HomeMy WebLinkAbout10C Utility Billing Practices o � pxro�,
ti �
V � 4646 Dakota Street SE
Prior Lake, MN 55372 ,
`�INxESO�
CITY COUNCIL AGENDA REPORT
MEETING DATE: NOVEMBER 12, 2013
AGENDA #: 10C
PREPARED BY: CATHY ERICKSON, ACCOUNTING MANAGER
PRESENTED CATHY ERICKSON, ACCOUNTING MANAGER &
BY: JERILYN ERICKSON, FINANCE DIRECTOR
AGENDA ITEM: CONSIDER APPROVAL OF A REPORT REGARDING UTILITY BILLING
PRACTICES
DISCUSSION: Introduction
As directed by the city council, the purpose of this agenda item is for the
Council to review current utility practices (specifically regarding water shutoff
versus certification) and consider some possible alternatives.
Hi StOry
From 2009 to 2013, we have seen a 5% increase in the number of utility
accounts, and a 144% increase in building permits which means the number
of accounts will continue to grow. As our community continues to grow, we
want to ensure that we are providing property owners with a high level of
service, while prudently managing the administrative aspects of billing and
collection of utility payments.
Over the past several years, we have seen a rise in the number of account
changeovers due to change in renters. Currently, the process of managing !
the billing and collections for renters falls on the City (rather than the property
owners).
Current Circumstances:
While the request for information was directed at the shutoff versus
certification options, staff thought it would be appropriate to include some
options that may facilitate the collection process and, therefore, minimize the
occurrence of delinquent accounts.
The attached report identifies the pros and cons associated with each of the
current practices listed below and the possible alternatives. Staff attempted
to identify these pros and cons from the City perspective as well as the
property owner (who is ultimately responsible for the utility bill).
The account statistics provided below are based on our October 2013 billing
cycle.
Current Practice #1: The City disconnects water service for utility bills
that are delinquent more than 60 days. We certify outstanding utility bill
balances as special assessments on an annual basis. Certifications
consist of final accounts that are past due more than 60 days, as well as
accounts that are active but the water has been shut off due to non-
payment.
Of the 17 accounts to be certified for special assessment in 2013, 35% or 6
are renters.
Benchmark Results-Water shut-off vs. certification for delinquent utilitv bills:
Staff contacted other cities to see how they handle delinquencies. We found
that 85% of the 13 cities use certification of delinquent utility bills as the sole
means of collection, while 15% of the cities disconnect the water first and
then certify, if necessary.
# of % of
Responses Total
Certify Only 11 85%
Disconnect/Certify Annually 2 15%
Tota I 13 100%
Current Practice #2: The City bills the renter directly versus the
landlord.
92% of our utility account holders are owner/landlord and 8% or 675 are
renters. Our delinquency rate is 13% of all accounts or 1095.
Accounts
% of Total
# of Accounts Accounts
Rentals 675 8%
Owners 7,541 92%
Total accounts 8,216 100%
Delinquent Accounts 1,095 13%
27% or 179 of all renter accounts are delinquent; while 12% or 916 of owner
accounts are delinquent.
Delin uentAccountType
% of
# of Total
Delinquent #of Account
Accounts Accounts Type
Rentals 179 675 27%
Owners 916 7,541 12%
Total DelinquentAccounts 1095 8,216
We have benchmarked various utility billing processes with neighboring and
similarly sized cities. For the 13 responses we received, our benchmark
survey revealed the following:
Benchmark Results - Renter vs. Landlord Billinq: Almost half of the cities (6)
bill the renter, 38% (5) bill the landlord, and 15% (2) give the landlord the
billing option. Of the five Cities that bill the landlord, two will also provide a bill
to the renter.
Party Billed # of Responses % of Total
Renters 6 47%
Landlords 5 38%
Give landlord the option 2 15%
Tota I 13 100%
ISSUES: See Attachment 1 for a summary of the issues and opportunities of Utility
Billing Current Practices and Alternatives.
The changes in utility billing and collection method of delinquent utility bills
would require ordinance amendments.
If the council desires to change our present practices, staff recommends a
phased approach. For example, the Council could consider making the
change to bill landlords directly instead of renters. Staff could evaluate the
impact of this change (i.e. delinquency rate) and then the Council could
consider shutoff versus certification. This will also give staff an opportunity to
evaluate the impact of providing eStatement and ePayment services which
we are rolling out January 2014.
FINANCIAL Any changes in practices could affect revenue and expenditures associated
IMPACT: with providing utility services.
Currently, the City does not charge any administrative fees associated with
setting up new accounts or the additional notifications required for landlords
(past due notices for their renters).
ALTERNATIVES: 1. Elect to continue the existing practice which includes water shut off.
2. Direct staff to prepare a process and timeline for conversion to a
certification process.
3. Continue to bill renters as is the current practice.
4. Direct staff to prepare a process and timeline to bill only property
owners and landlords.
RECOMMENDED
MOTION: As determined by the City Council.