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