Sunday, January 13, 2019

Water Department to Use New Collection Agency

City Council approved a new collection agency for past due water, sewer and trash service bills on 1-8-19.  Online Collection Services from Winterville, North Carolina is the new collection vendor.

Three years ago City Council approved use of a collection agency to collect past due water bills.  An RFP document provided background information:

The City of San Angelo Water Utility Department is soliciting RFPs for debt collection services for unpaid water, waste water, trash and storm water past due bills. This service is currently being provided through an amended legal services contract that was originally awarded through municipal court to collect on traffic violations. The original contract because it falls under legal services did not go through any formal RFP process. 
City staff was unable to answer the following questions from Council:

1.  What percentage of the uncollected amounts are commercial vs. residential?  "I don't that particular number."
2.  How many accounts does this represent?    "I don't have that number exactly....18,000 sticks in my to mind."
3.  In the last three years how much money did the first company collect?  "I'd have to go back and look at documents on that.  I have seen that but I don't recall."
4.  How long is the contract for?  "They are basically going to be one year terms, the first term may be two years."

Staff highlighted the new firm's capabilities vs. the current vendor:

"This company does have some fairly aggressive means in that they actually do credit bureau reporting, which is something we have not had the opportunity to do in the past."

"We have been not able to do the credit bureau reporting."
Flashback to January 2016 and the justification memo written by then Assistant Water Utilties Director Alison Strube:
The 1-5-2016 memo 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's purchasing department provided additional information to potential bidders via an addendum:

The document included a lengthy narrative to answer a number of vendor questions.  It stated:
In recent fact finding inquiries with other entities the City Water Utility department feels it may be able to get a collection service company that could provide a better return rate while at the same time receiving a higher success/recovery rate percentage

The current amount of outstanding debt being carried by the City Water Utility Department is approximately 3.6 million dollars and held under 12,700 accounts extending back to 2009 and possibly earlier. Although the collection agency does not have to be located in Texas or in San Angelo established municipal utility experience with collection in the state of Texas is paramount. Prior to placing accounts in collection the Utility makes several attempts over a 60 day period to notify account holders by phone, email, US mail and door tags. 

Selected candidates will be given a percentage of both new and existing accounts for collecting. The Utility would expect collection service providers to at a minimum provide monthly updates including accounts that have been collected, dollar values, and accounts that have been reported / filed with credit bureaus.
Only Councilwoman Lucy Gonzales served in January 2016 when the first collection agency was approved.  She did her part by asking good questions. City staff need to step up their game by preparing and providing good answers.

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