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HomeMy WebLinkAbout2011 05 09 Regular 600 Utility Billing Policy COMMISSION AGENDA CONSENT INFORMATIONAL ITEM 600 PUBLIC HEARING REGULAR X May 9, 2011 MGR /DEPT Meeting Authorization REQUEST: The Finance Department requests that the Commission review the proposed revisions to the utility billing and collection process and provide direction as deemed appropriate. SYNOPSIS: The purpose of this agenda item is to seek Commission review and consensus of proposed revisions to the utility billing and collection process for the purpose of improving customer service, increasing staff/process efficiency, incentivizing preferred payment method, and recovering costs while maintaining balance between all stakeholders (customer/bondholder). Additionally, to authorize City Manager and City Attorney to bring back any and all necessary documents to reflect those revisions deemed appropriate by the Commission. CONSIDERATIONS: The following chart sets forth brief descriptions of the proposed revisions along with the current status. The chart is followed by more detailed discussion of each topic. Current Status Proposed Revision Application Fee -- Application Fee -- Waive Application fee is required for all new accounts application fee for those customers regardlessat the time of application of payment method; currently, the who,, activate the preferred application fee is $20 payment method(s) which is currently automatic bank drafting (also known as electronic funds transfer/EFT) Late Fee Waiver -- Late Fee Waiver -- ONLY one one time per late fee can be waived during the Authorize late fee waiver up to lifetime24-month period of an account when hardship exists OR to motivate the customer to activate preferred payment method City Commission – Regular Meeting May 9, 2011 Regular Agenda Item #600 Page 2 of 6 Current Status Proposed Revision ‘Cash Only’ Requirement -- ‘Cash Only’ Requirement -- two When a customer has had returned Customers would no longer be placed under an 6-month payments (NSF) within a period that ongoing‘cash only’ requirement unless customer is required to make future payments deemed appropriate by City Manager, or his in cash, money order, or credit card ONLY designee. (hereinafter, ‘cash only’). No provision exists to ever reverse this ‘cash only’ requirement. Revocation of bank draft privilege -- Revocation of bank draft privilege -- Bank draft policy revokes customer’s bank Bank draft privileges would no longer be first draft privileges upon the NSF occurrence revoked unless deemed appropriate by the City but permits subsequent check payments Manager, or his designee. Special Payment Arrangements -- Special Payment Arrangements -- Other than the routine payment schedule Authorize City Manager, or his designee, to specific provision is not currently made for enter into special payment arrangements special payment arrangements (extensions/installments) After-Hours Reconnection Fee -- After-Hours Reconnection Fee -- When a customer has been disconnected for When a customer has been disconnected for non-payment, other than the reconnection fee non-payment, in addition to the reconnection no additional fee$25 after-hour reconnection fee of $40, is charged when fee of $40, a customer utilizes the after-hours’ reconnection may be charged when customer utilizes the serviceafter-hours’ reconnection service APPLICATION FEE – The City charges a $20 application fee for new accounts and would like to offer new account holders the opportunity to have that fee waived if they activate a preferred payment method at the time of application. Presently, there is one preferred payment method, that of automated bank drafting known as electronic funds transfer (EFT) which is currently utilized by 1,450 customers (11%). In an average fiscal year, we receive about 1,500 applications for new service. one-time If a positive response rate of 5% was realized, a decline in application fee revenues of ongoing $1,500 would result but administrative efficiencies would be gained. Failure to maintain preferred payment method for 12 consecutive months may result in a reinstatement of the application fee. This waiver would not retroactively apply to existing accounts which currently utilize the preferred payment method. LATE FEE WAIVER - Presently, a late fee may only be waived one time during the lifetime of an account. The late fee is $5 or 5% of outstanding bill, whichever is greater. Since most bills do not exceed $100, the typical late fee is $5. It is recommended that the Utility Billing staff be given authority to waive the late fee under one of the following conditions: one time in a 24-month period when unusual hardship exists (i.e. hospitalization, job loss) customer activates preferred payment method City Commission – Regular Meeting May 9, 2011 Regular Agenda Item #600 Page 3 of 6 For the customer with an unusual hardship, a late fee waiver may serve as a reasonable remedy. We do not expect waived penalty fees to exceed $8,000 in a given fiscal year. We do expect to increase staff efficiency and therefore customer service by reducing extended conversations about $5 late fees. Specific