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CITY OF SAN BERNOmINO - REQUEST Fo. COUNCIL ACTION
Dept:
FINANCE
Subject: CHARGE FOR THE COLLECTION OF
RETURNED CHECKS DUE TO
INSUFFICIENT FUNDS OR OTHER
REASONS.
From:
BARBARA PACHON,
DIRECTOR OF FINANCE
Date:
MARCH 22, 1994
Synopsis of Previous CouDcil action:
Ordinance MC-703 was adopted January 27, 1990, amending Section 3.10.010 of the San
Bernardino Municipal Code by increasing the charge for the collection of returned
checks to $10.00.
Recommended motion:
That further reading of the motion be waived and it be
laid over for final adoption.
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Contact person: Barbara pachon. Director of Finance
Phone:
x - 5242
Supporting data attached: AB 2274. City Attnv Memo 9/3/92.
Cost Analysis
Ward:
FUNDING REQUIREMENTS:
Amount:
NIA
Source:CAcct. No.)
(Acct. Descriotionl
Finance:
Council Notes:
Agenda Item No. ~'
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CITY OF SAN BERNOmINO - REQUEST F<O. COUNCIL ACTION
STAFF REPORT
In January of 1990, Ordinance No. MC-703 was adopted by the Mayor
and Common Council to increase the charge for returned checks to
$10.00. At that time, section 6157 of the California Government
Code limited the charge that pUblic agencies could charge for
returned checks to $10.00.
Assembly Bill No. 2274, which became effective January 1, 1993,
amends section 6157 of the California Government code, deleting the
$10.00 maximum limitation on the amount a public agency may charge
for a returned check. with the passage of this new legislation,
a public agency may charge an amount not to exceed the actual cost
incurred in the processing and collection of a returned check.
The City of San Bernardino has experienced an increase in returned
checks and continues to lose money in the processing and collection
of dishonored checks.
Staff completed an analysis to determine the actual cost incurred
while processing and collecting a returned check. According to the
analysis, the actual cost incurred by the City to process and
collect a returned check is $26.00.
To compare the proposed increase to the amount other organizations
charge for a returned check, a survey of local organizations was
conducted. Five of the organizations were municipal governments,
and the remaining five were local retail or grocery stores. The
returned check charges ranged from $10.00 to $40.00.
Amending the existing ordinance will benefit the city in the
following ways:
1. Allows the City to recover the cost of handling a
returned check.
2. will serve as a deterrent to potential makers of bad
checks.
3. Minimizes costs incurred from habitual offenders.
Staff recommends the existing ordinance be amended to defray the
cost of handling returned checks and to serve as a deterrent to
habitual offenders.
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AMENDED IN ASSEMBLY MARCH 3,1992 .\
CAIJFORNIA LECISLATURE-I991-92 RECULAR SESSION
,
, ASSEMBLY BILL
No. 2274
Introduced I)y Assembly Member Alpert
January 6,1992
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An act to amend Section 6157 of the Government Code,
relating to public agencies.
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LEGISLATIVE COUNSEL'S DICEST
I AB 2274, as amended, Alpert. Public agencies: returned
; checks. . .
. .Existing law provides that the state, and each city, whether
- general law or chartered, county, and district, each
. 'subdivision, department, board, commission, body, or agency
of the foregoing entities, shall accept personal checks drawn
in its favor or in favor of a'designated official, in payment for
any license, permit, or fee, or in payment of any obligation
owing:to the public agency or trust deposit, if the person
issuing the check furnishes to the person authorized to
receive payment satisfactory proof of residence in this state
and if the personal check is drawn on a banking institution
. . located in this state.
. . Existing law further provides that if any personal check
. . offered in payment. pursuant. to these provisions is returned
without payment, for any reason, a reasonable charge for the
returned check not to exceed $10 may be imposed, as
. specified.
t . This bill would delete the $10 maximum limitation on the
amount that a public agency may charge for a returned chec;k
.'.,. and, instead, would permit a public agency. to charge an
. "".: . amount not to exceed the actual costs incurred by the public
'~ .(i' agency to recover the public agency's processing and
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AB 2274
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collection costs. . '. _
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
The people of the State of California do enact as follows:
.. . ,
1. (COmme
2 Division
\
1 SECI'ION 1. Section 6157 of the Government Code is
2 amended to read:
3 6157. (a) The state, and each city, whether general
4 law or chartered, county, and disbict, each subdivision,
5 department, board, COIl1I1';-1on, body, or agency of the
6 foregOing, shall accept personal checks drawn in its favor
7 or in favor of a designated olBcial thereof, in payment for
8 any license,. pennit, or fee, or in payment of any
9 obligation owing to the public agency or trust deposit, if
10 the person issuing the check furnishes to the person
11 authorized to receive payment satisfactory proof of
12 residence in this state and if the personal check is drawn .
