HomeMy WebLinkAbout06-05-2018 Item 17 Amend Resolution for Utility Billing Deposits Meeting Date: 6/5/2018
FROM: Carrie Mattingly, Utilities Director
Prepared By: Brigitte Elke, Interim Finance Director
SUBJECT: UTILITY BILLING DEPOSITS
RECOMMENDATION
It is recommended that the City Council adopt a Resolution that a mends Resolution 7080 (1992
Series) by:
1. Eliminating deposit requirements for non-payment;
2. Establish a deposit amount when a social security number is not provided; and
3. Allow for increases to the deposit amount with the change in water and sewer rate s.
DISCUSSION
In 1992, the City Council esta blished a refundable deposit requirement for all accounts
disconnected from service due to non-payment of outstanding invoices (Attachment B). The fees
were adopted without an inflator and are still $90.00 for all residential accounts and vary for all
other customer classes by meter size. Per resolution (Attachment A), the deposit is reimbursed
when an account remains current and in good standing for at least one year.
In September 2015, the Utility Billing function moved from the Finance Department to t he
Utilities Department. This offered an opportunity to review current practices, policies, and
analyze procedures which included utility account deposits. The current deposit policy was
found ineffective as it no longer covers the average debt, is cumbersome and time consuming to
administer, and adds an additional financial burden on people already in arrears with the bill.
What has changed
Prior to contract meter reading, utility invoices arrived at different dates from month-to-month.
Now the due date falls on the 15th of each month. This allows customers to better plan for the
expenditure. The implementation of online and phone payment options allows customers to pay
their bill 24/7 and leaves them less dependent on City business hours.
Shut -off numbers have therefore gradually dropped over the past two years from 870 to 246 in
the first six months of 2017-18. However, a customer already pays $110.00 in reconnection fees
in addition to the owed amount. With the deposit an additional $200 become due before water
service can be restored.
Collection of Debt
The new streamlined processes for shut -off for non-payment and the improved final bill process
keep accounts current and a customer aware of a final invoice after termination of service.
Additionally, staff implemented a phone tree alert to all account holders who have an open
invoice pending for collection. This process decreased the cases being transferred to the
collection agency by 30%.
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Account Security Deposit
In order to open a utility account, customers have to provide their social security number as the
unique identifier of the account holder. The City currently allows a customer to pay a deposit to
avoid providing this information. Staff recommends that the deposit collected for this purpo se
remain, be non-refundable until the account closes, and should at least secure the average
collection amount of $300. Since the average monthly utility bill changes with rate adjustments,
it is recommended to increase the deposit amount with the annual changes in water and sewer
rates as notified under Proposition 218.
FISCAL IMPACT
In 2016-17, the Utilities Department referred $61,402 in outstanding payments to collections.
This represents 0.18% of the $33.4 million in rate revenue collected for the Water and Sewer
Fund. The amount sent to collection for accounts with deposit was $4,518 of which $990.00 was
secured with the deposit. Nine of those deposits were collected through the shut -off process, two
in lieu of a social security number.
ALTERNATIVE
1. Keep the current resolution. This is not recommended as the deposit does not cover the debt
it was supposed to secure.
2. Continue to collect a deposit for non-payment and increase the amount to $300. This is not
recommended as it places a large burden o n people who already struggle to pay the bill to
restore water service.
Attachments:
a - Resolution 7080 (1992 series)
b - Amended Deposit Resolution
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R ______
RESOLUTION NO. _____ (2018 SERIES)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA RESCINDING AND REPLACING RESOLUTION
NO. 7080 (1992 Series) TO ESTABLISH A RECONNECTION FEE AND
REFUNDABLE DEPOSIT REQUIREMENTS.
WHEREAS, Section 13.04.030 of the City of San Luis Obispo Municipal Code provides
that a deposit may be required prior to initiating water service and allows such a deposit to be
established by resolution; and
WHEREAS, in 1992, Resolution No. 7080 established a refundable deposit for all
accounts for which water has been disconnected for non-payment; and
WHEREAS, in 1993, by memorandum, the Finance Director, as permitted by Ordinance
No. 1204, declared that if customers decline to provide their social security number when signing
up for City utility service, they are required to pay a deposit prior to the start of service; and
WHEREAS, current deposit levels are ineffective and insufficient in securing owed
balances. In the case of termination of service due to non-payment, they add additional hardship
to those already struggling to pay their utilities bill; and
WHEREAS, current processes for collection of unpaid balances on closed accounts
through the City’s collection agency depend on a social security number for successfully
identifying the debtor.
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo
as follows/or that (whatever action is needed):
SECTION 1. No deposit will be collected for non-payment of a balance on an active
account.
SECTION 2. A deposit will be collected for service request when the customer declines
to provide his social security number. This deposit amount is set at $300 and will be included in
the City’s master fee schedule and increased annually by the applicable inflator according to the
master fee schedule process.
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Resolution No. _____ (2018 Series) Page 2
R ______
SECTION 3. Resolution No. 7080 (1992 Series) is hereby repealed to the extent
inconsistent herewith.
Upon motion of _______________________, seconded by _______________________, and on
the following roll call vote:
AYES:
NOES:
ABSENT:
The foregoing resolution was adopted this _____ day of _____________________ 2018.
____________________________________
Mayor Heidi Harmon
ATTEST:
____________________________________
Teresa Purrington
City Clerk
APPROVED AS TO FORM:
_____________________________________
J. Christine Dietrick
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City
of San Luis Obispo , California, this ______ day of ______________, _________.
____________________________________
Teresa Purrington
City Clerk
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