City of Culver City, California
Agenda Item Report
Meeting Date: 08/09/2010 Item Number: C-6
CITY COUNCIL AGENDA ITEM: Adoption of a Resolution Amending Exhibit C of
Resolution No. 2010-R016 Relating to Credit and Debit Card Convenience Fees.
Contact Person/Dept.:
Jeff S. Muir/Finance
Phone Number: 310/253-5865
Fiscal Impact: Yes [X] No [] General Fund: Yes [X] No []
Public Hearing: [] Action Item: [] Attachments: [X]
Commission Action Required: Yes [] No [X] Date: _______________
Public Notification: (E-Mail) Meetings and Agendas – City Council (08/05/10)
Department Approval:
Jeff Muir (08/02/10)
City Attorney Approval:
Carol Schwab (by H. Baker) (08/04/10)
Chief Financial Officer Approval:
Jeff Muir (08/02/10)
City Manager Approval:
Martin R. Cole (08/05/10)
RECOMMENDATION:
Staff recommends that the City Council adopt a resolution amending the Credit and
Debit Card convenience fees established in Exhibit C of Resolution No. 2010-R016.
BACKGROUND:
The City currently accepts credit and debit cards at various locations, such as the
Finance Department, the Veteran’s Memorial Building, and the Police Department.
On December 17, 2007, the City Council adopted Resolution 2007-R-073 which
established a 3% convenience fee for all credit card payment transactions, and a
$0.50 convenience fee for all debit card transactions. Just like any other retailer, the
City incurs bank and/or merchant fees each time a customer pays with a credit or
debit card. These fees would not otherwise be incurred if a traditional payment
mechanism was used (check or cash).
The idea behind the current fees was to recapture the cost of providing the
convenience of being able to use a credit or debit card, particularly in the instance of
a substantial payment amount. The City only accepts Visa or MasterCard, both with
approximate merchant and bank fees equal to 3% of the transaction. The cost of
using a debit card with a PIN code is substantially less than a credit card (or a debit
card with a Visa/MasterCard logo used as a credit card), and therefore the $0.50 fee
was established to recover costs.
There are competing views on whether government agencies should add a fee for
the ability to pay with a credit or debit card. Processing checks over the counter or
through the mail utilizes staff time not only to accept and apply the payment, but also City of Culver City, California
Agenda Item Report
to process the check through the City’s bank. Credit or debit card payments reduce
that effort. On the other hand, the merchant or bank fees with credit cards can be
fairly significant and it can be argued that the individual using the credit card,
potentially receiving rewards points for doing so, should pay the cost. In the retail
industry, the cost of credit card payment fees is factored into the pricing.
DISCUSSION:
Recently, the Finance Department has been researching options to allow for online
payments of commercial refuse bills, monthly parking permits, and other
miscellaneous items. During the presentations with various vendors and our follow-
up discussions, it appears our current practice of charging convenience fees is out of
line with the Visa Operating Regulations. First, Visa only allows convenience fees
for items through an alternate payment channel, outside of the normal payment
channel (mail or face-to-face). Second, Visa requires that convenience fees be
consistent for all payment types, whether credit card, debit card, electronic check,
etc. Finally, Visa requires the convenience fee to be a fixed amount, and not a
percentage. MasterCard does not have these same requirements.
California Government Code Section 6159(g) states:
(g) Notwithstanding Title 1.3 (commencing with Section 1747) of Part 4 of
Division 3 of the Civil Code, a court, city, county, city and county, or any
other public agency may impose a fee for the use of a credit or debit
card or electronic funds transfer, not to exceed the costs incurred by
the agency in providing for payment by credit or debit card or
electronic funds transfer. These costs may include, but shall not be
limited to, the payment of fees or discounts as specified in paragraph (3) of
subdivision (d). Any fee imposed by a court pursuant to this subdivision
shall be approved by the Judicial Council. Any fee imposed by any other
public agency pursuant to this subdivision for the use of a credit or debit
card or electronic funds transfer shall be approved by the governing body
responsible for the fiscal decisions of the public agency.
Pursuant to this section, staff believes that there is a legitimate argument to be made
that Visa’s Operating Regulations are in conflict with what the Government Code
permits. However, given the desire to move forward as quickly as possible with
additional online payment opportunities staff is recommending changes to the Fiscal
Year 2010/2011 User Fees and Charges that will bring us into compliance with the
Visa rules.
Specifically, staff recommends the current convenience fees of 3% for all credit card
transactions and $0.50 for all debit card transactions be eliminated, and a new
convenience fee applicable only to online or telephone payments be established in
the amount of $2.00 per transaction. Staff estimates that setting the fee at this City of Culver City, California
Agenda Item Report
amount should allow the City to recover the cost of providing these alternative
payment channels. If necessary, this fee will be adjusted for Fiscal Year 2011/2012
based on actual experience.