guidance would be provided to staff to best ensure that any late fee waivers are consistently and equitably applied. Customers are given 20 days from the bill date to pay the balance due; payment is considered late 21 days after the bill due date; on day 22, a late fee is assessed. Each month, 15-20% of our approximate 12,750 customers pay their bills late. The following sets forth the relevant steps from the initial utility bill up to and including a ‘finalled’ account: Utility bill - mailed approximately 2 weeks after meter read date Due date - 20 days after bill date (Tuesday) Delinquent post card – created 21 days after bill date (Wednesday) Televox phone call – 28 days after bill date (Wednesday) Service disconnection/door hanger - 35 days after bill date (Wednesday) Meter lock-off/door hanger – 42 days after bill date meter locked off for non-payment Account ‘finalled’ – if account is not made current, account is considered abandoned and placed in final bill run ‘CASH ONLY’ STATUS – Presently, when a customer has had two returned payments within a 6-month period that customer may no longer pay by check but must make ALL future payments in cash, money order or credit card. This requirement is inconvenient and/or costly for the customer, but of greater ever significance -- it’s permanent. No allowance is made to relieve the customer of this ‘cash only’ requirement. Of the 65 customers presently abiding by this ongoing ‘cash only’ requirement, the length of time they have been in this status ranges from 2 weeks to 8 years. From time to time a customer may encounter difficult financial circumstances. When this occurs, it is not the City’s intent to apply a permanent penalty. Rather, the fees which are incurred and paid provide sufficient financial coverage as well as appropriate disincentive to the customer. If requested by the customer the returned payment may be resubmitted otherwise, the second tender must be made in cash, money order, or credit card. Staff recommends that only under circumstances deemed appropriate by the City Manager, or his designee, would a customer be placed under an ongoing ‘cash only’ requirement. If approved, all 65 ‘cash only’ customers would be relieved of this ongoing burden. REVOCATION OF BANK DRAFT PRIVILEGES - first The current bank draft policy removes bank draft privileges upon the NSF occurrence but does permit future payments by check. Since it is being recommended above (Cash Only Status) that the sole consequence for returned check payments end with penalty fees and since bank City Commission – Regular Meeting May 9, 2011 Regular Agenda Item #600 Page 4 of 6 drafting is the preferred payment method, staff also recommends that only under circumstances deemed appropriate by the City Manager, or his designee, would bank draft privileges be revoked. As with returned check payments, if requested by the customer, the bank draft may be resubmitted otherwise, the second tender should be in cash, money order, or credit card. SPECIAL PAYMENT ARRANGEMENTS – Although many customers in the midst of financial hardship are willing to work out a payment arrangement, no guiding documentation exists. To that end, we recommend that the City special Manager, or his designee, be authorized to extend payment arrangements. We have defined two categories of payment arrangement: 1)payment extensions of 30 days or less 2)payment installments exceeding 30 days specifying due dates/amounts Payment installments would be primarily reserved for those customers with leaks and/or unexplained usage, therefore, wide utilization is not anticipated. AFTER-HOURS’ RECONNECTION FEE – When a customer has been disconnected for non-payment, at the time of disconnection a door- hanger is placed on the property’s front door. If the customer calls the emergency phone number to have service reconnected after-hours and disputes the turn-off, the technician will restore service until the matter can be sorted out the next business day. Even when the disconnection is no additional fee determined to be valid, other than the reconnection fee of $40, is being charged for the after-hours’ service. Service is typically disconnected on Wednesday mornings. Aside from numerous attempts to inform the customer of service interruption, morning disconnections provide maximum potential for the customer to discover the disconnection and rectify the problem. Some customers with interrupted service will choose to turn it back on themselves which may result in a $95 tampering fee. After-hours’ reconnection is defined as customer-initiated service to restore water after 5 p.m. on business days or on holidays and weekends. Although sending technicians out to a service address after-hours is more costly due to overtime, these charges are not being passed on to the customer who requested and received the service. In order to recover the additional cost, it is recommended that a $25 after-hours reconnection fee be charged. Independent of such a fee, the cost is subsidized by all utility customers. new This after-hours’ reconnection fee would not apply to service accounts. Although our communications state that new service should be initiated by 2:30 