Managers of the Minneapolis impound lot were informed as far back as 2009 that the city was keeping money from vehicle auctions that belonged to the vehicles' former owners.

Yet not until the Star Tribune inquired about the practice last month did officials say they would notify the owners of auctioned vehicles if they have cash owed to them. Under state law, any surplus revenue from the auctions of impounded vehicles should be held for 90 days for the former owners, but this year the city kept an estimated $149,400 in unclaimed funds.

The notification policy won't go into effect for another six weeks, city officials say.

But in early 2009, Little Canada businessman Gary Stephanson sent a fax to Don Pedlar, manager of the city's impound lot, and Pedlar's boss, Steve Hengle, pointing out that the city wasn't informing vehicle owners when refunds were due to them.

This week, Pedlar and Hengle said they could not recall being told about the issue, even though the fax is still in a file at City Hall.

"I wish I could remember," Pedlar said when asked why he didn't act on the information.

Yet both recall speaking to Stephanson, who several years ago proposed privatizing part of the city's impound operations. Those talks collapsed with no deal, but before the negotiations ended Stephanson sent several messages to Pedlar and Hengle, including a Feb. 15, 2009, fax that asks them about auction proceeds.

The four-page fax documents the state law, 168B, that covers abandoned motor vehicles and the authority governments have to dispose of them. The fax includes a handwritten note from Stephanson on the first page, which says, in part, "I thought you were informing customers of their right to recover excess funds."

The notification process until now has been a certified letter sent to vehicle owners shortly after their vehicle is towed. The letter says that the city has taken possession of the vehicle and will dispose of it if not picked up in 15 days, but it never specifically mentions the possibility of a refund.

The city auctioned about 2,250 vehicles in the first 10 months of 2011, according to city officials. An estimated 428 of those auctions ended with bids high enough to generate a refund, but just one person stepped forward to claim money, according to city officials.

State law says that the city has the right to keep enough proceeds from vehicle auctions to cover the cost of towing the vehicle and storing it at the impound lot along with some administrative fees -- typically about $688 per vehicle.

Stephanson said he also spoke to City Council Member Sandy Colvin Roy in the fall of 2009, telling her about the refund issue. Colvin Roy chairs the City Council committee that oversees the impound lot. Stephanson doesn't have documentation of his conversations with Colvin Roy, but this week she said she remembers speaking to him. The thrust of those conversations was about privatizing the impound lot, Colvin Roy said, and not the auction proceeds. "I do not remember any conversation about this facet," she said of the auctions.

Changes coming

Pedlar this week said vehicle owners have asked about refunds since the Star Tribune report last month. So far about "eight or nine" of those owners were awarded refunds, he said.

As a result of the report, Colvin Roy said the impound lot would change its operation so that vehicle owners get more notification of refunds. But last month, city traffic and parking services director Jon Wertjes told council members that the impound lot didn't want to notify every vehicle owner of a potential refund, because only a small number of people would get them.

Atif Saaeed, parking services manager, said it could be another six weeks before the impound lot starts notifying people of refunds.

Matt McKinney • 612-217-1747