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HomeMy WebLinkAboutReso 84-18 Adopting Financial PoliciesRESOLUTION NO. 84-18 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF MORRO BAY, CALIFORNIA, ESTABLISHING THE CITY OF MORRO BAY'S ACCOUNTING AND FINANCIAL REPORTING POLICIES RELATED TO FINANCIAL MANAGEMENT UNCLAIMED PROPERTY, FRAUD, WASTE AND ABUSE, DISPOSAL OF SURPLUS PROPERTY AND EQUIPMENT, PURCHASE ORDERS THE WATER RECLAMATION FACILITY RATE SURCHARGE ADJUSTMENT AND PROPRATION FOR UTILITY BILLS AND NOTIFICATION TO CUSTOMERS POLICY THE CITY COUNCIL City of Morro Bay, California WHEREAS, the City of Morro Bay wishes to establish Accounting and Financial Reporting policies to direct staff and provide transparency to the Council and community; and WHEREAS, the Accounting and Financial policies include those regarding (i) financial management, (ii) property notification and disposal of unclaimed property, (iii) fraud, waste and abuse (iv) disposal of surplus equipment and property, (v) utilization of purchase orders, (vi) annually review of the Water Reclamation Facility surcharge and (vii) proration of utility bills and notification to customers; and WHEREAS, staff recommended the City Council adopt a Financial Management Policy, U nclaimed Property Policy, Fraud, Waste and Abuse Policy, Surplus Property Policy, Purchase Order P olicy, Water Reclamation Facility Rate Surcharge Policy and Proration of Utility Bills and Notification to Customers Policy, all of which demonstrate the City's commitment to fiscal responsibility and prudent management and is consistent with Government Accounting Standards. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Morro Bay, California: S ection 1. The City Council hereby approves: a. the Financial Management Policy, as set forth in Exhibit A, attached hereto and incorporated herein, b. the Unclaimed Property Policy, as set forth in Exhibit B, attached hereto and incorporated herein, c. the Fraud, Waste and Abuse Policy, as set forth in Exhibit C, attached hereto and incorporated herein, d. the Disposal of Surplus Equipment and Property Policy, as set forth in Exhibit D, attached hereto and incorporated herein, e. the Purchase Order Policy, as set forth in Exhibit E, attached hereto and incorporated herein, f. the WRF Rate Surcharge Adjustment Policy, as set forth in Exhibit F, attached hereto and incorporated herein, and g. the Proration for Utility Bills and Notification to Customers Policy, as set forth in Exhibit G, attached hereto and incorporated herein. 01181.0001/480959.1 Resolution No. 84-18 Page 2 PASSED AND ADOPTED by the City Council of the City of Morro Bay at a regular meeting thereof held on the 9th day of October 2018, by the following vote: AYES: Irons, Davis, Headding, Makowetski, McPherson NOES. None ABSENT: None ABSTAIN: None JAI1/�L. IR�NS, Mayo, J ATTEST: )tt/it-CotO N SON. City y DANA S Clerk • 01181.0001/480959.1 p+�� 1UV( \1 =-= ssi 8PoRATE0 COUNCIL POLICY FINANCIAL MANAGEMENT POLICY Policy Statement Resolution No. 84-18 Exhibit A The City of Morro Bay (City) is a full -service City, providing essential services to over 10,000 residents related to public safety, planning, building, harbor, public works and recreation. In addition, the City has a vibrant tourism industry, attracting thousands of visitors annually, all of whom utilize city services in some fashion. As such, it is prudent for the City to establish sound financial management policies that conform with generally accepted accounting principles and state regulations. Purpose The purpose of this policy is to describe the City's key accounting policies and procedures to provide guidance to City staff and transparency on City policies. The City's accounting records are to be maintained in full accordance with Generally Accepted Accounting Principles (GAAP), as established by the Government Accounting Standards Board (GASB). Government fund types (General Fund, Special Revenue Funds, Capital Project Funds and Debt Service Funds), agency funds and expendable trust funds are maintained via a modified accrual basis of accounting. Proprietary fund types (Enterprise Funds and Internal Service Funds) and nonexpendable trust funds are maintained via an accrual basis of accounting. Basis of Accounting Basis of Accounting refers to the time when revenues and expenditures are recognized in the accounts and reported in the financial statements. The City uses the modified accrual basis of accounting for monthly accounting purposes. Annual financial reports are prepared using the Governmental Accounting Standards Board Statement No. 34 (GASB 34), which is based on full accrual accounting. Definitions • Modified Accrual: An adaptation of the accrual basis of accounting for government fund types. Revenues and other financing resources are recognized when they become available to finance expenditures of the current period. Expenditures are recognized when the fund liability is incurred. Accrual Basis: Sometimes called "full accrual" basis. A basis of accounting in which revenues are recognized when earned regardless of when they are received, and expenses are recorded at the time the liability is incurred, regardless of when it is paid. Audits General financial audits are performed annually by an independent auditor designated by the staff and approved by the Council. Other special purpose audits are conducted from time to time as needed. All employees are required to disclose and furnish information when called upon to do so as promptly as possible, in an open and honest fashion. October 2018 Page 1 Financial Management Policy Resolution No. 84-18 Exhibit A Budget The City maintains a balanced budget on an annual basis. Revenues and expenditures are estimated on the basis of reasonable and conservative assumptions. Funding for current expenditures comes from current revenues with operating and capital budget items clearly distinguished and reported separately. The budget is presented to the Council for review and adoption, along with the City's Appropriations. Limit and Investment Policy for the approved budget's fiscal year. Reporting and Record Keeping The City provides reports to the Council on a quarterly basis indicating the status of the approved operating and capital budgets as well as a summary of the City's investments. In addition, the finance department uploads accounts payable check registries and payment batch detail to the City's website as well as the monthly cross fund reports and cash statements upon completion of the monthly reconciliation process. The cross -fund reports and cash statements provide the cash balances of all funds and investment(s). Additional financial reports are prepared as needed when requested and required by staff and committee volunteers. Annually the city files financial reports with the State Controller's Office and prepares a Comprehensive Financial Report (CAFR). Financial Institution Account Authorization The City's cash is pooled from all sources and funds and held in various financial accounts, including Rabobank, Opus Bank, and an investment account with Local Agency Investment Fund (LAIF). For more information on LAIF, please refer to the City's Investment Policy. City Council approved accounts: Revenue deposits (including direct deposits from the State of California) and payment of accounts payable drafts (including EFT withdrawals) are transacted with the City's account held at Rabobank. City issued checks are signed, via electronic signature, by the Mayor or Vice Mayor, and the Finance Director or City Manager (or another designated staff member if n ecessary). LAIF and OPUS Investment account: The City's reserves are held with LAIF and Opus bank accounts. Periodically, LAIF requests u pdated account access authorization for transfers of funds. The account access authorization is u pdated with LAIF when required and/or as requested by LAIF. Accounting System — Fund Accounting The accounts of the City are organized on the basis of fund and account groups, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self -balancing accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures, or expenses as appropriate Governmental resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. The City uses three fund types as follows: Fund Classification: Governmental Funds 1. Fund Type: General Fund. The General Fund is the general operating fund of the City. It is used to account for all financial resources except those required to be accounted for in another fund. October 2018 Page 2 Financial Management Policy Resolution No. 84-18 Exhibit A 2. Fund Type: Special Revenue Fund. These funds are used to account for the proceeds of specific revenue sources (other than special assessments, expendable trusts, or major capital projects) that are legally restricted to expenditures for specified purposes. Fund Classification: Fiduciary Funds 1. Fund Type: Agency Funds. These funds are used to account for assets held by the City as an agent for individuals, private organizations, other governments, and/or other funds. Agency Funds are custodial in nature (assets equal liabilities) and do not involve measurements of results of operations. Fund Classification: Proprietary Funds 1. Fund Type: Enterprise Funds. These funds are used to account for assets held by the City's enterprise activities, the funds that sell goods and services and lease properties to the general public, such as the City's water, sewer and harbor funds. Cost Allocation Plan The annual Citywide Cost Allocation Plan (CAP) identifies the cost of administrative support for all departments and special funds. Use of the plan include: To ensure all direct and indirect costs associated with providing services are included in the calculation of user fees and charges. For example, the CAP is the basis for the indirect cost component of the fully burdened hourly rate used to calculate the cost of City staff providing fee services. 