p.m. in order to ensure same- day service, we consistently over-deliver in this arena. Even when contacted on weekends, our technicians provide same-day service for new customers. City Commission – Regular Meeting May 9, 2011 Regular Agenda Item #600 Page 5 of 6 FISCAL/LEGAL REVIEW A financial feasibility report was completed in 2011, which estimated the adequacy of existing rates and additional revenues from adopted rate increases and determined them sufficient to meet the annual debt service coverage requirement provided for in Resolution No. 665 (the “Bond Resolution”), duly adopted by the City Commission, as amended and supplemented. The proposed revisions to the utility policies/ordinance(s) will not adversely impact the debt coverage requirements per Resolution No. 665. Michael Williams, bond counsel, of Akerman Senterfitt, reviewed the proposed revisions and finds no conflict with current bond covenants. The City’s auditor, McDirmit Davis, has also reviewed the proposed revisions without issue. FISCAL IMPACT: No funding is necessary to implement the revisions. Application Fee Waiver – This revision would decrease one-time application fee revenues (presently $20/acct.; approximately $1,500/FY) but would also increase the likelihood of timely payment while decreasing staff time on an ongoing basis. Late Fee Waivers - Although staff believes penalty revenues would be somewhat reduced (estimated as much as $8,000/FY), staff efficiency would increase as would goodwill with those customers who perceive the system to be unfair and inflexible. ‘Cash Only’ Status / Revocation of Bank Draft Privilege – This revision is primarily a convenience issue for the customer. While it is possible that some customers may fall back into NSF status, the prevailing fees would serve as the appropriate consequence/disincentive. Special Payment Arrangements – The purpose of this revision is to work with the customer toward payment of their ongoing user fees while chipping away at their outstanding balance. Wide utilization of payment installments will not exist, but to the extent utilized, delinquent account balances are expected to decline as well as disconnections and accounts being sent to ‘collections’. After-Hours Reconnection Fee – Revenues would increase in order to recover additional and incremental costs related to after-hours’ reconnection services. COMMUNICATION EFFORTS: This Agenda Item Has Been Electronically Forwarded To The Mayor And City Commission, City Manager, City Attorney/Staff,And All eAlert/eCitizen Recipients; And Is Available On The City’s Website, LaserFiche, And The City’s Server. Additionally, Portions Of This Agenda Item Are Typed Verbatim On The Respective Meeting Agenda Which Has Also Been Electronically Forwarded To The Individuals Noted Above; And Which Is Also Available On The City’s Website, LaserFiche, And The City’s Server; Has Been Sent To City Staff, Media/Press Representatives Who Have Requested Agendas/Agenda Item Information, Homeowner’s Associations/Representatives On File With The City, And All Individuals Who Have Requested Such Information; And Has Been Posted Outside City Hall; Posted Inside City Hall With Additional Copies Available For The General Public; And Posted At Five (5) Different Locations Around The City. This Agenda Item Is Also Available To Any New Individual City Commission – Regular Meeting May 9, 2011 Regular Agenda Item #600 Page 6 of 6 Requestors.City Staff Is Always Willing To Discuss This Or Any Agenda Item With Any Interested Individuals. Furthermore, if approved, the following will be updated to reflect the revisions in the utility billing/collection process: Invoice Website Delinquent Cards Welcome Packet Form letters Letters sent to all ‘cash only’ customers RECOMMENDATION: It is recommended that the City Commission authorize the City Attorney to move forward with the following revisions to the utility billing and collection process or whatever revisions it deems best: Waive application fee for those customers who, at time of application, activate and maintain preferred payment method for a minimum of 12 months Authorize staff to waive one late fee within a 24-month period, when unusual hardship exists or if the customer opts to activate preferred payment method Release all customers from the ongoing ‘cash only’ requirement and only under circumstances deemed appropriate by the City Manager, or his designee, would a customer be placed under an ongoing ‘cash only’ requirement Revise bank draft policy such that bank draft privileges are not revoked for reasons of returned payment unless deemed appropriate by the City Manager, or his designee Authorize the City Manager, or his designee, to enter into special payment arrangements with utility customers (payment extensions and payment installments) Authorize a $25 after-hours’ reconnection fee when after-hours’ service has been initiated by the customer to restore services which have been disconnected for non- payment Authorize the City Manager and City Attorney to bring back Ordinance/Resolution and any and all necessary documents to reflect the preceding revisions or those revisions deemed appropriate by the Commission