sr-092810-3eCity Council Meeting: September 28, 201.0
Agenda Item: 3 _ E
To: Mayor and City Council
From: Susan Cline, Acting Director of Public Works
Subject: Interest Rate for Cemetery Pre-Need Payment Plans
Recommended Action
Staff recommends that the City Council adopt the attached resolution modifying the
interest rate for Cemetery pre-need payment plans from one percent (1%) per month to
an annualized rate of twelve percent (12%).
Executive Summary
On November 10. 2009, Council adopted Resolution No. 10440 CCCS) authorizing a
cemetery payment plan. program to allow customers to finance cemetery pre-need
arrangement charges for up to a maximum of 60 months. The payment plan requires a
minimum 10% down payment and interest is calculated monthly at 1% on unpaid
balances. Staff recommends that Council adopt the attached resolution modifying the
interest rate to an annualized rate of 12%.
Discussion
-Resolution No. 10440 (CCS) authorized interest to be charged on pre-need
arrangement plans at a rate of 1% per month on the unpaid balance. Applying a 1%
monthly interest rate on unpaid account balances has proven to be difficult for some
customers to understand since the amount changes each month based on the unpaid
balance. In order to simplify the interest calculation for Cemetery customers by allowing
equal monthly payments of fixed principal and interest, staff proposes that interest rate
be modified to an annualized interest rate of 12%.
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Financial Impacts & Budget Actions
Modifying the interest rate charged on pre-need arrangement plans is not expected to
have a significant impact on revenues and therefore no budget actions are required.
Prepared by: Virgil A. County, Cemetery Administrator
Approved:
Forwarded to Council:
~-,s-~ ~
Rod Gould
City Manager
Attachment:
A -Resolution
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Reference Resolution No.
10528 (CCS).