10.C.
City Council Meeting - FINAL
- Meeting Date:
- 09/16/2025
- From:
- Jessica Kittleson, Customer Service Director
TITLE:
Consideration and Approval of Municipal Services Accounts, Miscellaneous Account Receivable, and Insufficient Funds Write-offs: Delinquent and Uncollectible Accounts for Fiscal Year 2024-25.
STAFF RECOMMENDED ACTION:
Approve the write-off of delinquent and uncollectible Municipal Services accounts, Miscellaneous Account Receivables, Transaction Privilege Tax accounts and Insufficient Funds in the combined amount of $22,456.46.
Executive Summary:
Staff requests Council approval for the annual write-off of $22,456.46 in accounts receivable deemed uncollectible for the fiscal year ending June 30, 2025. This write-off encompasses Municipal Services accounts, Miscellaneous Accounts Receivables, and Insufficient Fund charges.
After exhausting all reasonable collection efforts, City staff has determined these accounts are no longer viable for active collection. The City follows generally accepted accounting principles by writing off uncollectible accounts annually to maintain accurate asset valuation. When feasible, outstanding amounts are reported to credit agencies, which occasionally results in later payment when customers seek to clear their credit history. In accordance with state law, individual utility account information remains confidential and is not subject to public disclosure.
This write-off represents sound fiscal management by ensuring the City's balance sheet accurately reflects collectible assets. The requested amount falls within the City's current established annual allowance of $77,000 for uncollectible accounts. Write-offs are allocated back to their originating funds, maintaining proper accounting segregation.
After exhausting all reasonable collection efforts, City staff has determined these accounts are no longer viable for active collection. The City follows generally accepted accounting principles by writing off uncollectible accounts annually to maintain accurate asset valuation. When feasible, outstanding amounts are reported to credit agencies, which occasionally results in later payment when customers seek to clear their credit history. In accordance with state law, individual utility account information remains confidential and is not subject to public disclosure.
This write-off represents sound fiscal management by ensuring the City's balance sheet accurately reflects collectible assets. The requested amount falls within the City's current established annual allowance of $77,000 for uncollectible accounts. Write-offs are allocated back to their originating funds, maintaining proper accounting segregation.
Financial Impact:
The City maintains a proactive approach to managing uncollectible accounts by establishing annual reserves based on comprehensive analysis of aged accounts, historical write-off patterns, and anticipated procedural changes affecting collection rates. The requested write-off of $22,456.46 remains below the established annual allowance, demonstrating effective financial forecasting and management.
| Category | Amount |
|---|---|
| Municipal Bill Accounts Receivable | $21,204.70 |
| Miscellaneous Accounts Receivable | $1,242.76 |
| Insufficient Funds (NSF Checks) | $9.00 |
| Total | $22,456.46 |
Policy Impact:
None.
Previous Council Decision or Community Discussion:
None.
Options and Alternatives to Recommended Action:
- Authorize the complete write-off of uncollectible Municipal Services, Miscellaneous Accounts Receivable, and Insufficient Funds as recommended.
- Reject the write-off authorization, maintaining outstanding receivables on the balance sheet and continuing collection efforts indefinitely.
- Authorize a partial write-off, approving a reduced amount while continuing collection efforts on remaining accounts.
Background and History:
Collection Process and Procedures
Active Account Collections: The City employs a comprehensive collection strategy before considering any account for write-off. Initial contact begins with reminder postcards for past-due balances, followed by email notifications, phone calls, and physical notices at service locations. Staff actively work with customers to establish payment plans and connects them with available assistance programs. Service disconnection serves as the final collection tool for active accounts.
Closed Account Management: Security deposits collected at service initiation typically cover final bill amounts for closed accounts. The City has implemented enhanced processes for timely mail forwarding, delinquency processing, and skip-tracing to ensure final bills reach customers at new addresses. Increased enrollment in autopay services and improved online payment options have simplified the final bill payment process.
Credit Reporting and Recovery: Unpaid accounts are reported to credit agencies with appropriate customer notification. Once reported, debts remain active on credit reports for seven years from the delinquency date, often resulting in payment when customers apply for mortgages, car loans, or rental agreements. This passive collection method continues to generate recoveries on previously written-off amounts.
