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    5.    
Finance Committee
Meeting Date: 09/14/2021  
FROM: Bill Gallardo

Subject:
Resolution Designating a Banking Administrator; Authorizing Bank Signers on Behalf of the City of Brea; and Solidifying Certain Payment Processes
RECOMMENDATION
Approve the Resolution designating a Banking Administrator for the City Operating and Successor Agency bank accounts; authorizing bank signers on behalf of the City of Brea; and solidiying certain payment processes.
BACKGROUND/DISCUSSION

Banking Administration  

California Government Code 53635.2 requires all money belonging to or in the custody of a local agency to be deposited for safekeeping in state or national banks, public banks, savings associations, federal associations, credit unions, or federally insured industrial loan companies in this state selected by the treasurer or other official having legal custody of the money.  Additionally, California Government Code 53679 states that money belonging to the local agency under the control of any of its officers or employees other than the treasurer shall be deposited as active or inactive deposits.

All funds collected by the City are ultimately in the custody and under the control of the Administrative Services Department.  The Administrative Services Director (formerly Finance Director) has traditionally in his/her capacity acted as the City's banking administrator.   The Administrative Services Director has and continues to authorize the opening/closing of bank/investment accounts on behalf the City; provide written instructions and sign agreements regarding the City's banking relationships; provide written instructions regarding individuals authorized to sign checks, reviews/authorizes wires or otherwise withdraw funds from the City's accounts and other day-to-day banking matters.  The proposed resolution would officially designate the Administrative Services Director as the City's Banking Administrator.

Authorized Signers

In conjunction, Ordinance No. 798 was adopted February 4, 1986.   This Ordinance amended the Brea City Code relating to the form and contents of warrants and authorization for use of facsimile signature.

§ 2.00.050  AUTHORITY TO DRAW WARRANT; FORM AND CONTENTS.   
B.   All warrants, orders or checks upon the City treasury for the payment of any money shall be signed by either the Mayor or one of such members of the City Council as are authorized to so sign by minute motion of the City Council, and shall be countersigned by the City Treasurer, or, in his or her absence, by that person designated as the Assistant Treasurer by minute motion of the City Council.  In every warrant, order or check so drawn shall be specified the name of the person to whom the same is payable, the date and amount thereof, the services or indebtedness for which it is to be issued and the fund out of which it is to be paid and shall be made payable to the person named therein or to his or her order.  Any person required or authorized pursuant to this section to sign, or countersign, any warrant, order or check upon the City treasury may execute such warrant, order or check by means of a facsimile signature in lieu of his or her manual signature upon the filing and certification of such person's manual signature in accordance with the Uniform Facsimile Signature of Public Officials Act (Cal. Gov't Code §§ 5500 et seq.) as the same now exists or as may be amended from time to time.  Whenever any warrant, order or check is for an amount payable in excess of $10,000, the same shall, in addition to the signatures required or permitted hereinabove, be countersigned by the City Manager or Assistant City Manager, or such other official designated by resolution of the City Council manually and not through the use of a facsimile signature. ('61 Code, § 2.6)  (Ord. 8, passed  - - ; Am. Ord. 539, passed  - - ; Am. Ord. 733, passed  - - ; Am. Ord. 798, passed  - - )

Within the 1986 revision, the implied authorized bank signers are the Mayor, Mayor Pro Tem, other members of the City Council, City Treasurer, City Manager, and Assistant City Manager.   Over time and for operational purposes, the Administrative Services Director and Finance Managers were informally added as authorized signers of the City's bank accounts.  It is the City's practice to affix a facsimile of the Mayor and City Treasurer to all checks issued and countersigned by the City Manager, Assistant City Manager, Administrative Services Director or Finance Manager, as required. The proposed resolution would officially authorize the following signers by title for the City's General Operating and Successor Agency to the Brea Redevelopment Agency bank accounts:
  • Mayor
  • Mayor Pro Tem
  • Council Member
  • City Treasurer
  • City Manager
  • Assistant City Manager
  • Administrative Services Director (added)
  • Financial Services Manager - Revenue (added)
Annually, the City Council reorganizes.  Reorganization of the City Council renders obsolete the authorization of the former Mayor and City Treasurer to draw checks/payments on City bank accounts.  Annually, new signature cards are submitted to the City's banking institution by the Administrative Services Director, as Banking Administrator for all City banking accounts.   To avoid the adoption of a Resolution each time a reorganization occurs, it is recommended that the Reorganization action minutes officially serve as the minute motion of the City Council to make the needed changes.  Again, this action is solidifying staff's current practice. 

Also, it is necessary to clarify that a change in staff (City Manager, Assistant City Manager, Administrative Services Director and Financial Services Manager - Revenue) would not require formal adoption by the City Council.  Such changes in persons, not titles, should be handled administratively.

Payment Approvals/Processing

Furthermore, certain payment processes are needed to be solidified.   As noted, checks issued by the City shall require two signatures (facsimile is allowed) from authorized officers identified and payments in excess of $10,000 require a third wet signature.  Payments between $10,000 and $100,000 can be countersigned by wet signature by any other authorized signer.  As requested by City Council, payment requests in excess of $100,000 require a wet signature from both the City Manager and the Administrative Services Director.  Also, the actual payments must be signed by the City Manager or the Administrative Services Director.   In their immediate absence, both the City Manager and Administrative Services Director can appoint a temporary designee.   In addition, payment requests in excess of $500,000 require authorization/confirmation by signature from a member of the City Council.   This authorization/confirmation is located on the supporting document, not on the physical payment.  As an added review, the City Treasurer is provided information on all payments in excess of $100,000.   A wet signature is not required, but staff retains the electronic approval for such payments.  

Staff requests the exception to this rule be for transfers made to and from the City and/or Success Agency's Local Agency Investment Fund (LAIF) accounts.   Although by nature this is an investment, LAIF accounts serve as a savings account to draw from or deposit to when balances in the City's checking accounts are below or exceed comfortable limits.    Transfers (both withdraws and deposits) tend to exceed $500,000.   Cash determination is performed weekly; however, it can be cumbersome to seek the required authorization in a timely manner to make the necessary LAIF and banking wire transfer deadlines. 

The recommended changes do not change the Brea Municipal Code or staff processes with the exception of transfers to and from LAIF.  Rather, they are intended to strengthen the language and provide more specific direction for staff.   Facsimile signature, when needed, is still permissible and is provided as a means of efficiency. In addition, these changes solidify most of the processes that are already in practice. 
SUMMARY/FISCAL IMPACT
There is no fiscal impact.
RESPECTFULLY SUBMITTED
William Gallardo, City Manager
Prepared by:  Faith Madrazo, Financial Services Manager - Revenue
Concurrence:  Cindy Russell, Administrative Services Director
Attachments
Resolution

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