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HomeMy WebLinkAboutTR-51-91 �r TOWN OF NEWCASTLE k REPORT Fi le #ro Lt n Res. # By-Law # MEETING: GENERAL PURPOSE & ADMINISTRATION COMMITTEE DATE: June 17, 1991 REPORT #: TR-51-91 FILE #: SUB,ECT: FINANCIAL (BANKING) SERVICES RECOMMENDATIONS: pectfully recommended that the General Purpose and Administration Committee recommend to Council the following: 1. That report TR-51-90 be received; 2. That the existing banking services contract with the Bank of Nova Scotia be extended on a month by month basis at the present consumer price index and that the Mayor and Clerk be authorized to execute any necessary agreements; 3. That Staff be authorized to call a tender as appropriate for. financial services to be put in place in January of 1992; 4. That the payroll services be removed from the financial services call; and; 5. That the payroll services remain with the Bank of Nova Scotia and continue on a calendar year basis and be reviewed on a separate basis from time to time . BACKGROUND & COMMENT: 1. The banking services contract was awarded to the Bank of Nova Scotia in 1988 through report TR-50-88. (copy of original report attached) 2. The services provided by the Bank of Nova Scotia are quite satisfactory, however there are a number of other issues with regard to the contract and the original report. These issues are identified as follows: i) The term of the contract is referred to in report TR-50-88 as a five year term effective August 1, 1988. However, the actual document submitted by the Bank of Nova Scotia to the Town refers to the contract as a period of three years from August 1, 1988 which would conclude August 1, 1991. They have included the option of extending the contract at the Town's option for a further two years at the consumer price index of the 4th and 5th years. ii) There was no tender call for the proposal, but selected institutions were asked to quote. This aspect requires review in respect to the restrictions of the existing Purchasing By-law. . ..2 ) A, TR-51-91 Page 2 iii) There is no OMB approval to extend beyond the current term of Council if in fact it was Council's original intention to award the contract for a five year term. iv) The timing of the contract, being an August 1st renewal date (regardless of the year) will always require commitment beyond the term of the existing Council. Recommendation #2, therefore is to change the timing to be on a calendar year basis. v) The payroll services change with the existing contract resulted in an extensive change to the processing of payroll. The masterfile listing and weekly adjustments are complicated and require continual monitoring. The system as it exists is working well but took the first two years of the contract to bring it to the successful stage that it is at now. It would be more cost efficient to continue with the existing system until due consideration has been given to moving to an alternate system, whether that be in house or an external more efficient processing system. The payroll portion of the contract requires daily contact and therefore it is more critical not to disrupt the normal operations mid way through the year. Tax implications of dual T-41s for two systems run in one year and excessive overtime to change over support maintenance of the existing system does not appear at this time to be reasonable. vi) The tax payments at the Municipal Administrative Centre as built into the current financial system cause loss of interest income due to the time delay from the receipt of payment until deposit. The cost was not factored into the previous proposal when it was recommended that the current taxes no longer be required to be paid at the bank only. 3. In consideration of the above, significant changes will necessarily be made to the proposal and given the time frame and the requirement to obtain OMB approval for any new contract, staff feel it is appropriate to review the entire contract and issue a tender call or selective bid requests as appropriate to coincide with the calendar year to extend for the term of the prevailing council. 4. This situation has been discussed with the Bank of Nova Scotia. They have no difficulty with the extension of the contract as described. Respectfully submitted, Recommended for presentation to the Committee, Marie A. Marano, H.BSc., A.M.C.T. , La rence Kotseff, Treasurer. Chief A i istrative Officer. MAM/pp ATTACHMENT: HANDOUT TOWN OF NEWCASTLE C J REPORT File #/0- ,::5 Res. CPA-40-ST By-Law # MEETING: GENERAL PURPOSE & ADMINISTRATION COMMITTEE DATE: June 20, 1988 REPORT #: TR-50-88 FILE #: SUB.IECT: FINANCIAL SERVICES TOWN OF NEWCASTLE RECOMMENDATIONS: It is respectfully recommended that the General Purpose and Administration Committee recommend to Council the following: 1. That report TR-50-88 be received "In Camera"; and 2. That the the proposal for providing banking services to the Town of Newcastle be awarded to the Bank of Nova Scotia, for a a period of five years effective August 1, 1988; . and 3. That staff be authorized to re-design the Tax Bills to conform with the standards and procedures established by the Canadian Banker's Association for interbank acceptance of 1989 and subsequent tax payments; and 4. That further to recommendation no. 3 above, staff be authorized to accept tax payments at the municipal offices in Bowmanville. BACKGROUND & COMMENTS: During budget deliberations staff indicated that the banking services currently being provided to the Town would be reviewed and a report made to committee. Staff have now completed this review and advise that proposals were sent to the following financial institutions: f � / 2 . . . 