Item 7EAGENDA ITEM #7E
JULY 12, 2004
CITY OF ATLANTIC BEACH
`"° CITY COMMISSION MEETING
STAFF REPORT
'"~ AGENDA ITEM: Elimination of interest on customer deposits, Section 22-
27.1.(b) Utility Deposits.
SUBMITTED BY: Nelson Van Liere, Finance Director
DATE: June 20, 2004
BACKGROUND: For many yeazs, the City has paid three percent interest on
customer deposits while earning much more than that.
Over the past few yeazs, interest rates have drastically
declined and it is no longer in the best interest of the City to
continue to pay interest on customer deposits. Now that the
interest earned by the City on customer's deposits is less
than what we pay, the City is losing money. It is for this
reason that I recommend the elimination of the payment of
interest altogether.
The residential deposit amount is $125.00 and is to be paid
,,, interest at 3% per year if the customer maintains a good
payment history for two years. That is $3.75. At the same
time, the City is earning only 1.20%, which equates to
~,, $1.50 for the same period. The City pays out $2.25 more
than it earns. The remaining $1.50 is hardly enough to be
worth the effort of maintaining a customer deposit balance.
The section of the City Code to be amended is as follows:
Sec. 22-27.1. Utility deposits.
(b) The deposit of any customer shall be refunded
~°~* ~-r~e~-ofPerceat-p~.ta after
twenty-four (24) months from the date of deposit, provided
the customer is current in all payments and has timely made
all payments during the preceding twenty-four (24) months.
If any customer becomes delinquent in payments after his
deposit has been refunded pursuant to this section, the city
may require an additional deposit for service to continue.
RECOMMENDATION: That the City Commission~request staff to prepare an
amendment to Chapter 22, Sec.22-27.1(b) of the City Code
~"" of Ordinances to eliminate the payment of interest on
customer deposits.
"" REVIEWED BY CITY MAN +
e•
ORDINANCE 80-04-68
AN ORDINANCE AMENDING CHAPTER 22 UTILITIES,
ARTICLE II WATERWORKS SYSTEM, SECTION 22-27.1
UTILITY DEPOSITS PARAGRAPH (B) DELETING REFERENCE
TO THE PAYMENT OF INTEREST ON CUSTOMER DEPOSITS
!~" AND TO PROVIDE AN EFFECTIVE DATE
AGENDA ITEM #7E
JULY 12, 2004
WHEREAS; The City has paid three (3) percent interest on utility deposits over
the years, and
WHEREAS; the City earns less than three (3) percent interest on those same
invested funds resulting in a net loss to the City to hold the deposits, and
WHEREAS; the City has determined that it is in its best interest to eliminate
interest on deposits.
NOW, THEREFORE, BE IT ENACTED BY THE CITY COMMISSION
ON BEHALF OF THE PEOPLE OF THE CITY OF ATLANTIC BEACH,
FLORIDA, that;
Section 1. Chapter 22 of the City Code of Ordinances be amended as
follows:
(b) The deposit of any customer shall be refunded ~~~+'' ~-~+°-~°°+ °+ .~,° ,.°+° °~
after twenty-four (24) months from the date of
deposit, provided the customer is current in all payments and has timely
made all payments during the preceding twenty-four (24) months. If any
customer becomes delinquent in payments after his deposit has been
refunded pursuant to this section, the city may require an additional
deposit for service to continue.
Section 2. This ordinance shall take effect immediately upon its adoption.
Passed by the City Commission on first reading this day of July, 2004.
Passed by the City Commission on second and final reading this day of July, 2004.
Approved as to form and correctness:
John S. Meserve
~ Mayor /Presiding Officer
Alan C. Jensen, Esquire
City Attorney
ATTEST:
~ Maureen King, CMC
City Clerk