HomeMy WebLinkAbout03/03/1992, C-3 - FINAL PASSAGE OF ORDINANCE NO. 1204 REVISING REQUIREMENTS FOR INITIATING AND DISCONTINUING WATER SERVICE AND ACCEPTING CREDIT CARDS FOR PAYMENT OF CITY SERVICES Illll^I�IIII�II�IIIIII I MEETING GATE:
I �pc�� o� San tins OBISp0 03-03-92
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COUNCIL AGENDA REPORT ITEM NUMBER
C-3
FROM: William C. Statler, Director of Finance
Prepared by: Linda Asprion, Revenue Manager �� "
Alison Lloyd, Interim Customer Services Supervisor �xWV' U°
SUBJECT: FINAL PASSAGE OF ORDINANCE NO. 1204 REVISING
REQUIREMENTS FOR INITIATING AND DISCONTINUING WATER
SERVICE AND ACCEPTING CREDIT CARDS FOR PAYMENT OF
CTTY SERVICES
CAO RECOMMENDATION
Give final passage to Ordinance No. 1204.
BACKGROUND
At its meeting of Tuesday, February 18, 1992, the City Council took action on a 5-0 vote
to introduce Ordinance No. 1204 to print and adopted Resolution No. 7080 setting forth
requirements for initiation and discontinuation for water service within the City of San
Luis Obispo, accepting credit cards for payment of City services, and establishing a
reconnection fee and refundable deposit requirements. The agenda report from that
meeting is attached. Public testimony was received and staff recommends that Council
give final passage to the Ordinance.
ATTACHMENTS:
I
Customer Service Pilot Programs Original Agenda Report from 2-18-92
Ordinance No. 1204
Resolution No. 7080
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COUNCIL AGENDA REPORT ITEM NUMBER:
FROM: William C. Statler, Director of Finance
Prepared by: Linda Asprion, Revenue Manager.
Alison Lloyd, Interim Customer Servi es SupervisoMkc'���
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SUBJECT: CUSTOMER SERVICE PILOT PROGRAMS
CAO RECOMMENDATION
Approve implementation of two pilot programs for a period of six months to improve
customer service by:
■ Enabling water service to be initiated or discontinued by telephone and eliminating
the $25 refundable deposit requirement for all accounts.
■ Allowing Community Development, Finance, and Recreation Departments to accept
credit cards for payment of City services.
In order to implement these pilot programs, the following Council actions are required:
■ Introduce an ordinance establishing revised requirements for initiating and
discontinuing water service. _
■ Adopt a resolution establishing revised reconnection fees and refundable deposit
requirements to be effective April 6, 1992.
REPORT-IN-BRIEF
At the Council's December 5, 1990 goal setting meeting, it was decided that a key program j
objective for 1991-93 would continue to be a Public Relations/Public Information Program
to assist the City in better meeting the service expectations and needs of our citizens. This
pilot program proposal is a direct result of this Council objective. The two pilot programs
will run simultaneously for a six month period beginning April 6, 1992 and ending
September 30, 1992.
These pilot programs are experimental and the results cannot be predicted. As such,
success is not guaranteed. However, staff is optimistic that these programs will contribute
toward streamlining existing procedures in keeping with the City's program objective of
continuous improvement in the area of customer service. The two pilots will be structured
in a manner to obtain as much informational data as possible so that the programs can be
objectively evaluated and appropriate recommendations presented to Council regarding
their continuation.
DISCUSSION
Background
At their goal-setting meeting on December 5, 1990, the Council determined that a Public
Relations/Public Information Program to better meet the expectations and needs of our
citizens would continue to be a key program objective during 1991-93. As such, the City
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WMIGn COUNCIL AGENDA REPORT
has been involved in a number of activities to expand and enhance our current program.
Among these activities has been the development of a Customer Relations Program to
achieve the City's goal of continuous improvement in the area of customer services.
To facilitate this process, last summer the Finance Department worked with a customer
services trainer to streamline our procedures to make them more "user friendly" and
become more responsive to customer questions and concerns. The pilot programs that are
being recommended in this report have been developed to meet these objectives.