1 TR-50-88 Page 2 - Canadian Imperial Bank of Commerce - Royal Bank of Canada - Bank of Nova Scotia - Toronto Dominion Bank - Bank of Montreal Because of the confidentiality associated with these proposals, it would be appropriate to discuss same "in camera". The closing time for submission of proposals was Friday, May 27, 1988 and a response was received from all of the above financial institutions. It is my opinion that all institutions will be able to adequately serve our needs. I have attached a comparison of the proposed charges for our banking services as follows: Schedule I - General Banking Services - Compensation Requirements Schedule II - Payroll Banking Services - Compensation Requirements Schedule III - Municipal Tax Payments - Compensation Requirements 1987 Cost related to the above were as follows: -Schedule I (For account Activity) 1987 -$ 4,608 -Schedule II - Payroll 1987 $ 7,805 -Schedule III - Tax Payments 1987 $11,574 -Schedule IV - Summary of Proposals The above costs for tax payments can be eliminated by adopting recommendation no. 3 of this report. Further comments on Tax payments are found on schedule III to this report. If the reccommendation in the report is approved by Committee, staff will immediately arrange for the printing of general cheques to accommodate the change over. Respectfully submitted, Recommended for presentation to the Committee vJ.R. Blanchard, Lawrence E. Kotseff, Treasurer. Chief Administrative Officer. JRB/pp =`� GENERAL BANKING SERVICES COMPENSATION REQUIREMENTS Schedule I Account Activity Toronto Dominion C.I.B.C. Royal Nova Scotia Bank of Montrea. - Flat Monthly Fee $200 plus $4.00 $300 $415 $425 $485 or per returned -Int. free average monthly cheque - - $65,600 $66,000 $75,000 closing balances Fee includes following services: -Deposits to Accounts yes yes yes yes yes -Items deposited yes yes yes yes yes -Chargebacks no yes yes yes yes -Statements yes yes yes yes yes -Stop payments yes yes yes yes yes -Account transfers yes yes yes yes yes �r -Telephone transfers yes yes yes yes no -Netting accounts yes yes yes yes no -Balance Reporting yes yes yes yes no -Safety Deposit Box (1) yes no yes yes no -Credit Reports yes no yes yes no -Transit cash no no no yes no (Courier Service) -Coin & Currency Transactions yes yes yes yes no -Night Deposit wallets (5) yes no no yes no -Annual Audit Confirmations no no no yes no -Fee fixed for 3 years term yes yes yes yes no CONVERSION SUPPORT no n/a $415 $1,000 $1,455 PAYROLL BANKING SERVICES ' COMPENSATION REQUIREMENTS Schedule II Charges Toronto Dominion C.I.B.C. Royal Nova Scotia Bank of Montre -Salaried (106) $0.81 -Hourly (223) $ 0.89 $0.97 $1.17 $ 0.70 - -Report fee - per report $10.00 $20.00 $15.00 $10.00 - - year end reports $40.00 $20.00 $35.00 $10.00 - -new hires $ 1.19 $ 1.25 $ 1.25 $ 0.80 - -Record of Employment $ 1.00 $ 1.00 $ 1.25 $ 0.80 - -Term fixed no no no yes - Proposed Proposed Proposed Proposed Proposed ' Annual Cost Annual Cost Annual Cost Annual Cost Annual Cost Processing Costs (329 x rate) 293 302 385 230 - Payroll Reports (3) 60 60 45 30 - (excluding year end reports) 353 362 430 260 - Annualized (x 26 pays/year) 9178 9412 11180 6760 - Turnover (est. @ 10% annually - - - 56 -- Proposed annual cost 9178 9412 11180 6816 - NB: THE BANK OF MONTREAL DID NOT SUBMIT A COST SCHEDULE. Municipal Tax Payments Compensative Requirements Schedule III Currently arrangements are in place for the Town's tax bills to be paid only by mail at the municipal offices or in person at- any branch of the Canadian Imperial Bank of Commerce in the Region of Durham. Charges for this service were 25 cents per payment and subsequently increased to 40 cents per payment in 1986 to help defray increased costs in general and the use of additional tellers at peak tax payment times. All banks submitting a proposal recommend the Town consider extending the choice of where taxes may be paid i.e. in person or by mail at the municipal office and at any branch of any bank in Canada or within the Region. This would entail a redesign of the Town's tax bills to conform with the standards and procedures established for interbank acceptance. Many urban municipalities use this method of collecting taxes and based on 1987 costs, the Town's costs in bank fees could be reduced by about $11,000, if the fee burden is transferred to the rate payers. In addition, the Bank of Nova Scotia has confirmed that the monthly service cost of $425 will be reduced by $80-$120 per month if the above policy is adopted. In view of the costs being incurred, it is recommended that the Town institute a procedure for 1989 whereby all branches of local banks can accept current tax payments and to have the tax payer assume the responsibility for the bank processing fee of $1.00 per installment. In addition, payments will be accepted by mail or in person at the municipal offices. .Alternatively, the banks are prepared to accept tax payments at their respective branch within the region as per fee schedule indicated below. Charges for this service are at the expense of the Town of Newcastle. T.D. C.I.B.C. Royal Nova Scotia Montreal Tax Fee .47 .40 Nil .70 .95 Payments 28,935 28,935 28,935 28,935 28,935 Total Cost $13,599 $11,574 Nil $20,255 $27,488 Summary of Proposals Schedule IV Estimated Annual Banking Costs Monthly Charge 1988 1989 1990 Toronto Dominion General Banking $(235) $ 2,820 $ 2,820 $ 2,820 Payroll Service + $ 9,178 $ 9,728 $10,311 TOTAL $11,998 $12,548 $13,131 Canadian Imperial Bank of Commerce General Banking $(300) $ 3,600 $ 3,600 $ 3,600 Payroll Service $ 9,412 $ 9,412 $ 9,412 TOTAL $13,012 $13,012 $13,012 Royal Bank General Banking $(415) $ 4,980 $ 4,980 $ 4,980 Payroll Service $11,180 $11,180 $11,180 TOTAL $16,160 $16,160 $16,160 Bank of Nova Scotia General Banking $(425) $ 5,100 $ 5,100 $ 5,100 Payroll Service $ 61816 $ 6,816 $ 6,816 TOTAL * $11,916 $11,916 $11,916 Bank of Montreal General Banking $(485) $ 5,820 $ 6,111 $ 6,417 Payroll Service Unavailable TOTAL + Toronto Dominion Bank has confirmed payroll costs will remain firm for a six month period only. Any increase or decrease in unit cost will be passed on to the Town. * The Bank of Nova Scotia is prepared to extend the term to five years with price increases at the Consumer Price Index in the 4th and 5th years.