Consideration and Approval of Miscellaneous Receivable Account Write-offs: Delinquent and uncollectable accounts for Fiscal Year 2014.

Generally accepted business practices allow for the write-off of uncollectable accounts. City staff has exhausted collection efforts on the eligible accounts and will no longer actively collect on them. Where possible, the amount owed has been applied against the credit of the debtor and may be collected in the future. Pursuant to federal consumer debt collection law, delinquent account information is not subject to public release.

Subsidiary Decisions Points: None

None that is unbudgeted. Each year, the City anticipates that there will be uncollectable miscellaneous receivable accounts and reserves an amount at year end for these accounts.

Effective governance.

No.

• Authorize the write-off of uncollectable miscellaneous receivable accounts.
• Do not authorize the write-off off uncollectable miscellaneous receivable accounts and continue collection efforts.

 

Before any account is eligible for write-off, staff must initiate collection efforts on each account after it becomes delinquent. When collection efforts are exhausted, the account is eligible for write-off. If possible, any amounts due are applied to the customer's credit. If placed on the customer’s credit, the amount owed remains active for seven years after the delinquency date. Application against the credit of the debtor may lead to the recovery of some of the delinquent amounts in the future. This often occurs when customers apply for credit via other avenues (i.e., mortgages, car loans, apartment rentals, etc.).

Examples of miscellaneous receivable write-offs may include, but are not limited to, the following possible types: landfill, airport, fire contract, retiree insurance, damage claims, among others. Total miscellaneous receivable billings in FY14 are estimated at $8 million. The write-offs equate to approximately 0.03% of the total amount.

Pursuant to federal consumer debt collection law, delinquent account information is not subject to public release.

Miscellaneous Receivable Write-Offs (5 Year History)

Write-Off Year	Amt of Write-Off	Annual Amt Billed	% of Amt Billed
FY14	$2,125.86	$8.0 million	0.03%
FY13	$3,831.73	$9.4 million	0.04%
FY12	$33,322.21	$11.1 million	0.30%
FY11	$77,420.61	$12.5 million	0.62%
FY10	$107,059.95	$10.6 million	1.01%

Staff, using billing statements, letters, and telephone calls, has worked the write-off accounts. When customers fail to make payments, they are denied access to future City services and, when possible, the amount owed is applied to their credit.

It is sound financial management practice to reduce assets to reflect their true valuation. Failure to write-off accounts deemed uncollectable overstates the asset value of the City.

Inform. Yearly write-offs ensure that the City is following generally accepted business practices.

None.