Sunday, January 03, 2016

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.

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