SR-101-001-01 (2)
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City Council Meeting 2-24-04 Santa Monica, California
TO: Mayor and City Council
FROM: City Staff
SUBJECT: Proposed Ordinance Clarifying The Authority and Responsibilities of The
Finance Director and Risk Manager to Settle Disputes
Introduction
City staff recommends that the Council consider for first reading the attached proposed
ordinance. It would clarify the authority of the Finance Director and Risk Manager to act
on the City’s behalf in resolve certain categories of disputes. This clarification is
recommended to update the Code to reflect current practices, clarify City process and
procedures, facilitate the speedy resolution of disputes, and enhance collections.
Background
Currently, the Municipal Code does not reflect functions performed by the Risk
Manager, including maintaining self-insurance and settling claims. The Municipal Code
authorizes the City Attorney to compromise or settle liabilities of the City in amounts up
to $15,000 without Council approval. Santa Monica Municipal Code Section (SMMC)
2.44.050. The Code does not specifically authorize the Risk Manager to settle claims.
However, as a matter of longstanding practice here and in other cities, many
settlements are actually handled by the Risk Manager. Claims against the City are
routinely routed to Risk Management. Thereafter, the Risk Manager and his staff
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evaluate the claims and are frequently able to resolve smaller claims quickly before
litigation is even filed. On all large claims and claims which result in litigation, Risk
Management and the City Attorney’s Office work together.
Similarly, the Finance Department works to settle disputes about tax payments due to
the City by compromising interest and penalty amounts. Experience at all levels of
government has established that it is often possible to secure speedy payment of
disputed tax amounts by offering to modify the amount of interest or penalties which
would otherwise be due. However, the Municipal Code contains no explicit
authorization for this universally utilized approach.
Discussion
Staff recommends that the Municipal Code be amended to explicitly authorize the Risk
Manager to maintain self-insurance and to compromise and settle claims in amounts of
up to $15,000. Providing this express authorization will promote transparency and
clarity with respect to City organization and process. Moreover, it will forestall any
doubt that might otherwise arise as to which members of City staff possess the authority
to resolve claims.
This would be accomplished by adding language to Municipal Code Section 2.44.050.
As presently worded, that section gives the City Attorney $15,000 in settlement
authority. The proposed ordinance would extend similar authority to the Risk Manager
by adding his title to the existing language.
Staff further recommends that the Municipal Code be amended to clarify that the
Finance Director has similar authority to compromise and settle claims relating to
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interest and penalties on tax delinquencies. Protecting the Finance Director’s ability to
engage in this practice will ensure that he is able to secure prompt payment of taxes
and thereby maximize City revenues. The proposed ordinance would accomplish this
change by adding language to Section 2.12.260 that describes the duties of the Finance
Director. The proposed language would authorize the Finance Director to negotiate
interest and penalties as to delinquencies in tax payments of the Business License Tax,
Transient Occupancy Tax, Utility Users Tax, Parking Facility Tax, and any other City
imposed tax.
Financial/Budget Impact
There would be no new costs to the City attendant upon the proposed modifications to
the Municipal Code.
Recommendation
It is respectfully recommended that the accompanying ordinance be introduced for first
reading.
PREPARED BY: Marsha Jones Moutrie, City Attorney
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City Council Meeting 2-24-04 Santa Monica, California
ORDINANCE NUMBER _________ (CCS)
(City Council Series)
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
SANTA MONICA AMENDING SANTA MONICA MUNICIPAL CODE SECTIONS
2.12.260, 2.44.030, AND 2.44.050 CLARIFYING THE AUTHORITY AND
RESPONSIBILITIES OF THE FINANCE DIRECTOR AND RISK MANAGER TO
SETTLE DISPUTES
WHEREAS, the City of Santa Monica is committed to utilizing best practices in all
aspects of the public’s work including, in particular, fiscal management; and
WHEREAS, certain provisions of the Municipal Code relating to the functions of the
Finance Director and Risk Manager were adopted many years ago and therefore do not
reflect current best practices of managing municipal finances; and
WHEREAS, such practices include, but are not limited to, providing the flexibility to
resolve disputes promptly when prompt resolution will conserve or maximize public
resources,
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA MONICA DOES
HEREBY ORDAIN AS FOLLOWS:
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SECTION 1. Santa Monica Municipal Code Section 2.12.260 is hereby amended
to read as follows:
Section 2.12.260 Department head and duties.
The head of the Finance Department shall be the
Director of Finance who shall be appointed by the City
Manager. The Director of Finance, who shall also be the City
Controller, shall coordinate and supervise all activities of the
Finance Department. The Director of Finance shall have the
authority to settle tax disputes by reducing or waiving
amounts due and owing as penalties or interest on
delinquent City tax obligations if such reduction or waiver
serves to promote the City’s fiscal welfare by expeditious
payment, enhancing revenue, or otherwise.
SECTION 2.Santa Monica Municipal Code Section 2.44.030 is hereby amended
to read as follows:
Deleted:
City Controller
Section 2.44.030 Self-insurance fund-- Risk
Manager.
Deleted:
City Controller
The Risk Manager shall establish a self-insurance
fund for each risk mentioned in Section 2.44.020 hereof. The
money deposited in each such fund may be expended only
for the following purposes:
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a. Purchase of excess liability insurance for
exposures in excess of $15,000 for the operation of the
Santa Monica Municipal Bus Line and in excess of $10,000
for the operation of other automotive equipment belonging to
the City and liability arising out of the Public Liability Act.
b. Payment of losses and expenses incident to
the self-insurance program.
c. Transfer to budgets of departments rendering
services to the self-insurance program.
d. Payment by way of contract or wages for
adjustment services.
e. Purchase of primary coverage should the City
Council by resolution determine to abandon any self-
insurance program.
SECTION 3. Santa Monica Municipal Code Section 2.44.050 is hereby amended
to read as follows:
Section 2.44.050 City Attorney and Risk Manager
settlement authority.
The City Attorney, or his or her duly authorized
Deleted:
is
assistant or deputy, and the Risk Manager are hereby
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authorized to settle or compromise any liability of the City,
whether a claim has been filed as provided by law or not, in
all cases where the amount necessary to be expended in
order to settle or compromise such claim does not exceed
fifteen thousand dollars, without the necessary of first
receiving the approval of the City Council and said City
Deleted:
is
Attorney and Risk Manager in such event are authorized to
request the Director of Finance to draw a demand directly
upon the appropriate self-insurance fund for the payment of
such sum. The Director of Finance is authorized to draw
such demand upon the request of the City Attorney or the
Risk Manager.
SECTION 4. Any provision of the Santa Monica Municipal Code or appendices
thereto inconsistent with the provisions of this Ordinance, to the extent of such
inconsistencies and no further, is hereby repealed or modified to that extent necessary
to effect the provisions of this Ordinance.
SECTION 5. If any section, subsection, sentence, clause, or phrase of this
Ordinance is for any reason held to be invalid or unconstitutional by a decision of any
court of competent jurisdiction, such decision shall not affect the validity of the
remaining portions of this Ordinance. The City Council hereby declares that it would
have passed this Ordinance and each and every section, subsection, sentence, clause,
or phrase not declared invalid or unconstitutional without regard to whether any portion
of the ordinance would be subsequently declared invalid or unconstitutional.
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SECTION 6. The Mayor shall sign and the City Clerk shall attest to the passage
of this Ordinance. The City Clerk shall cause the same to be published once in the
official newspaper within 15 days after its adoption. This Ordinance shall become
effective 30 days from its adoption.
APPROVED AS TO FORM:
_________________________
MARSHA JONES MOUTRIE
City Attorney
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