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Home My WebLink AboutCS 39-03 Ciú/ o~ REPORT TO FINANCE & OPERATIONS COMMITTEE Report Number: CS 39-03 Date: September 8, 2003 From: Gillis A. Paterson Director, Corporate Services & Treasurer Subject: Changes to the Pre-Authorized Payment Plan Recommendation: 1. It is recommended that Report CS 39-03 of the Director, Corporate Services & Treasurer be received; and that: 2. the attached By-law No. 6179/03 providing for the changes to the pre-authorized payment plan from ten monthly post dated cheques to eleven monthly electronic withdrawals; 3. the Director, Corporate Services & Treasurer be authorized to make any changes or undertake any actions necessary in order to ensure that the pre-authorized electronic payment plan is completed on a yearly basis; 4. the attached By-law, providing for the changes to the pre-authorized payment plan, be read three times and passed by Council; and, 5. the appropriate officials of the City of Pickering be given authority to give effect thereto. Executive Summary: This report and the corresponding By-law will change the City's current ten month post dated cheque Pre-Authorized Payment Plan or (PAP) to an eleven month direct bank withdrawl (electronic) plan. This change was implemented as a request from the various PAP users. In addition, taxation staff believe that by moving to an eleven month plan, the City will be able to attract more PAP customers. Financial Implications: The change from a ten to eleven month plan will result in a small loss in interest income of approximately $2,800 per year. However, the interest revenue loss can be offset by having more individuals participate in this program thereby reducing internal cost and making the City's tax payment operations more efficient. Report CS 39-03 Date: September 8, 2003 Subject: Changes to the Pre-Authorized Payment Plan Page 2 Background: The City currently offers a ten month pre-authorized payment plan (PAP). As of September 15\ 2003, the City had approximately 4,450 number of participants. The attractive feature of the PAP plan is the fact that the property tax payments are spread over ten months in contrast to four installments and these are automatically transferred to the City's bank account from the taxpayers. Over the last few years, many of the PAP users and non-users have asked for an eleven month plan. Individuals who were not interested in the ten month plan stated that they would seriously consider an eleven month plan. A taxpayer paying $300 per month will now see their monthly payment reduced to $272.72 - a reduction of $27.27 or 9.1 per cent. From a cash flow management perspective, PAP users assist the City by providing property tax payments during non-tax payment months. In other words, in the beginning of the year, PAP users have made three payments (January, February and March 1) basically before the Cit~ receives its first payment of the year from its regular installment around February 28 of each year. Taxation staff believe that more individuals will be willing to participate in our program due to the eleven payments and therefore, this will assist with the cash flow cycle for the beginning of the year. In addition, Whitby and Uxbridge also offer an eleven month payment plan. The first six payments (January 1 to June 1) will be based on last year's property taxes. The last five payments will accommodate or reflect any changes to the individuals property taxes due to municipal budgetary increases. Electronic PAP Proaram When the City's PAP program was first introduced, (around 1996) the plan was based on individuals providing taxation staff with ten post dated cheques. As technology improved and with the introduction of "pre-authorized payment plans," approximately 98% of our PAP users are now using electronic banking where the City "debits" their bank account once a month. There are now approximately 100 individuals who still use the post dated cheque system. One of the changes to the PAP plan is to move eventually everyone to the electronic pre-authorized system. However, taxation staff realize that there may be a few individuals who are still not 100% comfortable with electronic banking and therefore, staff will provide a one year adjustment period for these few individuals. Workina Smarter Post dated PAP cheques consume valuable staff time in contrast to the electronic PAP system. By moving to an electronic PAP system, there will be savings of staff time from the manual post dated cheque system. Post dated PAP cheques require the following staff time: enter each cheque onto the tax data base, file cheques by appropriate month and then forward the cheques three business days before month end to the banks to be processed. Beside the extra staff time in processing manual post dated cheques, there is also the possibility that the post dated cheques can be misplaced ora Report CS 39-03 Date: September 8, 2003 Page 3 Subject: Changes to the Pre-Authorized Payment Plan keying error. In addition, if a post dated cheque user moves away from the City, staff would also have to mail back the remaining post dated cheques. With electronic banking, this step is not required. Since 1998, the number of property taxpayers in the City has increased by approximately 12%. In addition, since 1998, the Provincial Government has introduced property tax reform which has increased the workload of staff by introducing new programs such as: vacancy and charity property tax rebate program and Provincial capping program. There has been no additional staff provided for the increase in workload. The increase in taxation staff workload has been accommodated by reviewing current business practices which has resulted in working more efficiently. The eventual elimination of the post dated PAP cheques will provide additional taxation staffing hours to be used to meet customer expectations and needs. Attachments: 1. By-law to Amend Payment of Property Taxes. Prepared By: Approved I Endorsed By: sP~ ¿ z----" - Gillis A. Paterson Director, Corporate Services & Treasurer ~ -=>- ~ Stan KarwowsKI Manager, Finance & Taxation GAP:vw Attachment Copy: Chief Administrative Officer Recommended for the consideration of Pickering City Council I -, Tho ATTACHMENT # -L TO REPORT # Q3c¡ . 03 THE CORPORATION OF THE CITY OF PICKERING BY-LAW NO. 6179/03 Being a By-law of The Corporation of the City of Pickering to Amend the Payment of Property Taxes from ten monthly post dated cheque payments to eleven monthly electronic payments. WHEREAS the Council of The Corporation of the City of Pickering, enacted By-law Number 354/76 on February 2, 1976 to provide for the payment and collection of general taxes. WHEREAS the Council of The Corporation of the City of Pickering enacted By-law Number 4676/95 on October 2, 1995 to amend By-law Number 354/76 to provide for the provision of ten post-dated cheques; and WHEREAS it is the intent of the Council of The Corporation of the City of Pickering to amend the property tax payment By-law to allow for a change from the ten post-dated cheques to eleven electronic payments. NOW THEREFORE THE COUNCil OF THE CORPORATION OF THE CITY OF PICKERING HEREBY ENACTS AS FOllOWS: 1. Section 6 of By-law 354/76, as amended by By-law 4676/95 is hereby amended by deleting Section 6 of By-law 4676/95 and replacing it with: 6. Notwithstanding Clauses 3,4, and 5 above, and provided all taxes payable by the taxpayer in any year prior to the current year, plus all penalties and interest thereon, are paid in full, the Treasurer is hereby authorized to accept eleven monthly electronic payments, commencing January 151 and ending November 151 inclusive; the first six electronic payments from January 151 to June 1 5t, will pay the interim tax bill adjusted by an increase as determined by the Treasurer for property re-assessment years and the second five electronic payments dated July 151 to November 151 will pay the final tax bill installment in five consecutive equal monthly part payments. Failure by the taxpayer to pay anyone monthly part payment will invoke the penalty provisions as set out in Clause 4 of this By-law. 2. If any section or portion of this By-law is found by a court of competent jurisdiction to be invalid, it is the intent of Council for The Corporation of the City of Pickering that all remaining sections and portions of this By-law continue in force and effect. BY-LAW read a first, second and third time and finally passed this 7th day of October, 2003. Wayne Arthurs, Mayor Bruce Taylor, Clerk