ADMINISTRATIVE REPORT
Date: May 26, 1995
TO: Vancouver City Council
FROM: Director of Finance, in consultation with the Director
of Legal Services, the Chief Constable and the General
Manager of Engineering Services
SUBJECT: Change in Voluntary Payment System - By-Law Fines
RECOMMENDATION
A. THAT the system of two-tier voluntary payments under
Street and Traffic By-law #2849 and the Meter By-law
#2952, as detailed in this report, be approved,
including the changes in the level of voluntary
payments to reflect inflationary increases.
B. THAT the Director of Legal Services submit by-laws for
approval of Council reflecting these changes.
C. THAT the facility for payment by debit card and by
credit card using the telephone or the mail be
approved, at a cost of $25,000 and that funding be
approved from higher fine revenues.
D. THAT the use of an outside contractor be approved for
telephone follow-up on outstanding bylaw fines, as
detailed in this report, with details of procedures,
funding requirements, and tendering for a contract be
reported back for approval by Council.
GENERAL MANAGER'S COMMENTS
The General Manager of Corporate Services RECOMMENDS
approval of the foregoing.
COUNCIL POLICY
The City utilizes voluntary payments and the imposition of fines
under its Street and Traffic and Meters by-laws, in order to
enforce the provisions of those by-laws. At present, there is a
three-tiered penalty system.SUMMARY
This report proposes some significant changes in the voluntary
payment structure for City parking and traffic by-law fines, the
manner in which payments can be made, and the follow-up
procedures to ensure collection of outstanding voluntary
payments. These proposals are driven by the expectation of
increasing City revenues as well as improving customer service
for payment of voluntary payments.
The existing three-tier structure, with payment amounts
increasing at day 10 and day 50 would be replaced with a two-tier
structure with payment amounts increasing at day 35. This change
will remedy some of the confusion and problems associated with
payments around day 10, as well as providing greater incentive to
resolve the voluntary payment within the first thirty-four days.
The level of voluntary payments are proposed to be increased, to
reflect the inflation changes since voluntary payments were last
set in 1991, in order to maintain revenues and maintain the level
of incentive regarding by-law violations.
To increase the level of customer service associated with making
payments, it is proposed to introduce the facility to pay by
phone, or mail, charging the payment against the customer s
credit card. For those persons paying in person at City Hall,
debit card facilities will be introduced.
To achieve greater collections on by-law fines, it is proposed to
supplement existing collection procedures with the use of an
outside contractor for telephone follow-up on outstanding
voluntary payments.
PURPOSE
This report identifies several changes in the City parking and
traffic by-law fines processes which will be re-designed over the
next few months. Council approval of these changes is requested.
BACKGROUND
The City presently administers a 3-tier voluntary payment system,
with amounts increasing at 10 and 50 days after issuance. The
last increase in voluntary payment amounts was approved by
Council for implementation on May 1, 1991.The City's current
voluntary payment structure for Meter By-Law #2952 and Street and
Traffic By-Law #2849, is shown in the table below.
Voluntary Payment Amount
Violation Notice after Summons after
Notice 10 Calendar Days 50 Calendar
Days
Meter/Overtime $ 15 $ 20 $ 30
Prohibited Parking/ $ 25 $ 35 $ 50
Stopping
The current procedures for resolution of tickets are as follows:
- Up to 10 days, the alleged offender can pay the initial
prescribed amount.
- After 10 days, the amount is increased, and a notice is
automatically generated and sent to the registered owner.
Only the increased amount will be accepted after 10 days.
- After 50 days, a summons is automatically generated by the
system and mailed/served to the registered owner, requesting
that they either pay or have the charge transferred to the
courts by a "returnable date", usually 30 days after.
- During any time the alleged offender can challenge the
ticket by setting a trial date; the penalty is then
determined by the court.