2. To develop the Federally approved A-87 overhead rate. 3. To charge administrative support costs to the enterprise and assessment districts. P repaid Expenses P repaid expenses are goods or services paid for and recorded in advance of their use or consumption in the course of business, which represent expenses for the next fiscal year and, therefore, should properly be reported as a current asset at June 30. Typical types of prepaid expenses include insurance, annual memberships and subscriptions, and multi -period service contracts. City Departments should analyze expenses, and consider the following items: • Annual subscriptions or periodicals • Annual membership dues • Multi -year equipment service contracts • Any types of advance paid to a third party or employees It is the City's policy to amortize prepaid expenses, totaling over $1,000, for the portion consumed or used during the current fiscal and record as a prepaid expense the portion that will be consumed during the following fiscal year if $1,000 or greater. To do that Departments must identify expenses for goods or services paid in the current fiscal year with future economic benefits as prepaid expenses and other assets. For expenses requiring a purchase order, Departments shall charge the expense for the current fiscal year to the appropriate general ledge expense account and the prorated amount of the expense for the following fiscal year to the prepaid account. O ctober 2018 Page 3 Financial Management Policy Resolution No. 84-18 Exhibit A Reporting and Oversight of Prepaid Expenses At year-end, an analysis should be performed, and entries should be made to record prepaid expenses on the Statement of Net Position (SNP). The Finance Department is responsible for reviewing transactions, invoices and records to ensure that prepaid expenses totaling over $1,000 are accounted for in this manner. P etty Cash The City maintains total Petty Cash on hand in the amount not to exceed $1,100, which is to be used for small reimbursements and expenditures required during day-to-day operations. Examples of items for which petty cash. reimbursement may be requested by employees or volunteers are: • • • • Meal reimbursements Mileage reimbursements P urchase of miscellaneous kitchen, office and maintenance supplies P arking and toll fees Generally, petty cash reimbursements are to reimburse employees for smaller expenditures ($50- 75) that occur as incidental City -related expenses. Larger reimbursements (over $75) and/or anticipated fees/registrations are to be processed via the twice -monthly regular accounts payable process P etty Cash reimbursement requests must be accompanied with the receipt(s) and are to be submitted to the Department Director or his or her designee for review and approval. Prior approval should be obtained whenever possible to verify the expenditure is needed. Reimbursements over $75 are to be approved by the City Manager prior to disbursement. Each City Facility housing a City Department may elect to maintain a Petty Cash fund. Departments electing to do so must maintain their own Petty Cash funds. Each Department's Petty Cash fund is not to exceed $300 The Finance Director or his or her designee as authority to approve petty cash funds up to $300, with expenditures from those funds governed by the above. The Departments are responsible for maintaining adequate funds in the City's Petty Cash and will replenish funds as necessary through a "Petty Cash Reimbursement' submission, which will include all receipts/disbursement slips that are being reimbursed Reporting and Oversight of Petty Cash The Departments are responsible for maintaining adequate funds in the City's Petty Cash and will replenish funds as necessary through a "Petty Cash Reimbursement" submission, which will include all receipts/disbursement slips that are being reimbursed. The Finance Department will maintain a list of authorized Petty Cash Funds and approved amounts as well as count and verify petty cash unannounced at least annually at year-end, and more frequently should it be deemed necessary by the Department Director, Finance Director or City Manager. Discrepancies in the Petty Cash Fund will be reported to the Department Director and City Manager for appropriate action. Change Drawer In addition to Petty Cash, the City maintains change drawers in a total amount not to exceed $800. Cash drawers are maintained and to be used for making change only and are not meant to be reimbursement funds. O ctober 2018 Page 4 Financial Management Policy Resolution No. 84-18 Exhibit A Each City Facility housing a City Department that services the general public through cash transactions may elect to maintain a change drawer. Departments electing to do so must maintain their own change drawers Each Department's change drawer is not to exceed $400. The Finance Director or his or her designee as authority to approve change drawers up to $400. Reporting and Oversight of Change Drawer The Departments are responsible for maintaining adequate funds in the Change Drawer. The Finance Department will maintain a list of change drawers and authorized balances as well as count and verify change drawers at least annually at year-end, and more frequently should it be deemed necessary by the Department Director, Finance Director or City Manager. Discrepancies in the change drawer will be reported to the Department Director and City Manager for appropriate action. The daily transaction activity through the change drawer is balanced daily in conjunction with the daily revenue posting batches and bank deposit preparation. Any cash short or over instances are posted to a cash variance account in the general fund, which can be monitored by the Finance Director or designee. Daily Bank Deposit All cash and checks received into the Finance Department are to be processed timely and deposited into the bank institution by the next business day. All checks and cash not yet deposited are to be kept in a locked file cabinet. • October 2018 Page 5 Financial Management Policy COUNCIL POLICY UNCLAIMED PROPERTY Policy Statement Resolution No. 84-18 Exhibit B The City of Morro Bay (City) is a full -service City, providing public safety, public works, harbor, recreation and building, planning and development services. In addition, the City manages the City's Tourism function promotion Morro Bay as a tourist destination. As such, it is the City's responsibility to establish policies for prudent financial oversight and accountability. The City Council sets legislative financial management policies, as recommended by staff and advisory committees. The unclaimed property policy established guidelines for city staff to properly transact unclaimed property. Purpose The purpose of the unclaimed check policy is to provide the proper mechanism to take possession of long-standing unclaimed checks in accordance with government statutes and to ensure the propriety of the related accounting transactions. Definitions Unclaimed Money: If money (cash or check) that is not the property of the City remains unclaimed for a period of more than three years, then it shall become the City's property no less than forty-five days and no more than sixty days after an initial public notice is published regarding that unclaimed money (Government Code sections 50050 and 50051). Unclaimed Money Policy A. At any time after the expiration of the three-year period, the City will cause a notice to be published once a week for two successive weeks in a newspaper of general circulation. B Before or on the date of the unclaimed money is to revert to the City, a party may file a claim for all or a portion of the amount of an unclaimed money. The City shall either accept or reject a claim. If the City rejects the claim, then the claimant may file a complaint against the City seeking to recover all or a portion of the money, and serve a copy of the complaint and the summons on the City within thirty days after receiving notice the claim was rejected. If a complaint is filed, then the City must hold the claimed money until the dispute is resolved (Government. Code section. 