Additionally, amounts are reported to the State's Debt Set Off Program, which can intercept income tax refunds for debt collection. Since implementing this program in 2023, the City has successfully collected $94,169.38 in delinquent accounts—representing a combination of previously written-off accounts dating back to 2017 and closed accounts that may have otherwise required write-off. This enhanced collection tool has proven highly effective in recovering funds that traditional collection methods could not secure.
Total Municipal Services billings for FY 2024-25 were $50.7 million with recommended write-off amounts of $21,204.70 or 0.04% of total revenues. Miscellaneous Accounts Receivables billings at $11.9 million with recommended write-off amounts of $1,242.76 or 0.01% of total amounts billed. Below is a five-year history of the City's Municipal Services Bills and Miscellaneous Account Receivable write-offs:
Municipal Services Accounts Write-Offs: 5-Year History
Municipal Services Accounts Write-Off: Breakdown Information
Miscellaneous Accounts Receivable Write-Offs: 5-Year History
Miscellaneous Accounts Receivable Write-Offs: Breakdown Information
Special Categories
Transaction Privilege Tax Management: Following the Arizona Department of Revenue's assumption of local Transaction Privilege Tax collection in January 2017, the City inherited a receivable balance of $928,293.06 from previously collected accounts. Through diligent collection efforts, this balance has been reduced to $71,168.99 as of June 30, 2025. During FY 2024-25, staff successfully collected $42,016.19 through direct taxpayer engagement and payment plan arrangements. No write-offs are requested for this category as customers continue making payments on established plans, even though many related companies are no longer operational.
Library Account Management: The City is not requesting library account write-offs this fiscal year as staff focuses on implementing enhanced payment services, including online payment options. While these accounts do not appear as receivables on the City's balance sheet, library staff maintains comprehensive tracking through specialized software systems.
Key Considerations
This annual write-off request demonstrates the City's commitment to both fiscal responsibility and customer service excellence. The recommended write-off amount of $22,456.46 represents an exceptionally low percentage of total billings across all categories—only 0.04% for Municipal Services and 0.01% for Miscellaneous Accounts Receivable. This performance reflects the effectiveness of the City's comprehensive collection processes, from proactive customer outreach and payment plan options to credit reporting and skip-tracing efforts. By maintaining accurate financial records through timely write-offs while continuing passive collection through credit reporting, the City balances sound accounting principles with ongoing revenue recovery opportunities. The request falls well within the established allowance, ensuring no unexpected impact to the City's financial position while supporting transparent and accountable financial management practices.
Active Account Collections: The City employs a comprehensive collection strategy before considering any account for write-off. Initial contact begins with reminder postcards for past-due balances, followed by email notifications, phone calls, and physical notices at service locations. Staff actively work with customers to establish payment plans and connects them with available assistance programs. Service disconnection serves as the final collection tool for active accounts.
Closed Account Management: Security deposits collected at service initiation typically cover final bill amounts for closed accounts. The City has implemented enhanced processes for timely mail forwarding, delinquency processing, and skip-tracing to ensure final bills reach customers at new addresses. Increased enrollment in autopay services and improved online payment options have simplified the final bill payment process.
Credit Reporting and Recovery: Unpaid accounts are reported to credit agencies with appropriate customer notification. Once reported, debts remain active on credit reports for seven years from the delinquency date, often resulting in payment when customers apply for mortgages, car loans, or rental agreements. This passive collection method continues to generate recoveries on previously written-off amounts.
Additionally, amounts are reported to the State's Debt Set Off Program, which can intercept income tax refunds for debt collection. Since implementing this program in 2023, the City has successfully collected $94,169.38 in delinquent accounts—representing a combination of previously written-off accounts dating back to 2017 and closed accounts that may have otherwise required write-off. This enhanced collection tool has proven highly effective in recovering funds that traditional collection methods could not secure.
