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Anaheim, CA 92805
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CITY COUNCIL AGENDA REPORT
City of Anaheim
PUBLIC UTILITIES DEPARTMENT
DATE: AUGUST 9, 2022
FROM: PUBLIC UTILITIES DEPARTMENT
SUBJECT: APPROVAL OF A COLLECTION SERVICES AGREEMENT
WITH RAY KLEIN, INC., DBA PROFESSIONAL CREDIT
SERVICES
ATTACHMENT (Y/N): YES ITEM # 14
RECOMMENDATION:
That City Council, by Motion,
1) Approve a Collection Services Agreement (Agreement) with Ray Klein, Inc., dba Professional Credit Services (PCS), to provide collection services related to uncollectable utility closing bills for an initial term of five (5) years and up to four (4) one-year extensions in a not to exceed amount of $241,675 for the initial term and $48,335 per year for each of the one-year extensions; and 2) Authorize the Public Utilities General Manager or designee, on behalf of the City, to execute the Agreement and any related documents, and take any and all actions as are necessary or advisable to implement and administer the Agreement.
DISCUSSION:
At its meeting of July 27, 2022, the Public Utilities Board (PUB) recommended that City Council approve these actions.
Anaheim Public Utilities (APU) makes every attempt to work internally with customers to provide assistance and options in paying their past due bills. APU Customer Service staff works with customers to identify financial assistance resources, as well as provide payment plans and extension options to accommodate customers’ specific situations. Examples of financial assistance include applying federal and state funds to lower past due amounts, applying emergency assistance of up to $350 per household, offering APU income-qualified discounts, allowing additional energy at lower rates for medically-qualified uses, and offering efficiency programs to reduce consumption.
During the pandemic, APU suspended utility service disconnections for nonpayment, but there were still situations in which collection services were utilized. As examples, once APU exhausted its assistance and payment arrangements efforts because a customer is moving out of Anaheim, or a business is in bankruptcy, and closing bills go Approval of a Collection Service Agreement with Ray Klein, Inc., dba Professional Credit Services August 9, 2022
unpaid for 75 days past the service termination date, the account is deemed uncollectible, and a collection services firm is engaged in an effort to recover the overdue amount.
APU has an existing agreement with Professional Credit Services (PCS) that was approved by City Council in 2016. Since that agreement expires in August 2022, APU issued a Request for Proposals (RFP) for a collection services firm on April 20, 2022.
APU received ten proposals, which were evaluated based on Council Policy 4.1 and ranked based on relevant experience, ability to provide successful collection services, an online reporting portal, qualifications of the firm, demonstrated record of success at similar agencies, and reasonableness of fees.
The ranking of the top five firms is as follows:
Firm Location Rank
Ray Klein, Inc., Vancouver, WA 1
dba Professional Credit Services
General Revenue Corporation Mason, OH 2
IC System, Inc. St. Paul, MN 3
States Recovery Systems, Inc., Rancho Cordova, CA 4 dba SRS, Inc.
Sequoia Concepts, Inc., Agoura Hills, CA 5
dba Sequoia Financial Services
APU determined that PCS is the most qualified based on their extensive experience with similar agencies and demonstrated ability to achieve higher collection results while balancing the need for a customer-centric approach, which has recovered an average of $117,000 annually. PCS provided a client list of similar agencies that includes the City of Newport Beach, City of Glendale, City of Salem, and City of Corona.
Other features provided in their proposal include representatives who speak multiple languages, and are fully trained in compliance with collection laws and regulations such as the Fair Debt Collections Practices Act (FDCPA). PCS also offers a modern, highly intuitive web portal, which APU staff will use to securely refer collection accounts, view up to the minute collection efforts, and generate real-time customizable reports. The web portal is an important tool in ensuring that APU staff have the current status of collection efforts and contacts made with the customer at all times.
PCS provided the lowest cost proposal, in part, because existing accounts already in collections would not need to be transferred to a new company, therefore there would be no secondary placements resulting in multiple commission costs with recovery. PCS Approval of a Collection Service Agreement with Ray Klein, Inc., dba Professional Credit Services August 9, 2022
collection services are commission-based (18% of amount for primary collections) and do not require any direct payments until collections are received by APU. The other firms either did not demonstrate that they have sufficient collection rates or did not have highly rated technical capabilities to meet the reporting and real-time access to data as required.
The Agreement has an initial five-year term, with an option for an additional four (4) one-year extensions; however, should APU not be satisfied with PCS’s performance, the Agreement can be terminated upon 30 days written notice.
IMPACT ON BUDGET:
Sufficient funds are included in APU’s FY 2022/23 restricted Utility fund budget to cover the commission expense, and recovered funds are treated as an offset to uncollectible debt expenses. Future years are subject to City Council approval of budget appropriations.
Respectfully submitted,
Dukku Lee
Public Utilities General Manager
Attachment:
1. Collection Services Agreement with Ray Klein, Inc., dba Professional Credit Services