50052). C. The notice shall include the following information: a. The individual or business name as shown on the issued check, if applicable. October 2018 Page 1 Unclaimed Property Policy Resolution No. 84-18 Exhibit B b. The check date, number and the amount of money on the issued check, if applicable. c. A statement announcing the money shall become the property of the City of Morro Bay on a date that is not Tess than forty-five days after the first publication of the notice (See Exhibit I.) D. Proof of publication from the newspaper is to be retained in accordance with the City's records retention policy as proof the City published the required notice for two consecutive weeks. E Upon or prior to publication, a party of interest may file a claim which must include the following information: a. The claimant's name, address and telephone number. b. Social Security Number or Federal Employer Identification Number. c. Proof of identify such as a copy of a driver's license, social security card or birth certificate d. The amount of the claim. e. The grounds on which the claim is founded. (See Exhibit II) F. The City Manager, or his or her designee, may release to the party of the unclaimed money or its heir, beneficiary, or duly appointed representative, unclaimed money if it is claimed before the date the unclaimed money becomes the City's property, and the claimant submits proof satisfactory to the Finance Director or City Attorney. (Govt. Code Sect. 50052.5.) G. When the unclaimed money becomes the property of the City and is in a Special Fund, the City Council may transfer it by resolution to the General Fund. (Gov. Code Sec. 50053.) H. Subject to G., above, when unclaimed money reverts to the City's property, the money will automatically be credited to the City's fund from which the money was originally drawn. I. Any individual unclaimed check of Tess than Fifteen Dollars, or any amount if the depositor's name is unknown, which remains unclaimed for a period of at least one year may be reverted, without publication of notice, to the City and credited to the fund from which the check originated. (Government. Code Section 50055) J. The responsibilities of the Finance Director may be delegated by the Finance Director to the department that maintains the supporting records of the unclaimed money based on the initial receipt or deposit of that money or both. (Government Code Section 50056.) K. Disbursement and Money Transfer 1. Except as otherwise provided in this procedure, the Finance Department may release to the claimant of unclaimed money, or its heir, beneficiary, or duly appointed representative, the amount of the unclaimed money• i. If the claim is filed prior to the date the money becomes the property of the City of Morro Bay ii. If proof substantiating the claim is conveyed in writing, including all items detailed in the item `E' of this policy. After proper documentation is secured, payment request is October 2018 Page 2 Unclaimed Property Policy Resolution No. 84-18 Exhibit B prepared to release money based upon approved Claim Form. 2. Upon rejection of the depositor's claim by the Finance Department (Exhibit III), the depositor may file a verified complaint seeking to recover all, or a designated part, of the money in a court within San Luis Obispo County. The Finance Department shall be served with a copy of the complaint and summons which must be served within thirty days after the claimant received notice of rejection of that claim. The Finance Department shall withhold the release of the portion of unclaimed money for which a court action has been filed until a decision is rendered by the court. 3. Upon close of business on the forty-fifth (45) day after publication of the first n otice, the unclaimed check amounts revert to the City of Morro Bay. When the u nclaimed checks become the property of the City of Morro Bay and are in a special fund, the City Council may transfer them to the General Fund. See Exhibit IV. 4. Unclaimed checks of less than Fifteen Dollars that are more than twelve months o ld will be transferred to the General Fund by the City Council. See Exhibit V. L. Accounting Transactions October 2018 1. If unclaimed money is claimed prior to the date designated in the Public Notice then the Finance Department will verify the claimant's supporting information and if the claimant satisfies all conditions required under this procedure, the City will issue a new check for the claimed amount to the claimant. 2. Upon the close of business on the forty-fifth day after the initial notice is published, the remaining unclaimed money with a value of Fifteen Dollars or more will revert to the City. Those moneys will be transferred to a miscellaneous General Fund revenue account upon City Council approval. (Exhibit IV) I. Accounts payable checks will be voided, a journal entry will be prepared to reclass the account number from original to non- departmental Miscellaneous Revenue, Unclaimed Property account 100-90-001 480 406. This way the transaction will Debit Cash and Credit the above revenue account without changing the original Expense or Revenue account. II. Payroll checks will be voided through the payroll void process. In addition, a journal entry will be prepared to Debit the original expense account and Credit the Miscellaneous Revenue, Unclaimed Property account 100-90-001 480- 406. III. The records of voided checks must be retained in Accounting in accordance with the City's records retention policy. 3. As of March 31 st, annually, all outstanding checks of less than Fifteen Dollars from Accounts Payable and Payroll will be checked to determine those checks that have issue dates over twelve months. Those amounts will then be set into a resolution Page 3 Unclaimed Property Policy Resolution No. 84-18 Exhibit B for the City Council to approve, transferring these amounts to the General Fund miscellaneous revenue account. Follow steps 1, ii, and iii above. Public Notice A. Semi-annually, on or about April 30 and October 31, all unclaimed checks/money of at least Fifteen Dollars will be reviewed to determine those that have an issue/deposit date older than three years. Upon review a determination will be made to proceed if the total unclaimed checks exceed the cost to publish a public notice. B. Checks with an issue date older than three years will be given notice and published once a week for two successive weeks in a newspaper of general circulation selected by the City Manager, or his or her designee, concurrently. Those notices shall include the following information: a. The individual or business name as shown on the unclaimed check. b. The amount of the unclaimed check. c. A statement that the unclaimed check shall revert to the City's property on a date that is not less than forty-five (45) days after the notice is first published. C. Proof of publication from the newspaper shall be retained in accordance with the City's records retention policy as evidence of meeting the publishing requirements as stated in this policy. Release and Disbursement A. Except as otherwise provided in this policy, the City Manager, or his or her designee, may release to the claimant of an unclaimed money, or its heir, beneficiary, or duly appointed representative, the amount of the unclaimed money, if all of the following are met a. The claimant files a claim on or before the date the unclaimed money reverts to the City's property; b. The claimant submits sufficient proof substantiating the claim in writing to the City, including the following: i. Claimant's name, address and telephone number; ii. Social security number of FEIN iii. Proof of identity; such as a copy of driver's license, state -issued identification card, social security card, or birth certificate; iv. The amount of the claim; and v. The grounds on which the claim is founded vi. The claimant signs a form approving the City's request to stop. vii. Payment of the original unclaimed check and releasing the City from further claim against said amount. October 2018 Page 4 Unclaimed Property Policy Resolution No. 84-18 Exhibit B