Total Municipal Services billings for FY 2024-25 were $50.7 million with recommended write-off amounts of $21,204.70 or 0.04% of total revenues. Miscellaneous Accounts Receivables billings at $11.9 million with recommended write-off amounts of $1,242.76 or 0.01% of total amounts billed. Below is a five-year history of the City's Municipal Services Bills and Miscellaneous Account Receivable write-offs:
Municipal Services Accounts Write-Offs: 5-Year History
| Write-Off Fiscal Year | Total Write-Off | Annual Amount Billed | % of Amount Billed |
|---|---|---|---|
| FY 2024-25 | $ 21,204.70 | $ 50,716,995 | 0.04% |
| FY 2023-24 | $ 24,348.34 | $ 47.572,000 | 0.05% |
| FY 2022-23 | $ 64,711.38 | $ 44,260,000 | 0.15% |
| FY 2021-22 | $ 61,315.10 | $ 44,455,000 | 0.14% |
| FY 2020-21 | $ 46,254.86 | $ 40,851,000 | 0.11% |
Municipal Services Accounts Write-Off: Breakdown Information
| Write-Off Fiscal Year | Total # of Accounts | Accounts Greater than $1,000 | Accounts Between $500-$1,000 | Accounts Less Than $500 |
|---|---|---|---|---|
| FY 2024-25 | 77 | 2 | 6 | 69 |
| FY 2023-24 | 83 | 4 | 7 | 72 |
| FY 2022-23 | 144 | 17 | 24 | 103 |
| FY 2021-22 | 137 | 11 | 20 | 106 |
| FY 2020-21 | 166 | 6 | 20 | 140 |
Miscellaneous Accounts Receivable Write-Offs: 5-Year History
| Write-Off Fiscal Year | Total Write-Off | Annual Amount Billed | % of Amount Billed |
|---|---|---|---|
| FY 2024-25 | $1,242.76 | $11,989,404 | 0.01% |
| FY 2023-24 | $871.92 | $7,819,000 | 0.01% |
| FY 2022-23 | $1,110.57 | $9,970,000 | 0.01% |
| FY 2021-22 | $2,541.32 | $11,747,000 | 0.02% |
| FY 2020-21 | $5,386.86 | 11,411,000 | 0.05% |
Miscellaneous Accounts Receivable Write-Offs: Breakdown Information
| Write-Off Fiscal Year | Total # of Accounts | Accounts Greater than $1000 | Accounts Between $500-$1000 | Accounts Less Than $500 |
|---|---|---|---|---|
| FY 2024-25 | 2 | 0 | 1 | 1 |
| FY 2023-24 | 1 | 0 | 1 | 0 |
| FY 2022-23 | 3 | 1 | 1 | 1 |
| FY 2021-22 | 3 | 1 | 0 | 2 |
| FY 2020-21 | 5 | 2 | 0 | 3 |
Special Categories
Transaction Privilege Tax Management: Following the Arizona Department of Revenue's assumption of local Transaction Privilege Tax collection in January 2017, the City inherited a receivable balance of $928,293.06 from previously collected accounts. Through diligent collection efforts, this balance has been reduced to $71,168.99 as of June 30, 2025. During FY 2024-25, staff successfully collected $42,016.19 through direct taxpayer engagement and payment plan arrangements. No write-offs are requested for this category as customers continue making payments on established plans, even though many related companies are no longer operational.
Library Account Management: The City is not requesting library account write-offs this fiscal year as staff focuses on implementing enhanced payment services, including online payment options. While these accounts do not appear as receivables on the City's balance sheet, library staff maintains comprehensive tracking through specialized software systems.
Key Considerations
This annual write-off request demonstrates the City's commitment to both fiscal responsibility and customer service excellence. The recommended write-off amount of $22,456.46 represents an exceptionally low percentage of total billings across all categories—only 0.04% for Municipal Services and 0.01% for Miscellaneous Accounts Receivable. This performance reflects the effectiveness of the City's comprehensive collection processes, from proactive customer outreach and payment plan options to credit reporting and skip-tracing efforts. By maintaining accurate financial records through timely write-offs while continuing passive collection through credit reporting, the City balances sound accounting principles with ongoing revenue recovery opportunities. The request falls well within the established allowance, ensuring no unexpected impact to the City's financial position while supporting transparent and accountable financial management practices.
Connection to PBB Priorities and Objectives:
High Performing Governance: Enhance the organization's fiscal stability and increase efficiency and effectiveness.
Connection to Regional Plan:
None.
Connection to Carbon Neutrality Plan:
None.
Connection to 10-Year Housing Plan:
None.