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Home My WebLink About04/20/1993, 7 - LATE FEE ON DELINQUENT ACCOUNTS "NIA1111fll111111 METING GATE: IN C,".7 of san WIS QBISp 0 qnq COUNCIL AGENDA R=P--NL-J-- MU NUMBER: FROM: William C. Statler, Director of Finance Prepared by: Linda Asprion, Revenue Manager�� . SUBJECT: LATE FEE ON DELINQUENT ACCOUNTS CAO RECOMMENDATION ■ Adopt a resolution effective July 1, 1993, implementing a monthly late fee in the amount of$10 or 1S01c,whichever is greater, on all accounts that have not been paid within 30 days of the due date. ■ Introduce an ordinance amending the municipal code to provide for setting penalties on delinquent business and transient occupancy taxes by resolution. DISCUSSION Background There are four systems which issue invoices/bills to City customers: ■ Utility billing which bills customers for water and sewer on a bi-monthly basis. This system produces approximately 75,000 bills annually. ■ Business tax which bills customers operating a business in the City. This system produces approximately 12,000 renewal notices annually. ■ Transient occupancy tax (TOT) which bills all motels/hotels on a monthly basis for the tax collected from their patrons. Approximately 500 bills are issued annually. ■ General accounts receivable which issues invoices to customers for lease payments, parking permits, subventions, damage to City property, parking-in-lieu fees, and insurance payments. Invoices are produced on either a quarterly,monthly, or annual basis depending on the type of invoice. During a one year period approximately 3,300 invoices are billed through the accounts receivable system- Currently ystemCurrently the City charges a $5 late fee on delinquent utility bills; $10 or 10% monthly, (whichever is greater) on delinquent business tax and TOT accounts; and does not charge a late fee on delinquent general accounts receivable. Staff is recommending the implementation of a standard late fee for all four systems which will appropriately recognize the costs associated with collecting funds from customers who are delinquent in paying amounts'due to the City on a unified basis. 7-/ ��i��uiliilllllllllP1° ��Ulll MY Of San LUIS OBiSpO 10aZe COUNCIL AGENDA REPORT Why the scone late fee for all four systems? A standard late fee will be easier to administer, provide equity in the assessment of late charges,and will cover the costs associated with tracking delinquent accounts and submitting them to a collection agency as well as the lost opportunity cost from not having the funds available for use by the City. The initial late fee will be assessed 30 days after the due date of the invoice/bill. Each month the invoice remains unpaid,an additional $10 or 1.5% of the amount due (whichever is greater) will be added to the account balance. What do other cities chmge for late fees? Many of the municipalities contacted do not charge a monthly late fee on their accounts receivable and many of the cities have private utility companies for water and sewer. As such we expanded the survey to include some local businesses to determine what they charge for delinquent accounts. The survey results for monthly late fees are as follows: CITY WATER OTHER ACCOUNTS Palm Springs n/a $3.00 or 1% whichever is greater San Juan Capistrano n/a none Petaluma $10 $5.00 or 10% whichever is greater Visalia n/a none Davis 10% none Santa Barbara n/a none Camarillo 10% none Santa Maria $9 none Ventura 10% none Santa Cruz 10% 1.5% Monterey n/a 2.0% Napa $10 or 10% whichever $5.00 or 1.5% whichever is greater is greater County of San Luis Obispo 10% on property taxes Telegram Tribune 1.5% Quaglino's 1.5% Gottschalks 1.65% As reflected above, the proposed late fees are comparable to those charged by local businesses and other municipalities. -a ��»�NIIVIIIIIIIII�IIII�III city of San Luis OBISp0 NOGs COUNCIL AGENDA REPORT FISCAL IMPACT It is not anticipated that the amount of late fees collected will be significantly more than is currently collected. In the case of business tax and TOT delinquencies, the amount of the late fee is actually being reduced to conform to generally accepted business practices .(although the current maximum on the amount of the penalty for late payment of business taxes is being eliminated). Once the chronic delinquent.accounts recognize that a late fee will be added to the account balance, we are optimistic that more accounts will be paid in a timely manner. As part of our standard procedure, if a customer is having difficulty in making the payment, individual consideration will be provided for extended payment terms that will not be subject to late charges. SUMMARY I The City's utility billing, business tax, transient occupancy tax, and general accounts receivable systems are used to bill customers for a variety of services and fees owed to the City. Staff is recommending a monthly late fee in the amount of $10 or 1.5%, whichever is greater, be implemented to cover the City's administrative cost for follow-up on the delinquent payment and in lost opportunity cost from not having the funds available for use by the City. ATTACHMENTS i Resolution implementing a late fee on accounts receivable invoices ■ Ordinance