HomeMy WebLinkAboutTR-18-92 THE CORPORATION OF THE TOWN OF NEWCASTLE
REPORT
Meeting: File #
GENERAL PURPOSE & ADMINISTRATION COMMITTEE
Date: Res. #.
March 16, 1992 By-Law#
Report#: File#:
TR-18-92
Subject:
BANKING SERVICES
Recommendations:
It is respectfully recommended that the General Purpose and
Administration Committee recommend to Council the following:
1. That report TR-18-92 be received;
2 . That the contract for banking services for the Town of
Newcastle be awarded to the Bank of Nova Scotia;
3. That the contract be awarded for a three year term to
expire on December 31, 1994,
4. That the Town of Newcastle reserves the right to renew
the contract upon expiry, on a month by month basis for a
maximum period of one year with the rate of charges to be
adjusted in accordance with the prevailing Consumer Price
Index;
5. That taxes outstanding be payable in the following manner:
1) By mail to the Municipal Administration Centre
2) Through the mortgage companies
3) At any branch of the Bank of Nova Scotia within the
Region of Durham
6 . That Staff be authorized to pursue different means of tax
collection which might include direct access to customer
accounts for payment on a monthly basis for possible
introduction in 1993;
7 . That the Mayor and Clerk be authorized to sign all
appropriate documentation; and
8 . That the Bank of Nova Scotia be notified of Council's
decisions .
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TR-18-92 Page 2
Background:
1.0 Proposal Call:
1. 1 Report TR-51-91 in June 1991 advised Council that the
banking services would be advertised for renewal in the form
of a proposal call.
1.2 The proposal call was advertised and closed in December
1991.
1. 3 The banking services are currently on a month by month basis
with the Bank of Nova Scotia.
2.0 Results-
2 . 1 The review of the proposals has now been completed. The
results of the review have been provided under separate
cover.
2 .2 The Bank of Nova Scotia has submitted the lowest monthly fee
and the services provided for this fee are equal or better
than the nearest bidder. (ie line of credit) .
2 . 3 The level of service, and response time provided by the Bank
of Nova Scotia throughout the past contract has been very
good.
2 .4 The cost involved in transferring to another bank has not
been built into the calculations, however from past
experience, the cost is significant in terms of manpower
and overtime, and therefore this has been a consideration
in recommending that the Town retain the services provided
by the Bank of Nova Scotia.
3.0 Tax Payments-
3 . 1 The previous contract which awarded the banking services to
the Bank of Nova Scotia changed the method of payment of
taxes . The current year's tax payments were only payable at
the Town's Bank and were only payable at the Municipal
Offices by mail or if the taxes outstanding were for
prior years. It is Staff's opinion that this method was the
most cost efficient method of paying taxes and it also posed
less of a risk in terms of safety due to volume of cash
handled over the counter.
3 .2 The method of a ent above was c
p ym hanged through the
previously awarded contract such that all taxes (current
and prior years) are payable at the Municipal Administrative
Centre, and are also payable at most banks within the
Region of Durham.
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TR-18-92 Page 3
3 . 3 This method change in fact cost the municipality in terms of
lost interest because the payments made directly to the bank
were credited to the Town's account immediately. Under the
present method of payment there is a one or sometimes a two
day turnaround period before the monies collected either at
other banks or the Municipal Administrative Centre are
credited to the Town's account.
4.0 Cost to Municipality:
4 . 1 In 1991 the typical methods of payment during the peak
instalment periods were approximately as follows:
# Bills % Total
• Mortgage Company Payments 4,640 29 %
• Paid at all Banks 3,520 22 %
• Paid through mail 3,840 24 %
• Over the counter in person 4,000 25 %
Total 16,000 100 %
Seventy-five percent of all tax payments are made by
methods other than over the counter.
4 .2 The estimated additional cost to the Municipality
attributable to the method of payment of taxes can be
summarized in the following options:
Annual
Option 1: - Estimated cost attributable Estimate:
to payments made over the counter and
all banks within the Region:
47% of lost interest re: turn around
time $ 9,500
. Overtime cost to process over counter 3,000
. Security guard during instalments 1,000
. Courier Service 81000
Total $21,500
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Option 2: - Estimated cost if payments are made
only at Bank of Nova Scotia and over counter:
. 25% lost interest re: turn around time $ 5,000
. Overtime cost to process over counter 3,000
. Security Guard during instalments 1,000
. Courier Service 8,000
Total $17,000
Option 3: - Estimated cost if payments made j
only at the Bank of Nova Scotia and not over
the counter:
Lost Interest $ -
. Overtime Cost -
. Security Guard -
. Courier Service 4,000
Total $ 4,000
4.3 The above calculations assume that if the majority of the
cash were handled by the bank there would be the option of
having less than daily courier service.
4.4 Seventy-five percent of all tax payments are made by
methods other than over the counter. The tax bulletin
inserted with the interim tax bill which suggested that
there might be a change to the method of payment of taxes
over the counter generated a minimal number of complaints in
terms of the total number of tax bills issued. It is
therefore recommended that the current method of payment
over the counter be discontinued in an effort to respond to
the current state of the economy and to reduce the overall
cost to the Town and ultimately the taxpayer.
4.5 In an effort to reduce the lost interest associated with
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delay in deposits from other banks it is recommended that
taxes be payable only at any branch of the Bank of Nova
Scotia within the Region and not at any other bank.
4 .6 The option to pay taxes by mail or through mortgage
companies is not recommended for change at this time.
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4 . 7 Staff are investigating direct deposit payment into the
Town's bank account by the Mortgage Companies as another
method of reducing both the interest lost due to delay in
deposits and the amount of cash on hand.
4 . 8 The reduction of cash on hand resulting from the above
recommendations will also pose less of an audit security
and a safety risk to staff.
5.0 Direct Deposit:
5. 1 Direct monthly deposit from the taxpayer's account into the
Town's bank account has been investigated as an alternative
to quarterly instalments . However using the volume that is
currently paid through the banks, this is not a cost
efficient method at this time.
5.2 Staff would like to pursue this alternative in the form of a
questionnaire to be included with the final tax bill to
determine the interest in this method of payment. The cost
to process decreases with volume and if the interest is
significant this alternative could be implemented through
the current contract period. If this alternative were to
prove of interest to the public it would be implemented for
the 1993 tax year and thus any associated cost would be
reflected in the 1993 current budget.
6.0 Contract Term:
6 . 1 The extension to the contract on a month by month basis was
built into the proposal call and is intended to allow
flexibility due to the contract term coinciding with the
time of the next municipal election.
7.0 Conclusion:
7 . 1 It is recommended that the Bank of Nova Scotia continue
to provide the Banking services to the Town of Newcastle
and the proposal be accepted subject to the recommendations
contained in this report.
Respectfully submitted, Recommended for presentation
to the Committee,
Maa&fie A. Marano, H.BSc. , AMCT. Lawrence .VKotseff
Treasurer Chief A i istrative Officer
MAM/PP
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