Consideration and Approval of Utility 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.  The City may still recover some amounts owed, since customers may seek to clear personal credit by paying delinquent amounts.  Pursuant to state laws, delinquent account information is not subject to public release.

Subsidiary Decisions Points: No subsidiary decision points.

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

Effective governance.

No.

• Authorize the write-off of uncollectable utility accounts.
• Do not authorize the write-off of uncollectable utility 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 7 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.).

Total utility billings in FY14 are estimated at $33.2 million. The write-offs are approximately 0.58% of the estimated total amount.  The increase in FY14 is mainly due to an unfilled meter technician position (2 meter technicians instead of 3 meter technicians) for approximately 3 months of the write-off period.  Due to the unfilled position, Meter Services focused staff efforts on meter reading and it did not have the capacity to perform as many meter lock-offs, a tool that helps limit the annual write-off amount.  The number is expected to decrease in FY15 due to the addition of a temporary meter technician in November 2013 and the subsequent increase in disconnects in 2014.  Estimated disconnects in 2014 are 2x the 2013 total.  The last table below contains information on the number of disconnects that staff is able to perform with the additional staff member. 

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

Utility Account Write-Offs (5 Year History)

Write-Off Year	Amt of Write-Off	Annual Amt Billed	% of Amt Billed
FY14	$191,097.80	$33.2 million	0.58%
FY13	$121,300.64	$32.2 million	0.38%
FY12	$97,198.35	$29.8 million	0.33%
FY11	$41,508.08	$26.1 million	0.16%
FY10	$60,420.89	$24.8 million	0.25%

                         

                                                                                                                                                   Utility Account Write-Off Breakdown Summary

Write-Off Year	Utilities	Public Works	Storm Water	Taxes
FY14	$151,638.97	$27,091.03	$6,032.78	$6,335.03
FY13	$86,993.14	$26,226.11	$4,407.71	$3,673.68
FY12	$67,007.20	$23,647.05	$3,848.82	$2,695.28

Other Write-Off Breakdown Information

Write-Off Year	Total # of Accounts	# of Accounts Greater Than $1,000	# of Accounts Between $500 and $1,000	# of Accounts between $0 and $500
FY14	479	30	74	375
FY13	487	14	40	433

Staff, using billing statements, letters and telephone calls, has worked the write-off accounts. When customers fail to make payments, they may be 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.