Consideration and Approval of Utility Account Write-offs: Delinquent and uncollectable accounts for Fiscal Year 2015. (2015 Utility Account Write-offs)

Generally accepted business practices allow for the write-off of uncollectable accounts annually. City staff has exhausted collection efforts on the eligible accounts and will no longer actively collect on them. Where possible, any amounts due are applied to a customer's credit. As a result, debt that has previously been written-off is occasionally paid some time later to clear a customer's outstanding debt. Pursuant to state law, delinquent account information is not subject to public release.

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

Improve effectiveness of notification, communication, and engagement with residents, neighborhoods and businesses and about City services, programs, policies, projects and developments.

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 revenues in FY15 are estimated at $33.8 million. The write-offs are approximately .56% of the estimated total amount. The number decreased in FY15 due to a few changes in utility billing operations that are discussed in more detail below.

The first significant change was the addition of a temporary meter technician in November 2013. Total disconnects in 2014 were 1,605, approximately 3x the 2013 total. The additional meter technician helped increase the total number of disconnects, which has a direct correlation in the reduction in the amount of write-offs. The last table below contains information on the number of disconnects that staff is able to perform with the additional staff member. 

The second significant change was the approval by City Council in summer 2014 to increase the utility deposit for residential and commercial customers. Residential customer deposits went from $25 to $150 and commercial customer deposits went from a time-intensive calculated rate to a flat rate of $300. When customers do not pay a past due bill and do not respond to collection efforts, the City is able to recoup a higher percentage of the delinquent amount by applying the higher deposit figure. The City should see the benefit of this new deposit policy in 2016 as this policy needs time to have substantial effect.

Pursuant to state 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
FY15	$188,767.04	$33.8 million (Estimate)	0.56%
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%

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.