Town to restart late charges in July
For those who have gotten behind on bills to Lansdale Borough, you may be hearing from the town soon.
Council and staff are eyeing late July for a resumption of late fees and penalties on bills that have been waived over the past year due to the pandemic.
“If you take out the current billing, we’re about $120,000 in arrears, over a period of about four months,” said councilman Leon Angelichio.
“This is significant, because we voted in committee to bring forward to full council resuming normal penalties and fees, as of the end of the billing cycle on July 22nd,” he said.
As COVID-19 arrived in March 2020, Lansdale halted new late charges for customers of the borough’s electric department, on electricity the borough buys wholesale and resells it to local residents, business and industrial users. Talks continued through last summer on ways to assist those in need of help, and last fall the “Your Way Home” program administered via local nonprofit Manna on Main Street was announced, which allocates federal CARES Act COVID stimulus funds to those in need of help paying rent or utility bills.
When the Pennsylvania Utility Commission lifted their COVID-related ban on electric shutoffs on April 1, council and its committees started talks in April about when to reinstate those penalties, continuing those talks in May and picking up again at their June 2 committee meetings. Finance Director Melissa Gemelli reported on the latest delinquency figures as of June 2, noting that out of a total of 7,570 residential accounts in the borough, 6,560 or 87 percent were current, representing just under $268,000 of the total $388,000 owed on the most recent round of utility bills.
“The ones that are one month overdue are almost $47,000, and that represents 12 percent. Two months overdue are about $27,000, and that’s seven percent, the three months (overdue) are about $15,000 and four percent, and then the four-plus (months overdue) is $30,000 and it represents eight percent” of total residential customers, Gemelli said.
In raw numbers, out of the 7,570 total residential accounts, 6,560 were current on payments, another 504 were one month overdue, 260 at two months, 152 at three months and 94 at four or more months. The average values owed by those accounts increased over time, with one exception, Gemelli told the committee: the average customer one month overdue owed just over $93, two months overdue owe on average $105, three months overdue owe slightly less at $103, and four-plus owe on average $323, she said.
“Three of our customer service reps, every day, make multiple phone calls to people who are delinquent,” Gemelli said.
“They’ll say ‘Hey, I can pay $200 today, and I’ll make a payment in two more weeks of another $200.’ When that two weeks come up, and they haven’t made the payment, they get another call, just to say ‘Hey, you said you were going to do this,’” she said.
Calling residents early and often has had some success, she added.
“There was one day in March that all four of our customer service reps made calls, and we collected $40,000 in delinquent debts. So that has been very, very helpful,” she said.
“We are not giving them a date, but we are telling them that we will be starting to charge penalties and interest, and liening properties,” Gemelli said.
Angelichio said, when council started talks on the topic over the past two months, he felt best to give residents as much time as possible — but as businesses reopen and lockdowns lift, residents may be ready sooner.
“I have been very liberal in my mindset, in giving people as much time as possible. But we’re starting to see this wholesale change, that things are happening much quicker than we had initially expected,” he said.
“Mask mandates are being pulled, people are going back to work. Not everybody’s back, I get it. But I was an August or September person — quite frankly, I’m a July 1 person now,” for resumption of the late fees and charges.
Councilmen Denton Burnell asked what formal action or motion council would need to take to reverse their actions in 2020, and borough Manager John Ernst said there will be several steps.
“Our staff has been helping customers understand that the grace period is going to come to an end. Based on our billing cycles, and the way that our customer accounts are set up, we were shooting tentatively for July 22, as the date when this would all start to revert,” he said.
If council follows that timeline, a vote by council on June 16 could be followed by further calls, posts on the town’s social media channels, and other communication through early July, so those customers behind on bills can set up payment plans ahead of that date.
“I never ask the question, on the phone, ‘Can you do something?’ I ask, ‘How much are you doing today?’ Not ‘Can you?’ but ‘How much?’ You don’t give people an option,” Angelichio said.
“Most people, I think, are understanding of the process we’re going through, the necessity for that, and I think that makes the decision for them. They know they’re paying today, but what’s the details?” he said.
Councilwoman Carrie Hawkins Charlton said she held similar talks with the borough electric committee, which she chairs, and that group was also in agreement.
“We’re going to be reversing the current resolution, and moving forward with getting back to normal operations effective July 22,” she said.
On a related topic, Ernst said he and staff had consulted since last month with similar boroughs on how they handle cases where a tenant of an apartment or rental runs up a bill from the borough, then leaves without paying and the landlord may be held responsible instead.
“It was a bit across the board. I would say six of the twelve (asked) held the landlords accountable. Others did the collection part on their own, and then others did engage a third-party collection agency,” Ernst said.
Those talks also revealed a policy change council may want to consider, according to the manager.
“When a landlord is now responsible for paying off the debt of a tenant, our current policy is that you cannot bring someone else into that unit, until that debt is paid,” he said.
“What we talked about as a potential option, would be that if the debt is a certain threshold, let’s say $1,000 or $1,500, and if the landlord at that time does not wish to pay that off, then we would work to put a lien on the property,” Ernst said.
Doing so would create a formal record that the debt is still owed to the borough for electricity the town provided, but would also let the landlord bring in a new tenant that could help pay back those bills.
“We can then allow the landlords to bring a new tenant into the apartment and start receiving rent money. And then the borough, at that point, also gets another electric customer,” he said. “So that would be one particular option, instead of holding the apartment unit hostage until that amount is paid.”
Angelichio said he’d like to see details on how that would apply to different levels owed, particularly between residential versus commercial tenants.
“If somebody skips on a $200 bill, that’s not a lot of money. But what happens when it’s a commercial property, and that tenant’s two or three months behind, and that bill could be $10,000?” he said.
Burnell asked if staff had any data on how successful third parties are at collecting those owed debts, and Ernst gave figures he had received from one collection agency since the last committee talks. That agency typically tries to settle debt for about 75 percent of the balance owed, and of that 75 percent, the municipality would get 60 percent of that total, and the collection agency 40 percent.
“There is definitely a liability, that we would not receive our full balance on the money,” Ernst said.
Angelichio asked if staff had similar details on the costs related to the lien process, and how those charges or costs could be rolled into the amounts owed by the landlord. Ernst said he and Gemelli would present details at future meetings, likely the July 7 or Aug. 4 administration and finance meetings, before any action by full council.