Reporting and Oversight The Finance Department is responsible for oversight and administration of the unclaimed money process. Reporting of notices for unclaimed money will be provided to City Council during the quarterly budget updates and as needed. Attachments: Exhibit I - Sample of Public Notice Exhibit II - Sample of Unclaimed Money — Claim Form Exhibit III - Sample of Money Claim Rejection Form Exhibit IV — Resolution to transfer unclaimed check funds to the General Fund Exhibit V -. Resolution to transfer unclaimed funds of checks less than fifteen dollars (15) each, or any amount, if the depositor's name is unknown to the General Fund October 2018 Page 5 Unclaimed Property Policy Resolution No. 84-18 Exhibit B Exhibit I — Sample of Public Notice PUBLIC NOTICE NOTICE IS HEREBY GIVEN THAT, the Finance Department of the City of Morro Bay, County of San Luis Obispo, State of California, declares that the following monetary sums have been held by the City of Morro Bay and have remained unclaimed in the funds hereafter indicated for a period of over three (3) years and will become the property of the City of Morro Bay on the xx the day of the Month, Year, a date not less than forty-five (45) days after the first publication of this Notice. Any party of interest may, prior to the date designated herein above, file a claim with the City's Finance Department which includes the claimant's name, address and telephone number, Social Security Number or Federal Employer Identification Number, amount of claim, the grounds on which the claim is founded. The Unclaimed Money Claim Form can be obtained from the City Hall at 595 Harbor Street, Morro Bay, CA. 93442, or from the City's website at www.morrobayca.gov. Proof of identify such as a copy of a driver's license, social security card or birth certificate must be provided before funds will be released. With any questions, please contact the City of Morro Bay, Finance Department at (805) 772-6222. This notice and its contents are in accordance with California Government Code Sections 50050- 50056. Check Date Check Number Jennifer Callaway Finance Director October 2018 Payee Name Check Amount Page 6 Unclaimed Property Policy Exhibit 11 Sample of Unclaimed Property -- Claim • CITY OF MORRO BAY UNCLAIMED PROPERTY -CLAIM FORM Pursuant to California Government unclaimed check in the amount of $ in the this claim are: Return completed form to: City of Morro Bay Finance Department, Accounts Payable 595 Harbor Street Morro Bay, CA 93442 Code Section 50052, I wish to file a claim for a previously that was published on . The grounds on which I file Vendor or Individual Name (Printed) Vendor or Individual Name (Signature) Taxpayer I.D. or Social Security No. Telephone Number Address City/State/Zip Code October 2018 Page 7 Unclaimed Property Policy FOR FINANCE DEPARTMENT ONLY Exhibit II — Sample of Unclaimed Property-- Claim Proof of Identity Verified (check one): Driver's License Social Security Card Birth Certificate Verified By: Date: Claim: Approved Rejected Reason for Rejection: Reviewed By: Date: October 2018 Page 8 Unclaimed Property Policy Exhibit Ill — Sample of Property Claim Rejection Form CITY OF MORRO BAY PROPERTY CLAIM REJECTION FORM The City of Morro Bay has rejected the unclaimed property claim of: Vendor or Individual Name: Taxpayer I.D. or Social Security Number: Address: City/State/Zip Code: Original Check Date: Original Check Amount: The grounds on which this claim has been rejected are: October 2018 Page 9 Unclaimed Property Policy Exhibit 11l — Sample of Property Claim Rejection Form Under California Government Code Section 50052 you have the right to file a verified complaint seeking to recover all, or a designated part, of the money in a court of competent jurisdiction within San Luis Obispo County A copy of the complaint and the summons issued thereon must be served within thirty (30) days of receiving this notice of rejection. Upon being served, the Finance Director will withhold the disputed amount from being released until a decision is rendered by the court. Jennifer Callaway Finance Director October 2018 Page 10 Unclaimed Property Policy Exhibit IV — Resolution to transfer unclaimed property funds to the General Fund CITY OF MORRO BAY RESOLUTION NO. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF MORRO BAY, CALIFORNIA, APPROVING THE TRANSFER UNCLAIMED MONEY FROM THEIR RESPECTIVE SPACIAL FUND(S) TO THE GENERAL FUND PURSUANT TO CALIFORNIA GOVERNMENT CODE SECTION 50053 WHEREAS, the attached list of checks has been outstanding and unclaimed in special funds for more than three years; and WHEREAS, the City has provided public notice as required in California Government Code sections 50050 and 50051 and the City's Unclaimed Check Policy, NOW THEREFORE, BE IT RESOLVED, in accordance with California Government Code Section 50053, the unclaimed money on the attached list in the total amount of $00.00 shall be transferred from the respective special funds(s) to the General Fund's non- departmental revenue account. PASSED AND ADOPTED by the City Council of the City of Morro Bay at the City Council Meeting held on the xxth day of xxx, by the following vote: AYES: NOES. ABSENT: ATTEST: , City Clerk October 2018 , Mayor Page 11 Unclaimed Property Policy Exhibit V — Resolution to transfer unclaimed property of checks less than fifteen (15) dollars each, or any amount, if the depositor's name is unknown to the General Fund CITY OF MORRO BAY RESOLUTION NO. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF MORRO BAY, CALIFORNIA, APPROVING THE TRANSFER OF UNCLAIMED MONEYS FROM THEIR 12ESPECTIVE FUND(S) TO THE GENERAL FUND PURSUANT TO CALIFORNIA GOVERNMENT CODE SECTION 50055 WHEREAS, the attached list of checks has been outstanding and unclaimed in special fund(s) for more than three years; and WHEREAS, each of the checks listed on the attached summary is Tess than Fifteen Dollars or any amount, if the depositor's name is unknown, NOW THEREFORE, BE IT RESOLVED, in accordance with California Government Code Section 50055, the unclaimed money on the attached list in the total amount of $00.00 shall be transferred from the respective funds(s) to the General Fund's non -departmental revenue account. PASSED AND ADOPTED by the City Council of the City of Morro Bay at the City Council Meeting held on the xxth day of xxx, by the following vote: AYES. NOES* ABSENT: , Mayor ATTEST: , City Clerk October 2018 Page 12 Unclaimed Property Policy ftie COUNCIL POLICY FRAUD, WASTE AND ABUSE' POLICY Policy Statement Resolution No. 84-18 Exhibit C The City of Morro Bay (City) is a full -service City, providing essential services to over 10,000 residents related to public safety, planning, building, harbor, public works and recreation. In addition, the City has a vibrant tourism industry, attracting thousands of visitors annually, all of whom utilize city services in some fashion. As such, it is the City's intent to establish policy to ensure elected officials, committee and commission members, volunteers and employees are aware of the following: 1. A constructive culture requires integrity in the administration of the City's resources to ensure public trust. The City is committed to protecting the organization, its operations, its employees and its assets against fraud, forgery, dishonesty, theft and other similar improprieties. Activities of this type will not be tolerated under any circumstances. 2 This policy applies to any irregularity, or suspected irregularity, involving employees, consultants, vendors, contractors, outside agencies, and/or any other parties with a business relationship with the City. 3. Any investigative activity required will be conducted in an objective and impartial manner without regard to the suspected wrongdoer's length of service, position, title, or relationship to the City of any party who might be or become involved in or becomes the subject of such investigation. 