Pilot Program #1: Water Service by Telephone and Elimination of Refundable Deposit
In August of 1991, the customer services trainer reviewed the daily operations of the
Finance Department. The review was followed by a discussion with her and the Finance
staff on positive ways to address customer concerns. Two issues identified during the
discussion were customer dissatisfaction with not being able to initiate or discontinue water
service by telephone, and the $25 refundable deposit requirement to start service. Staff
estimates that approximately 25% of customer complaints received in the Finance
Department concern these two issues. As a result of this discussion, a Task Force was
formed, consisting of our "front-line" customer service employees, to review current
procedures and research the ramifications of making these changes. Their findings and
recommendations are discussed below.
Review Performed by Task Force
The Finance Department processes over 7,000 requests annually to initiate and discontinue
water service. In reviewing the Finance Department's current procedures, the Task Force
found that the City's Municipal Code, Section 13.04.030 (A) requires applicants who want
to initiate water service to "sign an application form or make application by letter showing
the date of application, location of premises served, mailing address, date applicant desires
service, and other information as required." Additionally, the Finance Department requires
a drivers license number and place of employment to assist in collection procedures for
customers who default on payments and have relocated. As such, the City's current
procedures require customers who want to initiate or discontinue water service to provide
written proof that they are assuming responsibility for payment of this service. Although
this could be accomplished through the mail, normally this is obtained by customers coming
to City Hall to sign-up for service.
In addition to the written verification requirements, the City's current procedure charges
customers a $25 refundable deposit in accordance with the provisions of Section 13.04.030
(B) of the City Municipal Code and Resolution No. 6447 (Amending Water Service Rates).
The original intent of the deposit requirement was to retain the $25 until a customer
established satisfactory' credit with the City. In actual practice, the deposit is used to offset
a remaining balance on a closed account or is credited to the customer's account after one
year of established credit history.
■ Surveys of Other Cities and Utility Companies
Once the Task Force completed its review of the City's current procedures, a survey
of all cities and four private utility companies in San Luis Obispo County as well
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COUNCIL AGENDA REPORT
as three college cities (Chico, Santa Barbara, and Santa Cruz) was conducted. The
survey asked questions regarding initiation and discontinuation procedures for
water/utility services and deposit requirements. The results of the survey indicated
that of the twelve agencies contacted, only two (Morro Bay and Paso Robles) require
customers to come into the agency or send documentation to provide original
signatures for service. The other ten agencies allow service to be initiated or
discontinued by telephone. Additionally, the survey results showed that other
agencies require deposits only from renters and customers who may be a potential
credit risk. However, in all agencies contacted, a significant reconnection fee is
charged when service is shut-off due to non-payment.
■ Further Research Activities
In addition to surveying other cities and utility companies, the Task Force contacted
the City's collection agency to determine if initiating or discontinuing water service
by telephone would negatively impact their ability to recover monies for defaulted
payments. The collection agency indicated the procedural change of not obtaining
a signature from the person assuming responsibility for the account would not impact
their collection abilities.
An analysis was also performed on customer accounts which were turned over to the
City's collection agency for nonpayment during the period of March - December
1991. Of the 333 accounts totaling $47,300, the $25 deposit had been refunded on
113 accounts due to good credit history being established. On the remaining 168
accounts, the deposit was used to offset the outstanding balance prior to being turned
over to the collection agency. The total of these remaining accounts was $30,800
for an average account balance of $180. This information indicates that the $25
deposit requirement is not sufficient in the majority of cases to negate the City's loss
if a customer defaults on payment and relocates.
■ What is the Disadvantage of this Pilot Program?
By implementing the pilot program and allowing initiation and discontinuation of
water service over the phone, there is the possibility that some individuals will
intentionally provide incorrect names or billing addresses in order to avoid
responsibility for subsequent billings, or have another customer's water service
discontinued as a "practical joke". This argument has been one reason why original
signatures of individuals responsible for water service have been historically required.
In discussion with other college cities, they have indicated that incorrect information
has not been a problem - but the realization that there is the potential for these
types difficulties is one reason staff is proposing a pilot program.
■ Recommendation
Based upon their research, the Task Force concluded that changing the City's current
procedures with respect to initiating and discontinuing water service would
significantly improve service to our customers. In addition to providing better and
more convenient customer services, it is anticipated that allowing water users to
initiate or discontinue water service by telephone would reduce the number of"walk-
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MOrms COUNCIL AGENDA REPORT
in" customers, perhaps resulting in reduced vehicle trips for this purpose.