amending the municipal code to provide for setting penalty charges on delinquent business and transient occupancy taxes by resolution. I ti r� RESOLUTION NO. (1993 SERIES) rte. RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO �i SETTING LATE FEES ON DELINQUENT ACCOUNTS WHEREAS, the City of San Luis Obispo bills customers for a variety of services and fees;.and WHEREAS, the City of San Luis Obispo has determined that customers who do not pay their invoices within 30 days of the due date are delinquent in making their payment. NOW, THEREFORE, the City Council of the City of San Luis Obispo finds and resolves that: SECTION 1. Effective July 1, 1993, monthly late fees in the amount of$10 or 1.5% on the balance outstanding, whichever is greater,will be charged and added to the balance of delinquent accounts which have not been paid within 30 days of the due date. SECTION 2. Effective July 1, 1993, Municipal Code Section 4.20.110, adopted by Resolution 6447, will be rescinded. Upon motion of , seconded by and on the following roll call vote: i AYES: NOES: ABSENT: the foregoing resolution was adopted this day of . 1993. Mayor Peg Pinard ATTEST. City Clerk Diane Gladwell APPROVED: i ttor ey 7-'� I' I ORDINANCE (1993 SERIES) AN ORDINANCE OF THE CITY OF SAN LUIS OBISPO AMENDING SECTIONS 3.01.505, AND 3.04.080 OF THE SAN LUIS OBISPO MUNICIPAL CODE RELATING TO PENALTIES ON DELINQUENT PAYMENTS WHEREAS, the City of San Luis Obispo is implementing a standard late fee on all delinquent accounts; and WHEREAS, amending sections 3.01.505 and 3.04.080 of the municipal code is necessary to establish penalties for delinquent payment of business and transient occupancy taxes by resolution; and WHEREAS, the City Council has held a hearing to consider the proposed changes; NOW THEREFORE BE IT ORDAINED by the City Council of the City of San Luis Obispo as follows: SECTION 1. Chapter 3.01, Section 3.01.505, Delinquencies and Penalties, is hereby amended to read as'follows: 3.01.505 Delinquencies and Penalties I demxc(a l:,,.... d....., .h,. t. T1I ......ee Beier- shall add ., alty e f ten and-ne lg9ths ($10'00 _. e whiehever- is the gf eater-, eft the fir-st .day Ti f penalty fe be added in ne event shall e3teeed ene befidEed (1909/0) per-eent ef the afnetint bf the Nosiness tax due v)ffiY:Cy 4'h 'qN\..:yvvvnY's..aputvvY• v:(n..:'w.YY.UOY:i.;m:ns(eA'.•.vynv..:n:.Y:fOY,n.n..i'.•.Y!<.Y.A'v..vn;r,.Ynv xx:.v.ui%n'A.FY:.:1n:iM:Y.K.%!xY!.•. v,.v .:..n:vv.v:[:nv.:.:.:.,v,.ryvi±n v}YYnnv,.Y}Y'.•:.Y:n}Yv. fOH �a�faxnr�to pay t'he,b�st��ss tali re �ired,by the prov�st�nsxo�ids'chapter pr��ir tai e p....i::.:r}pU.viY}Nl..KK.\n}•.Y:4:rv:....m,•nYY..Y:.....u.....w.:.:-:.:v:::..:...:.. y v.r vm z�elt�c�,ueni�da��,t1e.Drfe��x.o£ltttanee"shad atld a�enalt��;�'#a�nao�n#cel"tbtspe��altj� �)ial�"k��het lij�.xesoiut+�� i=_t3te Cily vNnet SECTION 2. Chapter 3.04, Section 3.04.080, Penalties and interest, is hereby amended to read as follows: 3.04.080 Fenaiiies and later-est ehapter-mithin the time required shall pay 4 penalty er- ten per-eent ef the ameent ef the in ..ddaten to the afneent of the ..... 7-6 !"� Frau1,d if tax d a r � ..tedetnt C� f Femittanee e to ameunt ef the tax shall be added thefete ift additien fe t-]�e penalties stated in subse A d D o f this s et;.,,, e { ieh the 'tt fi t b a deliii .e..t • ntil paid under the pr-evisiens of this seetieft shall beeefne a part ei the tk herein reVir-ed te be l 3:fl4 t1$fl>,I3elnque ce5 end Penaltae, ........... .....:...:...:.v.::: .:::.::::..:::n:,.::.::...:.::.n,,::.:::.v.; :{{:,:<.;:::.:>:n:.:A.{.,>:t:::.; t;:.;..::.;::.;.:.:.;:.:;< . Delinquency Any dpeator who falls'ib reT31�t tax tnaosed by thts chapter .................................................:.......::::::::::::::::::nv::..n::::.n..:..v.v:::.v.,..:nv::::!{i{.:.iii`y;.::n'ii`i: .iv.{.i:{{Jii::!{pH::,...1..:.:...:Miiii:i.;{{.::{.:.'!.i:liji!n....v:.... :{.i:":ii:.i:;iA� Within the tine re u;red shah a a enat the amount of rvhzcs wsli be set b resolutatrn :.....:f"w.. : P.v ..: Cl�?nCfliI�CI�3 $. Fraud. If the :tax adrnnist�'ator d�ter�ines that the n�onpay�ent gi'..ao . ernrttce dne ander this chapters due tb fraud; a �enalfy bf xwen#y f�ve`percent ofh :i<., :{ mot mf'the tax shall be added #hereifl tri addtt�on to the penalties restated 1n Stlbsect�z5rt .,:.:,..:.......... ...n:n�,.:n..:.w.. }�>� "tf�is<sectinz�f • G. Penalties Meredrft�Tax 'Y 1P p�palty ztnposec{ t1e the1. rsons Oti ".v:.u.:.v,.:,.:.n.::v.....-.v.:....::..:.�p..'v'.>.:v:S.:.i:.>::::v.::'i»:.>?:v:>>?1NJ�"%.::::':Y:'"::'<pe:vN#y�vi:w:•Y::.�. .n:v. sectt�m:s�all becozn�a past.ofths tai h��reln zei�uuecl n�.o be �ia�du SECTION 3. A summary of this ordinance, approved by the City Attorney, together with the ayes and noes, shall be published once in full, at least five (5) days prior to the final passage in the Telegram-Tribune, a newspaper published and circulated in said City, and the same shall go into effect July 1, 1993. O 7-6 INTRODUCED AND PASSED TO PRINT by the Council of the City of San Luis Obispo at its meeting held on the day of . 1993, on motion of seconded by - and on the following roll call voter AYES: NOES: ABSENT: Mayor Peg Pinard ATTEST: City Clerk Diane Gladwell APPROVED: At me J 7-17