ITEM 4. 3
CITY MANAGER' SREPORT
AUGUST 12, 2024 CITY COUNCIL REGULAR MEETING
ITEM: APPROVE WRITE- OFF OF UNCOLLECTIBLE UTILITY
AND MISCELLANEOUS CUSTOMER ACCOUNTS FOR
FISCAL YEAR 2023/4
RECOMMENDATION: Adopt Resolution to Approve Write - Off of Uncollectible Utility and Miscellaneous Accounts for
Fiscal Year ( FY) 2023/4
SUMMARY:
Generally Accepted Accounting Principles ( GAAP) and Governmental Accounting Standards Board ( GASB) require municipalities to evaluate and write- off delinquent accounts that are deemed uncollectible. As part of the annual audit process and in compliance with both GAAP and GASB requirements, the Finance Department has reviewed unpaid delinquent accounts assigned to collections. After a thorough review,
staff has determined $ 120, 790 to be uncollectible for FY 2023/4as detailed in Table 1 below:
Table 1.
Customer Account Type
FY 2022/3
Approved
Write - Offs
FY 2023/4
Recommended
Write -Offs
Increase/
Decrease)
No. of
Accounts to
be Written -Off
Utility Customers
Residential and Commercial) 180, 434 120, 620 33. 15%) 226 Miscellaneous Customers 13, 041 170 98. 40%) 3
Totals 193, 475 120, 790 229
The recommended utility write- offs represent 0.55% of the annual water and sewer charges billed to customers in FY 2023/4. The utility debt includes amounts from customers who have closed their account with the City without settling their final bills. The utility write- off amount in FY 2023/4 has decreased by $ 60, 000 or
33. 15%, from the prior fiscal year.
The recommended miscellaneous write- off amount of $ 170 include charges rendered by Animal Services. These charges include animal impound, emergency call costs, veterinary costs, and shelter fees.
Although these accounts will reflect as " written off" in the City' s financial system, additional collection measures are in place to seek repayment. For instance, the collection agency will continue to pursue repayment efforts on these accounts and forward any recovered payments to the City.
Tonight, Staff is requesting Council' s
approval to write- off $120, 790 of uncollectible
utility and miscellaneous charges.
CITY MANAGER' SREPORT PAGE 2
AUGUST 12, 2024 CITY COUNCIL REGULAR MEETING
UNCOLLECTIBLE UTILITY AND MISCELLANEOUS CUSTOMER ACCOUNTS BACKGROUND:
On May 19, 1998, the City Council of the City of Lathrop adopted Resolution 98- 664 regarding the approval and implementation of a revenue collection policy. On October 18, 2010, Council authorized the execution of an agreement with Golden State Collections, LLC.
The collection policy was established to help decrease the number of delinquent accounts ( 60- 90 days). After unsuccessful collection attempts by City staff, the policy allows City staff to refer customers' accounts that remain unpaid for 60- 90 days to the collection agency for collection proceedings. The collection agency operates on a commission - based structure. Their fee is 30% of the total amount collected.
Currently, there are two types of customer accounts referred to the collection agency:
utility and miscellaneous customer accounts. The utility customer accounts include charges for water and wastewater who have closed their account with the City without paying their final bill. Miscellaneous customer accounts include charges rendered by:
Finance, Animal Control, Community Development, Police, Parks & Recreation, and Public Works. Charges include animal impound, unpaid business license and programming fees, court ordered restitution, materials/ equipment, and checks returned for insufficient funds.
Utility Customer Accounts
During FY 2023/4, Golden State Collections, LLC, received claims for further collection processed on 226 delinquent utility customer accounts totaling $ 120, 620.
Of the $ 120, 620 assigned to Golden State Collections, LLC, the agency recovered 927 from 9 customer accounts recorded on the current and prior year claims. This represents a 0. 77% recovery rate from the total amount referred ( see Table 2).
Table 2.
ility Customer Accounts FY 2021/2 FY 2022/3 FY 2023/4
Total Utility Customers 9, 379 9, 895 10, 528
Accounts Sent to Collection Agency 16 198 226
Amount Assigned to Collection Agency 56, 601 184, 313 120, 620 Amount Recovered by Collection Agency 1,10 4, 658 927
Recovery Rate 1. 96% 2. 52% 0. 77%
Total Write -Offs 56, 601 184, 313 120, 620
CITY MANAGER' SREPORT PAGE 3
AUGUST 12, 2024 CITY COUNCIL REGULAR MEETING
UNCOLLECTIBLE UTILITY AND MISCELLANEOUS CUSTOMER ACCOUNTS The utility write - o0 amount in FY 2023/4has decreased by $ 60, 000 or 33. 15%. Of the 226 utility customer accounts, there are 85 residential accounts with past due balances of $ 500 or more. These accounts total approximately $ 103 thousand and makes up for 85. 06% of the overall utility write off amount. Most of the high balances were accumulated during the COVID- 19pandemic.
