City Multiplies Engineering Award: 200% Increase

San Angelo's City Council will hear a proposal to increase the maximum amount it plans to spend on street engineering by $2 million.  Council approved a $1 million indefinite quantity, indefinite delivery contract for engineering services in September 2015.  Staff proposed increasing that to $3 million. 

MedHab Gets Texas Higher Education Grants

Four years ago San Angelo's City Council voted for a $3.6 million economic development package for MedHab LLC.  The money would go toward creating up to 227 jobs.

The Standard Times reported on January 3, 2012:

According to a city memo, its first product will hit the market in Australia in June, "with a launch in the U.S. as soon as they receive final FDA (Food and Drug Administration) approval."

Four years later MedHab remains firmly in the research phase while it continues to raise capital.

Instead of 227 jobs in San Angelo Medhab has 15 company wide.  The company's main address is 1120 South Freeway, Fort Worth.  Data on the number of employees came from a Small Business Innovation Research spreadsheet dated 1-1-2016.  The SBIR website states:

The Small Business Innovation Research (SBIR) program is a highly competitive program that encourages domestic small businesses to engage in Federal Research/Research and Development (R/R&D) that has the potential for commercialization. Through a competitive awards-based program, SBIR enables small businesses to explore their technological potential and provides the incentive to profit from its commercialization. 

Four years ago San Angelo's City Council was sold a "nearly ready" to market product.  Nearly turned out to be a very long time.

City to Outsource Delinquent Water Collections Yet Again

San Angelo's City Council will entertain yet another proposal to help the Water Department ladies with collections.  The background packet for Tuesday's meeting states:

The proposed amendment will modify City Ordinance to allow the utility to turn over delinquent accounts to a third party collection agency and place the burden of the collection fee (20% of unpaid balance) on the collection account instead of the Water Utilities department. The collection agency will also be reporting these owed monies to the credit reporting agencies (i.e. Equifax, etc.)

The City had a similar provider until 2010 when the business folded. The City absorbed all collection cost with the previous provider. Currently, all collections for the Municipal Statement are performed by the Customer Service and Municipal Court departments. There is currently over $2.3 million in collections.

Council approved two other items to help water billing, a customer portal for residents to view their water use (April 2013) and an automated phone payment system (October 2012).  I have not seen any feedback on the impact of these two prior actions by council.

Oddly, staff projected little impact from utilizing a collection agency again.

Financial Impact:
Over $2.3 million currently in collections as handled by Customer Service and Municipal Court.

Placing the collection fee (20% of unpaid balance) on the customer relieves the Water Utilities department of this financial burden.

Who entertains contracting out a service and not projecting results?  How much of the $2.3 million is in water utility bills?  How much did the prior vendor collect percentage-wise from deliquent water accounts?  At what age did the city turn over accounts to the collection agency?  Hopefully, more information will be forthcoming at the Council meeting on Tuesday.

Mayor Morrison historically opposed the $25 late fee charged to citizens as usurious given the average water bill for 2015 was just over $50.  That's nearly a 50% penalty.  I wonder how he'll find an additional 20% collection penalty paid by the citizen user.

A charge will be added to a customer’s account for each delinquent, closed account at the time the account is turned over by the Water Utilities Department to a third party engaged by the City for collection of such accounts in a sum equal to twenty percent (20%) of the total sum payable on the account.

If the account is eight months overdue it could have $200 in late fees.  The simple act of turning that account over to collections would result in an additional $40 penalty solely from late fee charges.  

It will be interesting to hear Council's and the Mayor's take on this item..

Update 1-6-16:  Council denied the 20% add on to the water bill for delinquent accounts but nodded for staff to bring back a contract for a collection agency on over $2.7 million in delinquent water bills.

Update 4-4-17:  City Council briefly considered reducing the $25 late fee but stuck to the current practice of socking it to citizens because the city needs the revenue.