Proposed Interest Calculation Bylaw Replacement

Finance and Administration Report

TO: Committee of the Whole DATE: November 7, 2019 FROM: D. Christenson, Director of Finance MEETING: November 12, 2019

Proposed Interest Calculation Bylaw Replacement

RECOMMENDATION: THAT the Director of Finance’s November 7, 2019 report entitled “Proposed Interest Calculation Bylaw Update” be received.

CHIEF ADMINISTRATIVE OFFICER’S COMMENTS: I concur with the recommendation.

DIRECTOR OF DEVELOPMENT SERVICES’ COMMENTS: I concur with the recommendation.

DIRECTOR OF ENGINEERING’S COMMENTS: I concur with the recommendation.

DIRECTOR OF PROTECTIVE SERVICES’ COMMENTS: I concur with the recommendation.

PURPOSE OF REPORT:

To propose a replacement bylaw for Interest Calculation Bylaw No. 820, 2012 to clarify the type of deposits to which the bylaw applies and to update the threshold amount and period for deposits on which interest will be paid.

BACKGROUND:

Currently the calculation of interest on security deposits is established by Bylaw No. 820, 2012 (Attachment 1). The bylaw does not define “security deposits”. The interest rate set by the bylaw is tied to the Town’s banker’s prime rate. It also sets out that interest will not be paid if the deposit is $1,000 or less or is held for less than three (3) calendar months.

When Bylaw 820 was adopted in 2012, many refundable deposits were set at amounts of $1,000 or less. Since that time, bylaws requiring deposits have been amended to increase the deposit amounts in excess of $1,000, however Bylaw 820 was not amended at the same time.

DISCUSSION:

The proposed bylaw (Attachment 2: DRAFT Bylaw No. 1035, 2019) updates the original bylaw in three ways:

1. “Security deposits” is replaced with “refundable deposits” to more clearly articulate the type of deposits the bylaw applies to;
2. the threshold below which interest will not be paid is increased from $1,000 or less to $10,000 or less;
3. the time period threshold under which interest will not be paid is increased from three (3) to twelve (12) calendar months.

For clarity, a “redlined” copy of the draft bylaw is also attached (Attachment 3: REDLINED DRAFT Bylaw No. 1035, 2019), showing these changes.

BUDGET IMPLICATIONS:

The 2019 budget for payment of interest on deposits is $10,000. In 2018 View Royal paid a total of $13,200 in interest on deposits and are on a similar track for 2019. Increasing the thresholds to limit interest-eligible deposits may save in the range of $1,000 to $2,000 per year, given a similar level of deposit activity and interest rates. Additionally, there would be a small reduction in administration effort required to document these interest accruals.

RECOMMENDATION:

THAT the Director of Finance’s November 7, 2019 report entitled “Proposed Interest Calculation Bylaw Update” be received.

SUBMITTED BY: Dawn Christenson, Director of Finance

REVIEWED BY: K. Anema, Chief Administrative Officer

Attachment 1: Bylaw No. 820, 2012 Attachment 2: DRAFT Bylaw No. 1035, 2019 Attachment 3: REDLINED DRAFT Bylaw No. 1035, 2019