Additionally, eliminating the $25 refundable deposit to initiate service would save
the City administrative costs associated with collection and refunds. Deposit
elimination would also serve to benefit customers who move within the City or own
more than one property. Currently a deposit is charged each time a customer moves
or for each property that is owned.
Accordingly, Staff is recommending the requirement for all water service customers
to provide a deposit be eliminated. However, staff also recommends that if a
customer's water service is shut-off due to nonpayment, that a reconnection fee in
the amount of $40.00 be imposed. This reconnection fee is based upon the actual
cost (including personnel, materials, and equipment for both the Utilities and the
Finance Departments) to the City for disccmnecting and reconnecting water service.
Additionally, staff recommends that customers whose water is shut-off due to
nonpayment be required to pay a refundable deposit. This deposit would be the
same for all residential customers and is based on an average bi-monthly water bill
for 22 units of water, or approximately $90.00. For non-residential customers the
refundable deposit would be based upon meter size and the water usage equivalency.
The proposed refundable deposits would be as follows:
Unit Type/Meter Size Service Units Refundable Deposit
Al] Residential Units 1.00
1" Meter 2.00 $ 180.00
1 1/2" Meter 4.00 $ 360.00
2" Meter 6.40 $ 576.00
3" Meter 14.00 $1,260.00
4" Meter 22.00 $1,980.00
6" Meter 45.00 $4,050.00
Therefore, customers who have their water shut-off for nonpayment would be
required to pay the $40.00 reconnection fee plus the refundable deposit prior to
having water restored. The refundable deposit would be returned to the customer
after one year of good credit history or on a closed account. If the customer was a
repeat offender, the deposit would be used to offset the account balance and the
customer would be required to reinstate the refundable deposit.
It should be noted that if a customer contacts staff prior to shut-off, payment
arrangements will be made with the customer so that any reconnection fee or deposit
requirements can be avoided.
Implementation of the Pilot Program
Although it is impossible to predict at this time whether allowing customers to initiate or
discontinue water service by telephone and eliminating the deposit requirement will result
in a more efficient and "user friendly' procedure, staff has developed a plan of
implementation designed to maximize the program's success. The key elements of this plan
are staffing, training, and equipment.
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COUNCIL AGENDA REPORT
Starting. At this time, we believe that the staff savings by reducing the number of over-
the-counter customer contacts will offset the increased time required to take service
requests over the phone. However, one of the key reasons for conducting a pilot program
is to confirm our cost benefit assumptions.
During this pilot program, over-the-phone service requests will be handled by the Water
Conservation Staff. There are two key reasons for this:
■ The Water Conservation staff is currently the initial contact with the public
regarding water service questions.
■ The majority of customers who initiate water service also request information
regarding the City's mandatory water conservation program.
This approach during the pilot program will allow water conservation to provide a full
service package to all new customers when initiating water service. The Finance
Department will work closely with the water conservation office to monitor the number
of water service requests received and the time involved in handling each request.
Equipment. With the exception of an additional telephone line, the equipment necessary
to meet the needs of the pilot program is currently available in the Water Conservation
Office and Finance Department. The estimated cost to install the additional telephone line
is $100 with a $15.50 monthly service charge.
Training. In-house training sessions will be held prior to the start of the program which
is anticipated for April 6, 1992. The program will continue through September 30, 1992.
At the end of this six-month period, the program will be formally evaluated and a
recommendation will be presented for Council's consideration. It should be noted that the
time frame of the program was selected to correspond to the influx of Cal Poly students
who directly impact the volume of water service requests processed.
Pilot Program #2: Acceptance of Credit Cards
During the discussion with Ms. Jackman, staff proposed the possibility of accepting credit
cards for payment of City services. To determine the feasibility of implementing this
change in current City procedures, a second Task Force, also consisting of front-line
employees, was formed.
Review Performed by Task Force
The Task Force found that establishing a credit card program for the City would be
relatively easy and inexpensive to implement. Each participating department would need
an additional telephone line for use in obtaining approvals from the credit card company.
The cost to install the extra phone line would be approximately $100 with an additional
monthly service fee of $15.50. In addition, there would be a one time set-up fee of $50 for
each participating department which includes the cost of the credit card equipment, and an
approximate monthly fee of $55.