4. All employees are responsible for the detection, reporting and prevention of fraud, misappropriations, forgery, dishonesty, theft and other irregularities. Purpose To establish the City's commitment to protecting its assets against fraud, waste and abuse. The purpose of this policy is to establish a policy and procedures for clarifying acts that are considered to be fraudulent, describing the steps to be taken when fraud or other related dishonest activities are suspected, and providing procedures to follow in accounting for missing funds, restitution and recoveries. Definitions The California Government Code, subdivision 53087.6(f)(2), defines the term "fraud, waste, or abuse" as: "Any activity by a local agency or employee that is undertaken in the performance of the employee's official duties, including activities deemed to be outside the scope of his or her employment, that: • Is in violation of any local, state, or federal law or regulation relating to: fraud, corruption, malfeasance, bribery, theft of government property, fraudulent claims, 1 For purposes of this policy abuse is as defined herein and is not intended to include harassment, which is governed by other laws and policies. October 2018 Page 1 Fraud, Waste and Abuse Policy Resolution No. 84-18 Exhibit C coercion, conversion, malicious prosecution, misuse of government property, or willful omission to perform duty • Is economically wasteful, or • Involves gross misconduct." Some of these improprieties may be defined as follows: Fraud — the intentional false misrepresentation or concealment of material fact for the purpose of personal gain for oneself or others; or inducing another to act similarly. Fraud and other similar irregularities include, but are not limited to: a. Claim for reimbursement of expenses that are not job related or authorized. b. Forgery or unauthorized alteration of documents (checks, promissory notes, time sheets, independent contractor agreements, purchase orders, budgets, etc.) c. Misappropriation of City assets (funds, securities, supplies, furniture, equipment, etc.) d. Improprieties in handling or reporting of money transactions. e. Authorizing or receiving payment for goods not received or services not performed. f. Computer -related activity involving unauthorized alteration, destruction, forgery, or misrepresentation of data or misappropriation of City -owned software. g. Misrepresentation of information on documents. h. Any apparent violation of Federal, State or Local laws related to dishonest activities or fraud. i. Seeking or accepting anything of material value from those doing business with the City including vendors consultants, contractors, lessees applicants, and grantees. This shall not include any gifts or other items of material value declared by employees and/or City Council members on annual Statements of Economic Interest as required by the Fair Political Practices Commission. Furthermore, acceptance of any item intended to be a gift to City staff as a whole and not for a specific individual shall not be considered an act of fraud. Employee or Official — In this context, employee refers to any individual or group of individuals who receive compensation, either full or part-time, from the City The terms also includes any volunteer who provides services to the City through an official arrangements with the City or a City organization, as well as consultants, vendors, contractors, outside agencies and/or any other parties with a business relationship with the City. In this context Official means any elected or appointed City officer or official Management — In this context, management refers to any administrator, manager, director, supervisor, or other individual who manages or supervises funds or other resources. Investigator — In this context, Investigator refers to any person or persons assigned by the Department Director and Finance Director to investigate any fraud or similar activity. External Auditor — In this context, External Auditor refers to independent audit professionals who perform annual audits of the City's financial statements October 2018 Page 2 Fraud, Waste and Abuse Policy Resolution No. 84-18 Exhibit C Fraud, Waste and Abuse Policy It is the City's intent to fully investigate any suspected acts of fraud, misappropriation, or other similar irregularity Each department of the City is responsible for instituting and maintaining a system of internal controls to provide reasonable assurance for the prevention and detection of fraud, misappropriations, and other irregularities. Management should be familiar with the types of improprieties that might occur within their area of responsibility and be alert for any indications of such conduct. If a claim of fraud occurs, then an investigation shall ensue. The Investigator, in conjunction with the City Attorney (unless the claimant or subject of the claim) and representatives of the California Joint Powers Insurance Authority (CJPIA), has the primary responsibility for the investigation of all activity as defined in this policy. If the investigation substantiates inappropriate activities have o ccurred, then the City Clerk and/or Finance Director (unless one is the claimant or subject of the claim, and in that situation the City Attorney) will issue status reports to the City Manager. Immediately thereafter, the City Manager in consultation with the City Attorney, will issue status reports to appropriate designated personnel and, if appropriate to the City Council in accordance with the Brown Act. and possibly to the public, in accordance with applicable law. Decisions to refer the investigation results to the appropriate law enforcement and/or regulatory agencies for independent investigation will be made in conjunction with the City Attorney (unless the claimant or subject of the claim and then with legal counsel) and the City Manager, as will final decisions on disposition of the case except to the extent that the initiation of litigation may require approval by the City Council. Confidentiality All information received that is related to an allegation of fraud, waste and abuse will be kept confidential to the extent that it can. Any employee who witnesses or has direct knowledge of inappropriate activity shall notify the City Clerk and/or Finance Director immediately, and should n ot attempt to personally conduct investigations or interviews/interrogations. (See REPORTING PROCEDURE section below.) Investigation results will not be disclosed or discussed with anyone other than those who have a legitimate need to know. That is important in order to. avoid damaging the reputations of persons u nder investigation but who are subsequently found innocent of wrongful conduct and to protect the City from potential civil liability. Public disclosure shall be made only in accordance with applicable law. Authorization for Investigating Suspected Fraud, Waste and Abuse The City Clerk and/or Finance Director, or authorized representative, will have access to, and authority to examine any and all records, documents, systems and files of the City and/or other property of any City department, office or agency. It is the duty of any officer, employee or agent of the City having control of such records to permit access to, and examination thereof, upon the request of the City Clerk and/or Finance Director or his or her authorized representative. It is also. the duty of any such officer, employee or agent to fully cooperate with the City Clerk and/or Finance Director, or authorized representative, and to make full disclosure of all pertinent information. The City Clerk and/or Finance Director shall also be permitted access to any and all records documents systems and files of any City vendor or contractor as allowed by City agreements and contracts. October 2018 Page 3 Fraud, Waste and Abuse Policy Resolution No. 84-18 Exhibit C Reporting Procedures Great care must be taken in the investigation of suspected improprieties or irregularities so as to avoid mistaken accusations or alerting suspected individuals that an investigation is under way. Individuals filing a report concerning a possible violation or suspected violation must be acting in good faith and have reasonable grounds for believing that fraud, waste or abuse has been committed. Allegations that prove to have been made maliciously, or knowingly to be false, will be viewed as a serious matterpossibly subjecting the reporting party civil liabilities and/or disciplinary action, up to and including termination. Any employee or other interested complainant, who discovers or knows of fraudulent activity will have several options to report Reporting can occur by • Contacting the City Clerk — either in person, by mail, by email or by direct phone call at (805) 772-6205; • Contacting the Human Resources Analyst — either in person, by mail, by email, or by direct phone call at (805) 772-6207; • Contacting the Finance Director — either in person, by mail, or by direct phone call at (805) 772-6217; • Contacting the City Manager - either in person, by mail, by email or by direct phone call at (805) 772-6206; • Contacting the City Attorney - either in person, by mail, by email, or by phone call at (310) 527-6660; or • Contacting the Chief of Police - either in person, by mail, by email or by direct phone call at (805) 772-6237. The following information is necessary to begin and continue processing a complaint/concern: • The alleged misconduct involves a City employee, a contractor, or a vendor doing business