13 on a banking institution located in this state.
14 (b) If any personal check offered in payment pursuant
15 to this section is returned without payment, for any .
16 reason, a reasonable charge for the returned check mil)'
17 ge imIleses, v:lUeh , not to exceed the actual costs
18 incurred by the public agency, may be imposed to
19 recover the public agency's p~ and collection
20 costs. This charge may be added to, and become part of,
21 any underlying obligation other than an obligation which
22 constitutes a lien on real property, and a different
23 method of payment for that payment and future
24 payments\ by this person may be prescribed. , '
25 (c) The acceptance of a personal check pursuant to
26 this section constitutes payment of the obligation owed to
27 the payee public agency to the extent of the amount of
28 the check as of the date of acceptance when, but nof
29 before, the check is duly paid. ,
30 (d) The provisions in subdivision (I>) prohibiting a
31 returned check charge being added to, and becoming a
32' part of, an obligation which constitutes a lien on real
33 property do not apply to obligations under the Veterans'
34 Farm and Home PurcIiase Act of 1974 . (~cle 3.1
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C I T Y 0 F SAN B ERN A R DIN 0
INTEROFFICE MEMORANDUM
TO:
Fred Wilson, Acting Finance Director
David Kennedy, City Treasurer
FROM:
Dennis A. Barlow, Sr. Asst. City Attorney
.
DATE: September 3, 1992
RE: Recent Legislation - Returned Check Charges
COPY TO: W.R. Holcomb, Mayor
Shauna Clark, City Administrator
Existing law provides that the State and each city, whether
general law or chartered, and each subdivision, department, board,
commission, body, or agency thereof, shall accept personal checks
drawn in its favor or in favor of a designated official, in payment
for any license, permit, or fee, or in payment of any obligation
owing to the public agency or trust deposit, if the person issuing
the check furnishes to the person authorized to receive payment,
satisfactory proof of residence in this state and if the personal
check is drawn on a banking institution located in this state.
Existing law further provides that if any personal check offered in
payment pursuant to these provisions is returned without payment,
for any reason, a reasonable charge for the returned check not to
exceed $10.00 may be imposed, as specified.
AB No. 2274 approved by the Legislature and the Governor and
chaptered as Chapter 233 of the statutes of 1992 deletes the $10.00
maximam limitation on the amount that a public agency may charge
for a returned check and, instead, permits a public agency to
charge an amount not to exceed the actual costs incurred by the
public agency to recover the public agency's processing and
collection costs.
This legislation becomes effective on January 1, 1993.
any questions concerning the legislation or wish to
please contact this office.
If you have
review it,
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DENNIS A. RLOW
Sr. Asst. City Attorney
SEP 4 1992
FINANCE DEPT.
"'TV OF SAN BERNA'RDINO
DAB:js(Rtl~Chek.Mem)
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ORDINANCE NO.
AN ORDINANCE OF THE CITY OF SAN BERNARDINO AMENDING SECTION
3.10.010 BY INCREASING THE CHARGE FOR THE COLLECTION OF RETURNED
CHECKS.
THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO DO
ORDAIN AS FOLLOWS:
SECTION 1. section 3.10.010 of the San Bernardino Municipal
Code is amended as follows:
"A charge of TWENTY-SIX DOLLARS ($26.00) is imposed for the
cost of collection of each check payable to the City of San
Bernardino in payment of any tax, fee, fine or charge and
which is returned by the City'S depository as being
uncollectible for insufficient funds or for other reasons.
The charge of TWENTY-SIX DOLLARS ($26.00) shall be added to
all sums due for the tax, fee, fine or charge. From the time
the City is notified of the return of the check until payment
in full is made, including the charge imposed pursuant to
this ordinance, the City shall not be obligated to provide or
grant to the maker of the check any services or to permit
approval to which the payment relates."
I HEREBY CERTIFY that the foregoing ordinance was duly
adopted by the Mayor and Common Council of the City of San
regular meeting thereof, held on the
, 1994, by the following vote, to wit:
Bernardino at a
day of
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3/29/94
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AN ORDINANCE OF THE CITY OF SAN BERNARDINO AMENDING SECTION
3.10.010 BY INCREASING THE CHARGE FOR THE COLLECTION OF RETURNED
CHECKS.
ABSTAIN
ABSENT
AYES
NAYS
COUNCIL MEMBERS:
NEGRETE
CURLIN
HERNANDEZ
OBERHELMAN
DEVLIN
POPE-LUDLAM
MILLER
RACHEL CLARK, city Clerk
The foregoing ordinance is hereby approved this
day of 1994.
TOM MINOR, Mayor
city of San Bernardino
Approved as to form
and legal content:
JAMES PENMAN
City Attorney
By:
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