HomeMy WebLinkAboutResolution 4481, eliminating the automatic clearing house incentive Commission Memorandum
REPORT TO: Honorable Mayor and City Commission
FROM: Anna Rosenberry, Administrative Services Director
SUBJECT: Resolution No. 4481 – ELIMINATING THE “AUTOMATIC CLEARING HOUSE (ACH) INCENTIVE” SECTION FROM RESOLUTION NO. 4454 –
RATES FOR WASTEWATER (SEWER) SERVICE, and RESOLUTION NO. 4327 - RATES
FOR WATER SERVICE, FOR THE CITY OF BOZEMAN.
MEETING DATE: October 14, 2013
AGENDA ITEM TYPE: Action
RECOMMENDATION: Adopt Resolution No. 4481.
BACKGROUND: For numerous years, the City’s water and wastewater fee resolutions have
contained an “ACH Incentive” whereby customers could sign-up with the City Finance office to
have an Automatic Clearing House (ACH) transaction processed for their monthly bill payment. If customers signed up for the service, they received a $1.00 credit on their bill each month.
At the time the program was initiated:
1. Electronic payments were not common. Most customers paid via monthly check
through the mail. 2. The only other methods of electronic payment, other than ACH, were Visa and
Mastercard transactions. Visa and Mastercard credit payments charged fees to the
City for processing. (Debit cards were not common.)
3. There were no banking fees charged to the City to process ACH payment files.
4. We did not have an internet payment portal for electronic payments.
In order to incentivize customer’s making ACH payments (vs. credit, check and cash payments),
customers were offered a $1.00 discount each month if they used the service. At the time the
City initiated the credit program, and the Finance office could easily distinguish our ACH customers from others using Visa or Mastercard payments and apply the credit to each account.
Today, we have approximately 2,400 customers (20%) using the service and receiving the credit.
(Out of 11,150 customers, total.) While these customers appreciate the $1 credit feature of the
program; they also enjoy the convenience of never having to initiate their utility monthly payment; the city initiates the payment processing each month. We are not proposing to discontinue this important service. We are just proposing to eliminate the $1 credit incentive.
Today, payment processing is very different than it was even 10 years ago.
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• We find it increasingly difficult to fairly apply the $1.00 ACH Incentive. We receive
some ACH payments from other bank bill-pay systems – and cannot easily or quickly
apply the ACH Incentive credit. Our own online payment portal cannot add the credit to customer accounts without someone in the Finance office being contacted to intervene.
• We don’t believe it is necessary any longer to incentivize use of electronic payment
forms – or one form over any other form.
1. Electronic payments are very common. We now receive approximately 4,700 transactions per month in some version of electronic payment—over 42% of our total payments.
2. In addition to signing up for our monthly ACH file, there are other methods where
customers can initiate numerous forms of electronic payment to us – through their
bank’s bill-pay system, through our online payment portal, by filling out the credit/debit card payment information on the back of the bill, or by calling in to City Hall with a credit or debit card for processing.
3. Banks now charge file processing fees for all types of electronic payments, including
our ACH transaction file.
We do not believe that discontinuing the credit will have a material effect on the number of electronic payment transactions we process. It will, however, save Finance staff time in trying to
administer the credit program.
UNRESOLVED ISSUES: None.
ALTERNATIVES: Continue to offer the credit for ACH transactions; Offer the credit for
only city-initiated ACH transactions; Other options, as discussed by the Commission.
FISCAL EFFECTS: Discontinuing the credit program would result in approximately $19,200 savings for the remainder of this fiscal year in the Water and Sewer Funds combined. Savings would be split 50/50: $9,600 in each fund.
Attachments: Resolution No. 4481 Report compiled on: October 5, 2013
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Page 1 of 2
COMMISSION RESOLUTION NO. 4481
A RESOLUTION OF THE CITY COMMISSION OF THE CITY OF BOZEMAN,
MONTANA, ELIMINATING THE “AUTOMATIC CLEARING HOUSE (ACH) INCENTIVE” SECTION FROM RESOLUTION NO. 4454 – RATES FOR WASTEWATER (SEWER) SERVICE, and RESOLUTION NO. 4327 - RATES FOR WATER SERVICE, FOR THE CITY OF BOZEMAN.
WHEREAS, at the time the City’s “ACH Incentive” section was adopted, the City’s banking agreements provided for no-cost processing of ACH payment
transactions. The current agreement for banking services requires the City to pay
processing fees for ACH payment transactions; and
WHEREAS, in the past, ACH payment transactions were the only form of electronic payment, making it easy to identify which customers should receive an ACH
INCENTIVE credit to their account (all those with electronic payments); and
WHEREAS, today, there are many different forms of electronic payments (ACH,
Visa, Mastercard, BillPay files, 3rd Party Payments, etc.) There is very little distinction or advantage to the City in “incentivizing”, receiving, or processing an ACH payment compared to any other of these methods; and
WHEREAS, the City Commission of the City of Bozeman, following notice and
public hearing removed the “ACH INCENTIVE” from the Rate Schedules for the City of Bozeman’s Wastewater Fund (Resolution No 4454) and Water Fund (Resolution No 4327.)
NOW, THEREFORE, BE IT RESOLVED by the City Commission of the City of
Bozeman, Montana, that Section 1
COMMISSION RESOLUTION NO. 4454 - A RESOLUTION OF THE CITY
COMMISSION OF THE CITY OF BOZEMAN, MONTANA, ESTABLISHING RATES FOR WASTEWATER (SEWER) SERVICE FOR THE CITY OF BOZEMAN, AND ADDING CHARGES FOR CATTAIL CREEK, LOYAL GARDENS, AND
NORTON RANCH LIFT STATIONS.
is hereby revised to remove:
Section 6– ACH Incentive
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Resolution 4481, Eliminating the ACH Incentive
Page 2 of 2
For those customers who choose the automatic clearing house (ACH) payment option, a
one dollar ($1.00) discount will be taken from the total utility bill (total of water, sewer,
garbage). Bills will be mailed by the first working day of the month; with the automatic payment being deducted on the 15th of the following month.
Section 2
COMMISSION RESOLUTION NO. 4327 - A RESOLUTION OF THE CITY
COMMISSION OF THE CITY OF BOZEMAN, MONTANA, ESTABLISHING RATES FOR WATER SERVICE FOR THE CITY OF BOZEMAN is hereby revised to
remove:
Section 5– ACH Incentive
For those customers who choose the automatic clearing house (ACH) payment option, a one dollar ($1.00) discount will be taken from the total utility bill (total of water, sewer,
garbage). Bills will be mailed by the first working day of the month; with the automatic
payment being deducted on the 15th of the following month.
PASSED AND ADOPTED by the City Commission of the City of Bozeman, Montana,
at a regular session thereof held on the 14th day of October, 2013; and effective
beginning with that billing period which will first appear on the November 2013 water
and wastewater billing.
________________________________________
Sean A. Becker
Mayor
ATTEST:
____________________________ Stacy Ulmen, CMC City Clerk
APPROVED AS TO FORM:
__________________________________________
Greg Sullivan
City Attorney
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