Public hearing followed by discussion and possible action on any and all matters regarding the recommendation of allowing delinquent water and wastewater accounts without or in breach of payment-plan agreements to be submitted to a collections service and charging the service’s 20% collections commission to the account balance.  (Jorge Perez, Billing & Collections Manager)

A.  Open public hearing
      1.  Presentation by staff and/or applicant
      2.  Call to the public on this item
B.  Close public hearing
C.  Action on allowing delinquent water and wastewater accounts without or in breach of payment-plan agreements to be submitted to a collections service and charging the service’s 20% collections commission to the account balance.

On March 11, 2020, San Luis City Council approved the Agreement with Valley Collection Service, L.L.C., which follows this report.  City Council also approved an amendment on October 28, 2020, unrelated to the water and wastewater accounts, which also follows this report.  City Council was provided the following information for its decision on March 11, 2020.

The City of San Luis currently does not work with any third-party collection agencies to recover any debt on its utility accounts or any other debtors.  The main reason for not collaborating with an agency in the past is an issue with our billing software in generating actual arrear and bad debt reports as well as accurate information to provide to such agency.

During the current fiscal year, the Billing and Collections, Finance, and I.T. departments worked together to fix the issues we had in the past to move forward with this much-needed collection process.  Our software is ready to produce the data that a collection agency will need to perform its established collection procedures for debt recovery.

Just in utility accounts, the city has not received payments from bad debt balances on inactive accounts to the total amount of $72,780.63.

The Billing and Collections division contacted other municipalities within the State of Arizona and received some good feedback about Valley Collection Service (V.C.S.), LLC., which is a debt collection agency.  Some municipalities being served by V.C.S. are Chandler, Gilbert, Goodyear, and Scottsdale, to name a few.  Attached is a list of all the cities in Arizona being served by V.C.S. 

Valley Collection Agency establishes a commission fee of 20% on all collections made.  The city may elect to add this fee amount to the balance, so 100% of the monies owed are paid to the city.  However, to make this election, the city must first go through a fee public notice process.  We would like to get started now with Valley Collections keeping 20% of what they collect until the notice process can be completed.

Benefits of Using a Collection Agency
Using a collection agency to collect on the city’s delinquent accounts is a cost-effective tool to produce more revenue.

V.C.S. uses multiple skip-searching databases along with the National Change of Address databases to locate individuals who have moved.  The time that V.C.S. spends on this is time saved for the city in performing any collection activities and brings about increased revenue when they are able to find the individual and get them to pay their obligation.

While it is the focus of Valley Collection Service, LLC., to maximize collections for their clients, it is also very important for them to do this with an ethical approach.  This approach has allowed them to maintain a clean record with the Better Business Bureau and a clear conscience.  They also feel that it is a good business practice.

Ordinance No. 314
Other than approving the contract with a collection agency, there will not be a need to adopt a new ordinance as the city already has an ordinance in place. Ordinance No. 314 in its Section 2 (D), states that “The city may elect to assign any and all utility accounts considered delinquent with unpaid charges, fees, or assessments to a collection agency or attorney to collect, in addition to the disconnection of any and all services.”