with the City • Name of the individual(s) involved. • Specific information regarding the alleged misconduct e.g. circumstances related to the misconduct, where and when the misconduct occurred, etc. During the initial review of complainant report(s), the City Clerk and/or Finance Director will hold in confidence information disclosed, including the identity of the caller disclosing the information and the parties identified by the caller as allowed under Government Code §53087 6 The complainant may remain anonymous to the extent allowed by law. All inquiries concerning the activity under investigation from the suspected individual, his or her attorney or representative, or any other inquirer should be directed to the City Clerk Finance Director, or City Manager. No information concerning the status of an investigation will be given out. The proper response to any inquiry is: "There is no information to report at this time.' No reference should be made to "the allegation," the crime," 'the fraud," "the forgery," 'the misappropriation," or any other specific fraud reference when referring to any report. The reporting individual should be informed of the following: • Do not contact the suspected individual in an effort to determine facts or demand restitution. • Do not discuss the case, facts, suspicions, or allegations with anyone unless specifically asked to do so by the City Manager, City Clerk or the Finance Director. October 2018 Page 4 Fraud, Waste and Abuse Policy Resolution No. 84-18 Exhibit C Protection from Retaliation Retaliation against individuals for making good faith reports is prohibited. Employees making good faith reports of misconduct should feel safe and protected from retaliation. The City will provide appropriate support to reporting individuals to protect against retaliation and respond to concerns of retaliation or unfair treatment linked to good faith reporting. Whistle -Blower Protection S ubject to the limitations of the Code of Professional Conduct and State law applicable to lawyers, employees will be granted whistle -blower protection when acting in accordance with this policy. When informed of a suspected impropriety, neither the City nor any person acting on behalf of the City shall: 1. Dismiss or threaten to dismiss the employee. 2. Discipline, suspend, or threaten to discipline or suspend the employee. 3. Impose any penalty upon the employee. 4. Intimidate or coerce the employee. 5. Retaliation of any means included to imply to withhold, or actually withhold, support for an appointment, promotion, or change of assignment, or to suggest a poor performance report will be prepared or probation will be failed, as an act of retaliation. Violations of whistle -blower protections will result in discipline. U nless one of them is the claimant or subject of the claim, upon conclusion of the investigation, the results will be reported to the City Manager and City Attorney by the Department Director, Finance Director, City Clerk and CJPIA representatives. The City Manager following review of investigation results, will take appropriate action regarding employee misconduct over which the City Manager has authority Disciplinary actions can include termination, and referral of the case to an appropriate law enforcement agency and/or District Attorney s Office for possible arrest and prosecution. The City will pursue every reasonable effort, including court ordered restitution, to obtain recovery of City losses from the offender, or other appropriate sources. If the claim involves the City Attorney or an elected or appointed official, then the City Manager will report to the City Council for the Council to determine the appropriate action. Disposition If the investigation provides probative evidence that the subject matter of the investigation supports a finding this policy was violated, then, unless one of them is the claimant or subject of the claim, the City Clerk and/or Finance Director will work with the City Manager, department director and/or City Attorney to ensure the proper remedial action is taken in accordance with the City's Personnel Rules and Regulations and any other applicable law, rule, or regulation. P rocedures for Reporting and Oversight The Finance Director is responsible for the administration, revision, interpretation, and application of this policy. The policy will be reviewed periodically and revised as needed. The Finance Director may develop any other policies or procedures as necessary to implement this Policy. The Fraud, Waste and Abuse Reporting Policy will be distributed to all City employees, consultants, vendors, contractors, agents working for the City and elected officials subsequent to October 2018 Page 5 Fraud, Waste and Abuse Policy Resolution No. 84-18 Exhibit C approval. In addition it will be provided to all new employees, new business partners and those elected in the future. It will also be posted and made available on the City's website Management Responsibilities: Management is responsible for being alert to and reporting fraudulent or related dishonest activities in their areas of responsibility Each manager should be familiar with the types of improprieties that might occur in his or her area and be alert for any indication that improper activity, misappropriation, or dishonest activity is or was in existence in his or her area. When an improper activity is detected or suspected management should determine whether an error or mistake has occurred or if there may be dishonest or fraudulent activity. If management determines a suspected activity may involve fraud or related dishonest activity, then they should contact their next immediate supervisor not involved in the alleged misconduct and together with that supervisor inform their Department Director (unless the Department Director is alleged to have involvement in the alleged misconduct) and the City Clerk and Finance Director. October 2018 Page 6 Fraud, Waste and Abuse Policy Resolution No. 84-18 Exhibit C CITY OF MORRO BAY FRAUD, WASTE AND ABUSE POLICY ACKNOWLEDGEMENT OF RECEIPT By my signature below I acknowledge I have received, read, and understood the City of Morro Bay's Fraud, Waste and Abuse Policy, and I will abide by its terms. I understand that failure to fully comply with all terms set forth in the Policy may lead to disciplinary action, up to and including termination. Employee's Name (PLEASE PRINT) Employee's Signature Date October 2018 Page 7 Fraud, Waste and Abuse Policy Resolution No. 84-18 Exhibit D COUNCIL POLICY DISPOSAL OF SURPLUS EQUIPMENT & PROPERTY POLICY Policy Statement The City of Morro Bay (City) is a full -service City, providing public safety, public works, harbor, recreation and building and planning development services. In addition, the City manages the City's Tourism function promotion Morro Bay as a tourist destination. As such, it is the City's responsibility to establish policies for prudent financial oversight and accountability. The City Council sets legislative financial management policies, as recommended by staff and advisory committees. The Disposal of Surplus Equipment & Property Policy establishes guidelines to comply with Morro Bay Municipal Code Section 3.08.130 to dispose of City -owned vehicles, equipment, tools, real property, office equipment, machines, furniture and other miscellaneous property. Purpose It shall be the responsibility of the operating department to identify surplus property, obtain necessary approvals, and to coordinate arrangements for departmental transfer, bidding, auction or private sale of the items. The operating department shall also inform the Finance Department, in writing, about the disposition of the property. This notification shall include, at minimum, a listing of the items sold, authorization to surplus received from, the price received for each, the name and address of the buyer (or auctioneer) and the asset tag or other identifying number, such as a vehicle number, if available. Definitions Surplus Property — City -owned furniture, equipment, vehicles and tools of no use to the City. Real Property — Fixed Property, principally land and buildings. Disposal of Surplus Equipment & Property Policy An operating department must notify all City Departments, in writing, of the availability of surplus property and offer such property to interested departments prior to initiating any public bidding or other sale of the property. The transfer of surplus property from one department to another having potential use of the property shall be at the sole discretion of the City Manager. On the date of the adoption of this policy, the Morro Bay Municipal Code (MBMC) section 3.08.130 allows the City's Purchasing Agent (Finance Director) to trade in or exchange supplies and equipment for needed supplies and equipment. In addition, the MBMC is being amended to include language to allow the purchasing agent authority to "sell, by auction or other means tp ensure the City receives proper value." It is the Department's responsibility to provide documentation satisfactory to the Purchasing Agent to fulfil those criteria defined below: October 2018 Page 1 Disposal of Surplus Equipment & Property Resolution No. 84-18 Exhibit D Approvals. The following approvals shall be required to declare property as surplus: 1. Vehicles and Heavy Equipment. Property in this category shall be declared surplus by the Finance Director given the following information by the operating Department • Evidence the vehicle or heavy equipment is beyond its useful life and would be costlier to repair or unsafe to operate (as deemed and documented by the City's mechanic). Such documentation should provide support for current blue book or market value of the vehicle or heavy equipment. 