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COUNCIL AGENDA REPORT
It should be noted that the monthly fee will vary depending upon credit card usage. The
credit card companies charge 3.3% of the total monthly revenue received by credit card.
Accordingly, as more customers use a credit card for payment, the higher the fees.
However, it is anticipated that the use of credit cards will reduce the number of bad checks,
the number of City accounts that are turned over to the Collection Agency, and the number
of water service shut-offs that are due to nonpayment. Accordingly, the administrative costs
of these services will be greatly reduced which will off-set a portion of the fee paid to the
bank for processing services.
■ City Department Participation
On November 5, 1991, the Finance Department met with the Recreation, Public
Works, Police, and Community Development Departments to discuss the Task Force
findings and determine other City Departments interest in participating in a six
month pilot program. The Community Development and Recreation Departments
indicated that they are most anxious to begin participation in the program as many
of their customers request to use credit cards for payment. While not all City
departments will be participating in the pilot program, there will be consistency of
credit card acceptance within City Hall for customers.
■ Recommendation
The Task Force concluded that establishing a credit card pilot program is relatively
easy and inexpensive. Based upon comments from other City departments, it appears
that some customers have requested credit card payment availability, and as such,
this pilot program will provide the City an opportunity to respond to citizen's
requests.
Implementation of Pilot Program
It is envisioned that this program would be implemented during the same time period as
the water service pilot program (April 6 - September 30, 1992). No additional staffing will
be needed to carry out the pilot credit card program. In-house training sessions on
equipment usage and procedural issues will be held prior to implementation of the program.
The program will be formally reviewed at the end of the six month period and a
recommendation will be presented for Council's consideration.
Why Are We Recommending Pilot Programs?
Based on feedback from our customers, we believe that these two program changes will
significantly improve service to our customers. However, we will not know what the costs
and benefits of making these changes will be until we try them. At the end of the trial
period, we will return to Council with a formal evaluation of the pilot program results,
including any. costs associated with continuing them on an ongoing basis.
�l������'��Ieill!IIIIII� Ildlll city of San LUIS OBISpo
001,01 COUNCIL AGENDA REPORT
FISCAL IMPACT
If the pilot program to eliminate the refundable deposit requirement and allow water
service to be initiated or discontinued by telephone is approved, the total cost of
implementation and operation during the six month period is estimated at $200. The total
cost to implement and operate the credit card pilot program during the same period of time
is estimated at $1,800 ($575 per department). Funding is available from ventures and
contingencies for these two programs.
ALTERNATIVES
There are three basic alternatives available to Council:
■ Approve only the water service pilot program.
Council could approve only the water service pilot program. However, establishing
a program of accepting credit cards for payment of City services is in keeping with
the ,City's objective to provide better customer service through streamlining
procedures. The credit card pilot program is easy to implement, and is estimated
to cost less than $300 per month to operate. Staff is optimistic that both pilot
programs will meet Council customer service objectives. As such, staff does not
recommend this alternative.
■ Approve only the credit card pilot program.
Council could approve only the credit card pilot program. However, as discussed
previously, approximately 25% of customer complaints received by the Finance
Department concern the City's procedures for initiating and discontinuing water
service and the $25 deposit requirement. Staff is optimistic that changing the City's
procedures to eliminate the deposit requirement and allow water service to be
initiated and discontinued over the phone will not only streamline procedures but
%gill also be perceived as "user friendly" by our customers. As such, staff does not
recommend this alternative.
■ Do not approve either of the pilot programs.
Both pilot programs were developed in response to the City's customer services
objectives for 1991-93. While both pilot programs are relatively easy and inexpensive
to implement, they also address customer service issues which have been highlighted
by citizens. Data from both pilot programs will be collected and presented to
Council with recommendations for any ongoing procedural changes. Accordingly,
staff does not recommend this alternative.
SUMMARY
The two pilot programs are experimental in nature and there are many unknowns. Success
is not guaranteed. However, in keeping with.the City's program objective of "continuous
improvement" in the area of customer services, staff is optimistic that these programs will
contribute toward streamlining our existing procedures to make them more "user friendly".
Staff will develop as much data as possible during the pilot period so the Council can
thoroughly evaluate the programs at their conclusion.
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Mi;% COUNCIL AGENDA REPORT
Attachments
1. Ordinance revising requirements for initiating and discontinuing water service.
2. Resolution establishing revised reconnection fees and refundable deposit
requirements.
