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Home My WebLink About2003-020 Interest Rate for Utility Service Deposits ORDINANCE NO 2003- 20 AN ORDINANCE relating to interest on deposits for utility service, and amending section 7.50 020 of the City of Yakima Municipal Code BE IT ORDAINED BY THE CITY OF YAKIMA. Section 1 Section 7.50 020 of the City of Yakima Municipal Code is hereby amended to read as follows "7.50.020 Deposits. A. Deposits Required. At the time of application for utility service the director of the department of finance and budget, hereafter called director, or his designee shall require an applicant for domestic water service, irrigation water, sanitary sewer service, refuse service or any single or combination of these services, who is someone other than the owner of the premises to be served, to deposit with the city of Yakima an amount of money to be held as security for the payment of all bills and claims for such utility service Such deposit shall be an amount equivalent to a four - month domestic water, irrigation water, sanitary sewer and refuse service charge at the premises based upon an average of the preceding twelve months An applicant, other than the owner of the premises to be served, shall make a deposit or satisfy the credit policy described in subsection B of this section before utility service will be furnished. The city may disconnect the customer's domestic water service for failure to pay a deposit when required pursuant to subsection C of this section. B Deposit Criteria. An applicant, who is someone other than the owner of the premises to be served shall make a money deposit with the city whenever the director or his designee determines there is a possibility of financial risk to the city through an extension of utility services. Such determination shall be made based upon the financial status or utility service record of a non -owner applicant and shall be based upon the following criteria. 1 The applicant had prior utility service with the city of Yakima during the previous twenty -four consecutive months and for at least twelve months during which service was rendered the applicant received no more than one suspension notice, or 2. The applicant gives to the director or his designee written proof of utility service in another jurisdiction for the same period as required in subsection B1 of this section with proof of a satisfactory payment record of the same level as required in subsection B1 of this section for the same twelve month period. Page 1 (lk)ord- finance- interest on utility deposits -pm The director or his designee may temporarily commence water service pending payment of a deposit or verification of deposit criteria. C. Customer Deposits A customer, other than the owner of the premises served, shall pay a deposit as provided in this section when the customer's water service has been disconnected for nonpayment twice in any twelve- month period, or the customer has filed for bankruptcy so as to have required the city of Yakima to file its proof of claim for utility services, except for Chapter 13 wage earner plans D Customer Hearing At least ten days prior to the termination of a customer's utility service for failure to pay a deposit where service has been established, the customer service manager or his designee shall mail a written notice to the customer at his mailing address shown on his application for utility service informing him of the date of termination of service, the reasons therefor and his right to a hearing before the customer service manager or his designee prior to such termination of utility service, in the event such a customer makes a request for hearing prior to the actual termination of utility service, the customer service manager or his designee shall conduct a hearing and notify the appellant, in writing, of the time, date, and place of such hearing Pending the outcome of such hearing, utility service shall not be suspended. The customer service manager or his designee may hold the hearing as provided herein at the same time as the hearing provided in Section 7 68 025 of the city of Yakima Municipal Code E. Deposits In Interest Account:, on Deposits The director shall place all deposits in an interest bearing account. Deposits shall bear simple interest at the rate for the one -year Treasury Constant Maturity as reported by the U.S Federal Reserve in Statistical Release H.15 on January 15 of the year in which the utility deposit was made. If January 15 is a non - business day, the City will use the rate reported on the next following business day The interest rate on said deposits shall be adjusted February 1 of each year in accordance with said Treasury Constant Maturity rate. A final bill for domestic water service, irrigation water service, sanitary sewer service, and/ or refuse service, as the case may be, shall be deducted from such deposit and accrued interest and any surplus, plus six percent simple received by the city including accrued interest, shall be paid refunded to the customer in accordance with subsection F F Refund of Deposit. A customer who has paid a deposit shall be entitled to receive a refund of such deposit, plus six percent simple accrued interest from the date the deposit was received by the city, at the discretion of the director or her /his designee or under the following circumstances. Page 2 (1k)ord- finance - interest on utility deposits -pm 1 The customer makes a written request to the customer services manager or his designee, 2. The customer proved his identity to the satisfaction of the customer services manager or his designee, and 3 The customer has achieved a twelve consecutive month or longer utility service history at the premises for which the deposit was made and during the previous twelve -month period he has received no more than one delinquency notice concerning which said utility service was and terminated." Section 2. This ordinance shall be in full force and effect 30 days after its passage, approval, and publication as provided by law and by the City Charter PASSED BY THE CITY COUNCIL, signed and approved this 15th day of April, 2003 IL; ATTEST ►.. ry Place, Mayor City Clerk Publication Date. 4 -18 -2003 Effective Date 5-18 -2003 Page 3 (1k)ord- tinance- interest on utility deposits -pm BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT Item No For Meeting Of: April 15, 2003 ITEM TITLE. An Ordinance changing the Yakima Municipal Code (YMC) relative to the Rate of Interest Paid on Utility Customer Deposits SUBMITTED BY Rita Anson, Finance Director Qua— Pete Hobbs, Utility Services Manager CONTACT PERSON/TELEPHONE. Pete Hobbs, Utility Services Manager; #575 -6080 Edna Pettyjohn, Accountant; #575 -6070 SUMMARY EXPLANATION. Background. Per YMC 7.50 020, the city requires, in certain circumstances, customers applying for utility service to provide a cash deposit before service will commence Additionally, if service has been disconnected for non - payment twice in any twelve -month period, and in certain bankruptcy situations, a deposit may be required to continue service The City currently pays 6% interest on all utility customer deposits, this interest rate was established in 1985 when interest rates in the market were much higher The City currently has approximately $200,000 in utility deposits on which it pays 6% interest or approximately $12,000 annually Proposal. The attached Ordinance, if approved by Council, would link the rate of interest paid by the City on utility deposits to the interest rate of the One -year Constant Maturing Treasury note (CMT) as of January 15th of each year The interest rate would be adjusted every February 1st based on the CMT rate as of the previous January 15th The interest paid would be calculated (and prorated, if applicable) based on a 365 day year Note: The CMT interest rate is the rate authorized by the Utilities and Transportation Commission (WUTC) for interest payments on customer deposits for the utilities they regulate. If approved, this ordinance would more closely tie the interest rate paid by the City to market rates by allowing the interest rate to move up and down with the market. Note. the January 15, 2003 CMT rate was 1.37% This proposed rate change would save the City approx. $5,400 in 2003 and an estimated 9,000 in 2004 and thereafter, based on current deposit levels and market conditions and would provide a reasonable market rate of return to customers on their deposits Resolution Ordinance X Other (Specify) Contract N/A Mail to (name and address) Phone Funding Source N/A APPPQVEDD FOR SUBMITTAL. City Manager STAFF RECOMMENDATION. Pass Ordinance BOARD /COMMISSION RECOMMENDATION COUNCIL ACTION Ordinance passed. ORDINANCE NO. 2003— 20 \ \ISNT \Users\ranson \Council Agenda Items \2003 \04 -15 -03 Agenda Stmt - Ordin. Custo Dep Util.Accts.doc