2. Real Property. Property in this category shall be declared surplus by an action of the City Council and in accordance with state law. 3. Hand Tools. Office Equipment. Furniture and Fixtures. The Purchasing Agent authority pursuant to the MBMC is hereby delegated to Department Heads to sell or exchange any and all hand tools, office equipment, materials, furniture, fixtures, and other personal property of the City, used solely by that department, having a salvage value of less than $500 and which is obsolete or unserviceable, or is surplus to the City, or for which replacement is to be purchased The Department Head may sell the same for the best price obtainable in the open market or, when he or she deems it advisable. to the highest bidder at a public sale or he or she may exchange the same for other property or for credit on other property. The Department Director must provide approval prior for the sale or exchange of any surplus item having a salvage value of $500 or more. In the event the Department Head determines any such obsolete or surplus property has no salvage value, he or she may dispose of it as he or she deems advisable. Under this scenario the Department Head must document there is no salvage value of the property and provide notification to the Finance Department for accounting records. 4. Miscellaneous The disposal of all property not categorized above shall require the approval of the Purchasing Agent. Disposal of Surplus Property. All property declared surplus should be disposed of using the following priorities: 1. Transfer. Surplus property shall first be offered to all City departments for their potential use. 2. Public Sale or Auction. Property not transferred to another department shall be publicly sold using accepted methods or through an approved auction process If a department chooses to conduct an in-house sale process of equipment, then the department head must submit a written request to the Purchasing Agent indicating the item will be sold in-house, outlining the process for advertising and soliciting proposals as well as an estimate of the item's value and source of the estimate Department Heads and Mid Management employees are not eligible to purchase their departments surplus property. The Finance Department will verify whether the item requires reporting of sales tax. For in-house sales, a contract for sale must be processed and approved through the City Attorney's office and indicate the sale of the item is final and sold 'AS IS" with no promises or warranties provided. Upon sale of the property, notification to Finance Department with name of October 2018 Page 2 Disposal of Surplus Equipment & Property Resolution No. 84-18 Exhibit D purchaser and sale amount and sales tax to be reported if applicable must be provided as well as notification to the City Clerk so that that the property may be removed from the City's insurance policy. 3. Dismantled and All remaining items as well as those previously declared nonfunctional, unserviceable and obsolete may be dismantled and discarded using appropriate means. Reporting and Oversight The Finance Department is responsible for administration of this policy. If any City employee, officer or official disposes of property in a method not in conformance with this policy, then the City Manager will be notified, and that person will be required to submit written documentation as to why the policy was not complied. with. The documentation will be retained in the Finance Department. October 2018 Page 3 Disposal of Surplus Equipment & Property * AEI kik Policy Statement COUNCIL POLICY PURCHASE ORDER POLICY Resolution No. 84-18 Exhibit E The City of Morro Bay (City) is a full -service City, providing police, fire protections, public works, harbor, recreation and building, and planning development services. In addition, the City manages the City's Tourism function promotion Morro Bay as a tourist destination. As such, it is the City's responsibility to establish policies for prudent financial oversight and accountability. The City Council sets legislative financial management policies, as recommended by staff and advisory committees. The purchase order policy established guidelines for purchasing and u tilization of the City's purchase order system which financially obligates the City of Morro Bay. Purpose The City utilizes a decentralized purchasing system. Any official or employee who is required to purchase materials, supplies or services on behalf of the City for their department shall use purchasing practices set forth in this document. It is the responsibility of each department to solicit selected vendors in order to purchase or contract for services, supplies, and materials in an e conomic and prudent manner and in accordance with the City of Morro Bay's municipal code. The City desires to procure the best quality in services, supplies, and equipment at the least expense, and expects each department to supervise the inspection of all purchases to ensure conformance with specifications. All purchases are subject to budgetary limitations and department head approval. Departments are strongly encouraged to use local vendors whenever e conomically feasible. Definitions Purchase Orders (POs) — A document generated by the buyer (City) that authorizes a purchase transaction. When accepted by the seller, it becomes a contract binding on both parties. A purchase order sets forth the descriptions, quantities, prices, discounts, payment terms, date of performance or shipment, other associated terms and conditions, and identifies a specific seller. Purchase Order Policy The purchase order provides a means of encumbering funds, which reserves a portion of an appropriation until actual payment is made. Under the purchase order system, it is assumed there will be a time lag between the time the order is placed and the time of delivery. In order to ensure all terms and conditions of the purchase order are met by the vendor, payment is not made by the City until the services and supplies have been received as ordered and an invoice is received from the vendor. All purchase orders must be approved by the department head or designee and properly recorded by the Finance Division before the purchase is made. In order for a purchase o rder to be approved, the following must be attached to the purchase order and maintained in the City's Finance System: • Valid Insurance • Valid Business Tax for the seller • Executed Contract DRAFT Page 1 Purchase Order Policy Resolution No. 84-18 Exhibit E • Authorizing Council approval evidence by staff report when appropriate. • Any relevant resolutions P urchase Orders originate at the Department level and are approved up through the Department Director. Upon approval from the Department Director, the City Clerk will review and approve when valid insurance is obtained by the City If the City Clerk does not have a record of valid insurance for the Seller it is the responsibility of the Department to follow-up with the seller to submit valid insurance documents Following approval by the City Clerk, the purchase order is then submitted to the Finance Department for review and approval. The Finance Department will approve the purchase order once a current business tax is obtained by the seller and budget authority is confirmed. The Finance Department will also verify that the City's purchasing requirements have been meet per the City's municipal code. The Finance Department will retain an electronic copy of the approved P O and provide the Department with an electronic copy to issue to the vendor. The purchase order shall account for the quoted price inclusive of taxes and shipping and handling costs. The City Manager has