FISCAL ANALYSIS:
It is anticipated the new convenience fees will recover the cost of offering online and
telephone payment options. However, the City will cease charging any convenience
fees for face-to-face or mail credit card or debit card transactions. The City will still
incur the merchant and bank fees for these transactions. During Fiscal Year
2009/2010, approximately $1.15 million in payments were made via credit card,
resulting in approximately $30,000 in bank and merchant fees. During the analysis
completed for the Fiscal Year 2011/2012 and future year User Fees and Charges,
staff will factor the actual costs incurred from credit or debit card payments into the
specific fee categories, so that they will be recovered in arrears.
ATTACHMENTS:
1. Proposed Resolution
MOTION:
That the City Council:
Adopt a Resolution amending the Credit and Debit Card convenience fees
established in Exhibit C of Resolution No. 2010-R016.
MEETING DATE: August 9, 2010
AGENDA ITEM: Adoption of a Resolution Amending Exhibit C of Resolution
No. 2010-R016 Relating to Credit and Debit Card Convenience
Fees.
ATTACHMENTS
Pages
1. Proposed Resolution w/ Amended Exhibit C ....................... 1 - 4
EXHIBIT C
City of Culver City
Finance Department
FISCAL YEAR 2010-11
Service Name FY 2010-11 Fee
GENERAL FEES
Returned check fee 35.00 $
Credit card payment rejection fee 35.00 $
Convenience Fee: Online and Telephone Payments (fee is per transaction) $ 2.00
BUSINESS TAX CERTIFICATE APPLICATIONS & RENEWALS (CCMC
Business Tax Certificate Applications Processing Fee 70.00 $
Business Tax Certificate Renewal Processing Fee 65.00 $
Expedited Business Tax Certificate Processing Fee (this is an optional
service offered for an additional fee):
Receive Certificate in less than 10 business days after filing Application
36.00 $
Receive Certificate less than 2 business days after filing Application 52.00 $
Business Planning Review Fee 22.00 $
Transfer or Assignment of tax certificate 40.00 $
Replacement of lost or destroyed certificate or permit 16.00 $
Copy of application, or prior years’ renewal (per year)
16.00 $
GAMES, AMUSEMENTS & ENTERTAINMENT FEES AND DEPOSITS
Application Fee ( NONREFUNDABLE ) 203.00 $
Permit Fee 2,025.00 $
Quarterly Fee, if license & permit are granted 248.00 $
Permit for other location ( per location ) 68.00 $
FIGURE STUDIOS & FIGURE MODELING FEES (CCMC 11.08.035)
First Year Fee 540.00 $
Each Annual Renewal 506.00 $
TAXI PERMIT FEES AND BUSINESS TAXES (CCMC 11.10.070)
All fees are annual, unless otherwise specified
Initial application fee for permit to conduct a taxicab business (per company) 1,000.00 $
Annual business tax (per company ) 250.00 $
Taxicab inspection and license fee for each cab 400.00 $
Driver annual permit fee 30.00 $
Annual fingerprint fee See Exhibit G: Police Dept.
Annual renewal fee (per company) $ 250.00
TOBACCO RETAILER LICENSE (CCMC 11.15.025)
Annual Tobacco Retailer Licensing Fee (refer to Resolution 2009-R053) $ 235.00
3EXHIBIT C
City of Culver City
Finance Department
FISCAL YEAR 2010-11
Service Name FY 2010-11 Fee
CONSIDERATION BY COMMITTEE ON PERMITS & LICENSES (COPL)
Business Permit Application Fee 26.00 $
Transfer of Business Permit 16.00 $
Annual Administrative Review Fee for Massage Facilities
Up to 10 Massage Technicians at Facility 208.00 $
More than 10 Massage Technicians at Facility 364.00 $
Fees for COPL required Public Notification
Public Notice in Adjudicated Newspaper Actual Cost charged by Newspaper
Post Cards/Informational Mailings $25 per 50 post cards/mailings
Event Permit Fee*
Applicant physical address in Culver City $30 first day,
$15 per day thereafter
Applicant physical address Outside of Culver City $40 first day,
$20 per day thereafter
Expedited Event Permit Processing Fee:
Applies if application is submitted less than 3 weeks prior to event
78.00 $
*NOTE: Block Parties that require review by the COPL are exempt from the
permit application and public notification fees.
LOCAL TAX APPEAL FEE*
Business Tax
Real Property Transfer Tax
Transient Occupancy Tax
Utility Users Tax
All Other Local Taxes
*NOTE: Fee only applies to an appeal of an official decision by the Tax
Administrator to deny a tax refund or exemption request. There is no fee
associated with submitting the initial request.
PARKING METER KEY CARDS* (also included in Public Works fee schedule)
Refundable Deposit (paid upon issuance of key) 15.00 $
Purchased in $1 increments from a min. of $20 to a max. of $100
Balance on key will not exceed $100
*NOTE: per Resolution 2004-R033
50% of the amount
being Appealed,
not to exceed $725 |1013|