DISCUSSION
1. System of two-tier Voluntary Payment
Moving to a 2-tier voluntary payment system is a recommendation
from the Finance Department Treasury re-engineering team in
response to issues raised during customer interviews, and the
team's examination of successful practices employed by other
cities. The team's findings are as follows:
- Customers are confused regarding the correct amount to pay,
particularly at the 10-day increase step. This results in
processing bottlenecks and high administrative costs at the
By-Law Fines Branch and Parking Enforcement Branch.
- 33% of a Clerk I position at the By-Law Fines Branch is
utilized returning approximately 30,000 payments
annually. Most of the returns are regarding payment at
the 10-day step, and most because of the incorrect
amount being paid. - Customer disputes as to
whether the correct amount has been paid
are frequent and time-consuming. A
common complaint is that the mail
service makes the cheque late, forcing
its return and imposing a higher
voluntary payment.
- Accordingly, the 2-tier system recommends the elimination of
the 10-day voluntary payment increase. It is suggested,
however, that a reminder notice continue to be sent after 10
days, to ensure that customers receive notice prior to the
summons stage. This reminder notice would also address the
instances where parking tickets are removed from windshields
by people walking by or where tickets are blown off the
vehicle. As such, the 10-day notice may be the first notice
for some customers.
- In order to resolve the violation at an early stage, the 2-
tier system proposes that the summons issuance and final
voluntary payment increase be at 35 days, rather than the
present 50 days. The City Law Department and the Provincial
Court Administration both support the concept of bringing
offenders before the courts in a more timely manner.
Additionally, it is felt that giving customers 34 days to
pay before imposing penalties is more in keeping with normal
bills, such as utilities.
Therefore, the main feature of the proposed two-tier voluntary
payment system is that the initial level of voluntary payment
would remain constant for the first thirty-four days, and then
increase twofold. The notification to alleged offenders would
continue to involve three stages, as follows:
- violation notice of voluntary payment,
- a notice without increase at the 10 day stage, and
- issuance of a summons at the 35 day stage
2-tier systems have been successfully adopted in cities such as
Burnaby, Saskatoon, Seattle and Chicago. Conversely, the City of
Toronto went with a 4-tier system, and reports that the system
has proved cumbersome and confusing.
In addition to structuring the payment system so that it provides
a strong incentive to pay outstanding tickets, other cities have
adopted such incentives as vehicle liens, registration holdback,
towing of vehicles, and legislated 'deemed' conviction status for
violators. While none of these incentives is available to the
City at the present time, they will be investigated and if
appropriate, reported separately.2. Proposed Increase in Level
of Voluntary Payments
The present voluntary payment fine levels were implemented by the
City on May 1, 1991. Since that time, the consumer price index
has risen by 16.8%. Therefore, the present fine levels have not
maintained pace with inflation and accordingly, their deterrent
value has diminished. Accordingly, the base level payments are
proposed to be increased from $15/$25 to $20/$30.
In conjunction with the move to a 2-tier system of voluntary
payments, it is proposed that the system of timed increases in
the voluntary payment amounts be changed. The current system of
$5 to $15 increases from the base amount are considered an
insufficient incentive for early resolution of the ticket. A
twofold increase at the second tier stage will create a somewhat
greater incentive to address and resolve the payment earlier.
The proposed twofold increase after 34 days will:
- be a strong incentive for alleged offenders to avoid
the summons stage;
- offset the costs of the summons stage;
- be comparable with the Provincial parking violation
penalty system. Pursuant to the Motor Vehicle Act,
the voluntary payment for Prohibited Parking/Stopping
is $35, $50, or $75 depending on the specific section
of the Act.
In total, it is recommended that we adjust the level of voluntary
payments to reflect inflationary effects as follows:
Violation After 10 Days Summons
Notice Notice Only (35 Days)
Meter/Overtime $ 20 -- $ 40
Prohibited Parking/ $ 30 -- $ 60
3. Introduction of Other Payment Options
The complications of the 3-tier system and the 10-day increase
step, as previously outlined, have prevented the use of banking
institutions for processing payments. Not only would it be
difficult for bank employees to determine the correct amount, but
delays in paid ticket data from banks would increase the number
of erroneous 10-day voluntary payment increase notices.&
Eliminating the 10-day increase will allow the introduction of
bank services so that voluntary payments could be made at banks
(at branches or through banking machines). The increased use of
bank services in the Treasury Division is a major re-engineering
recommendation which will be explored further and reported back
to Council at a future date.
