Santa Paula Times

Council approves writing off more than $45,000 in uncollectible utility bills

September 14, 2011
Santa Paula City Council

Uncollectible bills of more than $45,000 were written off without comment by the City Council at the September 6 meeting.

Most of the outstanding balances from the 2010/2011fiscal year were unpaid utility bills, according to the report on the council’s consent calendar - reserved for those items usually considered routine.

According to the report by Interim Finance Director Sandy Easley, the uncollectible utility billing accounts hit $45,165 and included $6,774 (15 percent of the total) from the Refuse Fund, $17,734 from the Wastewater Fund (39 percent) and $20,522 from the Water Fund (45 percent). Returned checks equaled $892, with the bulk made out to the Community Services Department.

According to Easley’s report, the city regularly collects delinquent charges on utility accounts by discontinuing water service and placing liens on active accounts. “However, once a property is sold or the customer moves out, California law prevents the city placing a lien on the property or discontinuing water service.”

A majority of the 215 returned checks totaling $44,482 and received by the city during fiscal year 2010-2011 were “utility related and can be added back to the utility accounts,” and Easley said 11 of these checks should be written off as uncollectible. “Staff has spent considerable time and effort attempting to collect on these accounts and believes that any additional effort would not be cost effective,” in addition to the ledger listing for the outstanding balances that “tend to inflate the fund balances in the financial statements.” The approximately $45,000 owed to the utility enterprises is about three percent of the average monthly utility billing. 

Easley reported staff is exploring utilizing the services of a collection agency, and asked council authorization to revise and implement new collection policies and procedures or future use. Either way, staff will continue to “try to collect from former customers who seek to open new utility accounts within” the city. 

The city also collects a 10 percent charge for late utility payments, and in fiscal year 2009-2010 garnered about $177,000 in late charges. The listing of those outstanding balances in the 2010-2011 fiscal year ranged from $9.59 to $1,483.34.

In September 2010, after much debate, the council authorized about $105,000 written off as uncollectible, an amount that included accounts from 2007 and 2008. They also asked that the city explore a collections agency for recovery. The council was told at that time the city at times does sell such accounts.