In the midst of the COVID-19 global pandemic, people are fearful, many worrying about their health, along with the welfare of their families and friends in the wake of an unprecedented economic shut down that has forced many furloughs and layoffs.
To provide reprieve to constituents, cities can offer amnesty relief for anything from parking fines, to traffic citations, and other charges. Such amnesty programs can offer much needed debt relief to constituents, while also helping cities lessen budgetary woes.
Amnesty programs typically cancel a debt or penalty in return for some type of corrective action by the debtor. For library fines, that corrective action might mean returning overdue books. With respect to building violations, amnesty may equate to making repairs or fixing defective conditions. For parking and other violations, participation usually involves paying a percentage of the full debt. Sometimes amnesty programs charge only the original fine amount (sans penalties or fees) or a fraction of the full amount owed.
Because so many people need debt relief today, data suggests that cities need to offer immediate amnesty programs. These programs may help improve revenue collection in the months ahead as well.
In many cities, citation issuance has declined dramatically in recent weeks as there are fewer motorists on the road and fewer parking enforcement personnel working. Because the balance of citation revenue received in a given month is due to enforcement activities in the last 90 days, reductions in issuance now are going to have a ripple effect throughout the summer months. Past due amounts, however, represent an opportunity for cities to offer an amnesty program can help fill budget gaps.
Five cities with similar declining parking citation volumes.
In addition, data from several parking programs suggests February, March, and April, when the variance to mean collections range anywhere from 107% to 152%, are historically among the best months to offer an amnesty program. Collection programs typically generate the most revenue during tax return season. By starting an amnesty now rather than later this year, government agencies can expect to improve collections.
Starting immediately also gives cities an opportunity to provide iterative messaging and/or advertising during the amnesty program, rather than ramping up a promotional campaign prior to implementation. Online portals can also be used to provide SMS and email messages to motorists, including information about their eligibility for amnesty, outstanding balances, and payment options.
We recently studied the implications of amnesty programs for client cities, reviewing historical payments by year of issuance to determine collectability. We applied an assumed participation rate and compared that to historical rates used to optimize collections. For instance, if 8% of the citations issued in 2017 are paid in 2020, but the anticipated amnesty participation rate is 5%, waiving penalties for 2017 tickets in an amnesty program would cannibalize revenues.
And amnesty programs aren’t just an opportunity to provide relief and improve revenues. They also offer an opportunity to preserve revenues in the months and years ahead as our global economy recovers.
We can predict participation and revenues, including the anticipated impact of COVID-19, by examining historical balances, debt distribution by ZIP code, median household income, and the occupations and industries by ZIP code. For instance, residents primarily employed in the hospitality industry may be less likely to participate in an amnesty program than people involved in shipping or medical support. By weighing the estimated participation by community, we can establish pragmatic and optimistic participation rates, along with revenue projections.
Amnesty Program Participation Rates by Industry and Zip Code
Along with constituents, cities are concerned about the health and safety of their employees. In terms of programming, we suggest removing penalties from citations in host systems at the start of the amnesty period, as opposed to manually calculating penalty waivers in-person at a payment center. This allows customers to participate and pay remotely by phone, app, mail, or Web portal – while reducing the need for person-to-person customer interactions. Penalties can be added back for unpaid citations at the end of the amnesty window.
While an amnesty program launched during a normal period might call for a fixed amnesty window, we suggest for leaving the end date open-ended. To help the greatest number of people, an amnesty should optimally extend weeks or months beyond “shelter-in-place” orders, providing those left unemployed by COVID-19 an opportunity to return to work.
In the past we advised cities to carefully scrutinize amnesty programs to ensure they maintain the integrity of a parking system. Now however, the pandemic has changed how we live and how cities must operate. These are extraordinary times, and robust amnesty programs offer a solution to help people without undermining ongoing revenue.