This report proposes and requests Council approval to provide our
customers with the additional payment options using:
- a debit card payment system at City Hall;
- a credit card payment by mail;
- payment by phone, charging the payment against the
customer s credit card.
The payment by telephone system will be developed in-house by
Information Services. Hardware, software, and development costs
will total $25,000. It is proposed to fund this from the fine
revenues on the basis that this system will assist the payment
process and will result in a greater level of voluntary payments.
Some of the benefits are:
Guaranteed funds/better cashflow
- Settlement to the City's bank account occurs on the same
business day.
- Less room for clerical error, so improved cash management.
Reduced costs
- Less cash handling and associated security considerations,
such as cash shortages/overages and theft.
- Fewer cheques to handle, including expensive NSF collection
time. Bad cheque losses are reduced.
Improved customer service
- Convenience since it is an additional payment option.
- Electronic transfer of funds from the cardholder's account
to the City of Vancouver account saves the customer the
hassle of writing a cheque or carrying the cash (reduces
risk of cash loss and theft).4. Use of Outside Contractor
for Follow-up on Outstanding
Voluntary Payments
The current collection procedure for by-law fines involves the
mailing of reminder notices at day 10 followed up by a summons
(either personally serviced, or mailed). While these processes
are reasonably successful, the volume of unpaid tickets is too
great for staff to be as effective as they would wish. At
present, the uncollected by-law violation payments exceed $1.5
million, annually. In this light, and recognizing that other
governments are utilizing other follow-up procedures, it appears
prudent for the City to seek to supplement existing practices by
employing an outside contractor to assist in the process.
The details of how an outside contractor might be effectively
employed would have to be explored with potential bidders. There
is the potential , in this stage of the process, to establish
telephone contact with the alleged offender to determine if there
are questions regarding the outstanding voluntary payment and the
process to appeal it, to inform the person about options on how
payment might be made, and to inform on subsequent follow-up
procedures which the City will pursue, including issuance of a
summons. The benefits projected from this step would include
having personal contact with the alleged offender (as opposed to
simply mailed notices), and hopefully generating higher
collections.
At this point, approval in principle is requested from Council,
with the details of the services to be provided and the
remuneration to be reported back prior to tendering for this
service.
For those offenders who have a fine imposed by the Court (or fail
to attend a scheduled appearance), and still do not pay, the Law
Department currently pursues payment, utilizing Small Debts
Court, where appropriate. Staff are also exploring the use of a
collection agency to facilitate this work.
FINANCIAL IMPLICATIONS
It is anticipated that the change in the voluntary payment
structure will generate additional revenue to the City, but the
magnitude will depend on the customers' response as well as other
complementary actions to facilitate and enforce payment. The
results will be reported to Council in the annual Operating
Budget, in the year following implementation.The costs of
implementing the changes to the By-law Fines Voluntary Payment
System will be:
- advertising cost, to inform the public of the changes;
- the cost of re-designing and printing the ticket;
- the cost of re-programming the cash registers and computer
databases to accommodate the 2-tier structure and the
changes in the level of voluntary payment;
- the cost of a debit/credit card payment facility.
These costs with the exception of the debit/credit card facility
will be accommodated within the departmental budget.
IMPLEMENTATION
Implementation will require a fair amount of changes in systems,
printing, negotiating with contractors and advertising of the
changes. The actual implementation date will be determined by
staff and reported back to Council at the time of approval of the
by-laws.
CONCLUSION
The City's move to a 2-tier voluntary payment system will mean
that violators of parking regulations will find it easier to
understand and pay, and will receive better customer service.
For the habitual violators, the incentive to resolve, rather than
ignore their By-Law Violation Notices, will be increased.
* * * * *