authority to authorize a change purchase order if contingencies are needed up to 15% of the purchase price. Therefore, all purchase orders will be valid at face value plus 15%. Any actual purchase price over the P.O. amount plus 15% must be accompanied by a contract amendment. Confirming Purchase Order— If an emergency arises and it is impossible to obtain a P.O. prior to making the purchase or placing an order, a confirming P.O. should be completed as soon as possible. The P.O. will include all information as above and the word 'CONFIRMING" should be typed in the Description. All confirming purchase orders over $10,000 must be signed by the City Manager or his designee. Payment — Upon receipt of the goods or services, invoices are coded to and processed against the PO number to release the encumbered funds. Exemptions - Certain forms of procurement and/or vendors will be exempt from provisions contained above and are listed below: • Billings from the utility companies (i.e. electric, gas, water, telephone, communication, etc.) • Billings from government agencies (i.e. post office, county and city fees and charges, school districts, etc.) • Other specific vendors as approved by the City Manager and Finance Officer whose listing is maintained on file in the Finance Division. • Emergency projects as provided for in Public Contract Code Sections 22035 and 22050. Reporting and Oversight The City's Finance Department is responsible for administration and enforcement of the City's P urchase Order Policy Should Departments routinely not comply with the Purchase Order Policy, the Finance Department may require Department staff and the Department Director to document the reasons for noncompliance. Such documentation will be reviewed by the City Manager and attached to the PO for documentation DRAFT Page 2 Purchase Order Policy «M°ORATED 10\1 c COUNCIL POLICY WRF RATE SURCHARGE ADJUSTMENT POLICY Policy Statement Resolution No. 84-18 Exhibit F The City of Morro Bay (City) is a full -service City, providing essential services to over 10,000 residents related to public safety, planning, building, harbor, public works and recreation. In addition, the City has a vibrant tourism industry, attracting thousands of visitors annually, all of whom utilize city services in some fashion. As such, it is the City's intent to establish a policy to ensure community members, elected officials, committee and commission members, volunteers and employees are aware of the following: The water and wastewater utilities provide drinking water along with wastewater collection and treatment services to its residential, commercial and industrial customers. To cover the costs associated with providing services to its customers, the utility derives revenue from a variety of sources, including water and sewer user rates, reconnection charges, connection fees, and the n ewly adopted Water Reclamation Facility (WRF) rate surcharges. Those new WRF surcharges are intended to provide revenue needed to design and construct the WRF and ancillary facilities. The level of future revenue generated in the currently adopted water and sewer rate study is projected through a combination of analyses of historical and future system growth in terms of n umber of connections and consumption. With revenue derived from the various sources, the u tilities meet the cash requirements of operation and maintenance; water supply costs; debt service and reserve payments on bond indebtedness; and recurring annual capital expenditures for replacements, system betterments, and extensions not debt financed. Operating and Maintenance (O&M) expenses are those expenditures necessary to maintain the system in good working order. Water supply costs are those associated with the purchase and treatment of State water, pumping and treating groundwater. Sewer charges are necessary to provide collection and treatment of the community's wastewater. Routine annual capital expenditures, which include equipment replacements, consist of recurring annual replacements, minor extensions, and betterments which are normally revenue financed. The 2018 Proposition 218 WRF surcharge is intended to provide the amount of rate revenue necessary to retire the debt that will be used to finance the construction of the WRF and ancillary facilities. Purpose To establish the City of Morro Bay's commitment to providing the most cost-effective water and wastewater services for the community; the purpose of this policy is to establish procedures for clarifying how and when the WRF Rate Surcharge will be adjusted and what components of the Water and Sewer Utilities may utilize the WRF Rate Surcharge. Resolution No. 84-18 Exhibit F P olicy Water and sewer services are operated as an enterprise fund, which means revenues to support operations and capital improvements must be borne by the rate payers. Water and sewer funds are reviewed annually by the City Council at a public hearing as part of the City's annual fee schedule update (approximately March of each year). Upon completion of the review, Council then determines the appropriate rate for service. If rate adjustments are needed, then they are to be implemented at the beginning of the new fiscal year. At no time may Council adjust rates beyond maximum approved rates under Resolution No. 71-18, unless and until another Proposition 218 process is successfully completed. The intent of this rate adjustment policy is to provide for rates to be lower than the maximum approved rates under Resolution No 71-18, conditions permitting. P rocedures During the annual budget development process, the City's Finance Director, in cooperation with the Public Works Director/City Engineer, will analyze expenditures and revenues associated with the WRF project and report to Council the minimum Rate Surcharge, up to the maximum approved by City Council in Resolution 71-18, required to satisfy the debt repayment for the WRF program. Along with any rate recommendations, this Policy will be reviewed during the City's annual budget process, and updated, if needed, as a result of material changes in the risk exposures or new conditions that required changes in this Policy • O ctober 2018 Page 2 WRF Surcharge Review and Adjustment Policy `.............\\\..,.`' '1tf ►4L if COUNCIL POLICY Proration for Utility Bills and Notification to Customers Policy Statement Resolution No. 84-18 Exhibit G The City of Morro Bay (City) Public Works Department, Sewer and Water Divisions, are responsible for the collection and treatment of wastewater for over 5,000 customers within the City limits and delivery of potable water to a similar number of customers. This Proration for Utility Bills Policy (Policy) is designed to establish guidelines to allow for proration of utility bills for customers who initiate and terminate water and/or sewer utilities within a week and properly notify the City. P urpose The Policy establishes a mechanism for prorating utility bills in the instance that a customer signs up for services for less than one week in a given monthly bill cycle. The Policy further provides guidance on how to properly notify customers of the proration. Definitions P roration — a technique for applying standard billing methods to nonstandard billing periods. Prorating the utility bill for up to one week of service in a monthly cycle, allows the customer to receive a bill for an amount that reflects the portion of the month in which the service was used. Proration will not be extended to customers who use more than one week of services. Week — seven consecutive calendar days. P roration of Monthly Utility Bill and Customer Notification of Proration Policy The City bills utility customers monthly for water and sewer services. When customers sign up for City utility services through customer service representatives via in person, phone, fax or email, they will be notified the City will prorate utility bills for services rendered for one week or less in a given monthly cycle. The prorated dollar amount will be determined by dividing the flat rate water and sewer charge total monthly bill by the number of days in the month and multiplying that amount by the number of days the account was active. In addition, customers will be charged for units of water used during the period the account was active. The City will assess a ten -dollar monthly minimum for any account that is prorated. Customers whose accounts are live for eight or more days, whether consecutive or not, in a given billing cycle will be charged the full monthly amount for water and sewer services. Customers will only receive one month of proration on their account. Proration will not be applied to the same Utility service address in consecutive months.