City writes off $2.7M in outstanding utility bills
Debts deemed uncollectible after 4 years; changes made to prevent future losses
Mayor Javier Gonzales and the City Council without discussion Wednesday approved a request by city finance officials to write off nearly $2.7 million in unpaid utility bills they deem uncollectible.
But the governing body, which recently signed off on a contract with a third-party vendor to beef up debt collection efforts, also approved a series of staff recommendations designed to prevent such financial losses in the future, particularly as they relate to tenants who skip out on paying for service at properties whose owners have not been held liable by the city.
Delinquent tenants accounted for nearly $1 million of the outstanding debt accumulated under an ordinance amendment adopted in 2004 that allows landlords to waive liability for tenant water bills, Caryn Fiorina, Utility Billing Division director, said in a Feb. 1 memo to the city Public Utilities Committee.
“This is a conservative estimate since the majority of tenant account transfers had incomplete information in the system,” Fiorina wrote. “This ordinance change has resulted in lost revenue due to the Utilities Division not having recourse from tenant customers that move out and leave an unpaid balance.”
To step up collection efforts among tenants, the division recommended the following changes:
Utility accounts will automatically revert back to the owner after the lease expires unless the landlord or property owner files a new lease agreement with the city.
All outstanding balances for any person listed on the lease agreement must be paid in full before service is transferred.
If a tenant account becomes delinquent, water services will be “promptly” disconnected and other utility services will revert back to the owner after 10 days of dis-
connection. The city will have the right to deny tenant service requests if the tenant has a prior delinquent history.
Tenant accounts, which should be “current and in good standing,” will not be eligible for payment arrangements.
The division has already implemented changes to increase collections.
“We have now redesigned the collection process to be run daily and two-day notices will be automatically generated” instead of manually, the memo states. “This will improve our collection efforts.”
Adam Johnson, the city finance director, said the nearly $2.7 million in debts the city is writing off are beyond the fouryear statute of limitations.
“Some businesses, if you will, would go after people beyond the statute just to see if they’d pay,” Johnson said. “But the reality is that anybody could just respond and say, ‘You’re beyond your statute of limitations, and I don’t owe you anything.’ So we’re just going to move forward with getting those off the books.”