I
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ORDINANCE NO. ]204 (1992 SERIES)
AN ORDINANCE OF THE CITY OF SAN LUIS OBISPO REPEALING
CHAPTER 13.04.030, APPLICATION FOR WATER SERVICE
FROM THE SAN LUIS OBISPO MUNICIPAL CODE AND ADDING
CHAPTER 13.04.030, INITIATION AND DISCONTINUATION REQUIREMENTS
FOR WATER SERVICE WITHIN THE CITY OF SAN LUIS OBISPO
WHEREAS, the City Council has held a hearing to consider proposed changes to
procedures for initiating and discontinuing water service in the City of San Luis Obispo;
and,
WHEREAS, the City Council has adopted improving customer services to be a key
objective for 1991-93; and,
WHEREAS, implementing streamlined water service request procedures will make
them more user friendly and enable staff to be more responsive to customer questions and
concerns;
NOW THEREFORE BE IT ORDAINED by the City Council of the City of San
Luis Obispo as follows:
SECTION 1. Chapter 13.04, Section 13.04.030, New Application - Deposit required
prior to initiation of service, is hereby deleted.
13.04.030 .
740 Each applicant fbi %%fttel- se,vice shall be reqtiired to sign an ppplication fonn provided
by the afflitim division a, make application by lette, showing the date of applictALIU11,
iocation of vieInises to be served, mailing address, date applicant desire$ seiviee, and
SECTION 2. A new Chapter 13.04.030 is hereby added to read as follows:
13 D3fl ]nitiat►on and Discontinuation of;Waker Service
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A tach cus>a ner ether inttiattng ,or discontinuing water service shalt;he requir.le
p:>ro , e;jnfoxinataop:accordng;to tbe gzocedureS.estabJtshed by,the.3irgctax.af Fiztance
Il,appiicarits for service rn4y be required #o eposrt an amount established from time
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. :Q tuna by resoluttori'of the council prior to initiation or restoration of water service;
0-1204
INTRODUCED AND PASSED TO PRINT by the Council of the City of San Luis
Obispo at its meeting held on the 18th day of February, 1992, on motion of
Councilwoman Rappa seconded by Councilman Reiss
and on the following roll call vote:
AYES: Councilmembers Pinard, Rappa, Reiss, Roalman and Mayor Dunin
NOES: None
ABSENT: None
MAYOR RON DUNIN
ATTEST:
CITY CLERK PAM VOGES
APPROVED:
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City dmini rative Officer
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Director of Finance
Director of Utilities
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RESOLUTION NO. 7080 (1992 SERIES)
AMENDING RESOLUTION NO. 6447, TO ESTABLISH A RECONNECTION FEE
AND REFUNDABLE DEPOSIT REQUIREMENTS
WHEREAS, Chapter 13.04.030 of the City of San Luis Obispo Municipal Code
provides that a deposit may be required prior to initiating water service and. allows such
deposit to be established by resolution; and
WHEREAS, Ordinance No. 1204 was introduced to print at the public hearing
held on this matter on February 18, 1992; and public notice was provided ten (10) days
prior to the public hearing; and
NOW, THEREFORE, the City Council of the City of San Luis Obispo finds and
resolves that:
A. A service restoration fee in the amount of $40.00 shall be established.
B. A refundable deposit shall be established for all accounts whose water has been
disconnected due to non-payment in the following amounts:
Unit Type/Meter Size Service Units Refundable Deposit
All Residential Units 1.00 $ 90.00
1" Meter 2.00 $ 180.00
1 1/2" Meter 4.00 $ 360.00
2" Meter 6.40 $ 576.00
3" Meter 14.00 $1,260.00
4" Meter 22.00 $1,980.00
6" Meter 45.00 $4,050.00
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R-7080
Upon motion of Comcilwoman Eopseconded by Cm=i1nm Reiss and on the following roll
call vote:
AYES: CL=ilmembers Pinard, Rappa, Reiss, Roal= and Mayor Amin
NOES: rime
ABSENT: None
the foregoing resolution is effective April. 6,: 1992.
Mayor Ron Dunin
ATTEST:
Pam Voges, City Clerk
APPROVED:
4VU49i 75L-
City Adr'm'nistratTve Offi er Director of Finance '
i Att me Director of Utilities
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