In May 2024, the City received a second round of funding from the State Water Resources Control Board ( SWRCB) amounting to $ 158, 000 to assist residential and commercial customers with utility debt incurred due to the COVID- 19 pandemic.
Residential and commercial customers with outstanding balances were conditionally eligible to have credits applied to their utility account. These credits were posted to all eligible active and inactive accounts. Without the additional SWRCB funding, the recommended write off amount of $ 120, 620 for utility customers would have been significantly higher.
Staff will continue to re -enforce current programs that offers payment assistance, such as extending payment due date or granting payment arrangement to utility customers carrying past due balances. In addition, the Finance Department conducts a review of all new customers prior to establishing service to ensure there are no outstanding balances.
Miscellaneous Customer Accounts
Miscellaneous customer accounts referred to collections for FY 2023/4 totaled $ 170 from 3 accounts related to Animal Services, as summarize in Table 3. Animal Services billings included emergency call costs, veterinary costs, impoundment, and shelter fees.
Table 3.
Miscellaneous
Customer Accounts
Animal
Services
Public
Works
Parks &
Rec Misc. FY 2023/4
Accounts Sent to Collection
Agency
3 0 0 0 3
Amount Assigned to Collection
Agency
170 0 0 0 170
Amount Recovered by Collection
Agency
70 0 0 0 70
Total Write- offs 170
CITY MANAGER' SREPORT PAGE 4
AUGUST 12, 2024 CITY COUNCIL REGULAR MEETING
UNCOLLECTIBLE UTILITY AND MISCELLANEOUS CUSTOMER ACCOUNTS REASON FOR RECOMMENDATION:
The Finance Department has conducted a thorough review of the utility and miscellaneous customer accounts and recommends $ 120, 790 to be considered uncollectible. By approving the recommended write off amounts, the City is not forgiving the outstanding balances but is acknowledging that payment is not expected to be received.
FISCAL IMPACT:
Decrease customer' soutstanding balances due to uncollectible debt as follows:
Utility customer accounts:
Miscellaneous customer accounts:
Total amount of uncollectible accounts:
ATTACHMENTS:
120, 620
170
120, 790
A. Resolution to Approve Write -Off of Uncollectible Utility and Miscellaneous Accounts for Fiscal Year ( FY) 2023/4
CITY MANAGER' SREPORT PAGE 5
AUGUST 12, 2024 CITY COUNCIL REGULAR MEETING
UNCOLLECTIBLE UTILITY AND MISCELLANEOUS CUSTOMER ACCOUNTS APPROVALS:
Chia Lor
Senior Accountant
Cari Jame
Director o ' inance
Salvador Navarrete
City Attorney
Date
ghlay
Date
5 -1 --
Date
1) %S / ZctA- j
Thomas Hedegard Date
Deputy City Manager
Stephen J. Salvatore Date
City Manager
RESOLUTION NO. 24-
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LATHROP
APPROVING THE WRITE- OFF OF UNCOLLECTIBLE UTILITY AND
MISCELLANEOUS CUSTOMER ACCOUNTS FOR FISCAL YEAR 2023/4
WHEREAS, Generally Accepted Accounting Principles ( GAAP) and Governmental Accounting Standards Board ( GASB) require municipalities to evaluate and write- off delinquent accounts that are deemed uncollectible; and WHEREAS, as part of the annual audit process and in compliance with both GAAP and GASB requirements, the Finance Department has reviewed unpaid delinquent accounts assigned to collections; and
WHEREAS, after a thorough review, staff has determined $ 120, 790 to be uncollectible for FY 2023/4as detailed in Table 1 below; and Table 1.
Customer Account Type
FY 2022/3
Approved
Write -Offs
FY 2023/4
Recommended
Write - Offs
Increase/
Decrease)
No. of
Accounts to
be Written - Off
Utility Customers
Residential and Commercial) 180, 434 120, 620 33. 15%) 226 Miscellaneous Customers 13, 041 170 98. 40%) 3
Totals 193, 475 120, 790 229
WHEREAS, the recommended utility write- offs represent 0. 55% of the annual water and sewer charges billed to customers in FY 2023/4. The utility debt includes amounts from customers who have closed their account with the City without settling their final bills. The utility write- off amount in FY 2023/4 has decreased by $ 60, 000 or 33. 15%, from the prior fiscal year; and
WHEREAS, the recommended miscellaneous write- off amount of $ 170 include charges rendered by Animal Services. These charges include animal impound, emergency call costs, veterinary costs, and shelter fees; NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Lathrop approves the write- off of uncollectible accounts in the amount of $ 120, 620 in Utility Customers and $ 170 in Miscellaneous Customers for Fiscal Year 2023/4.
The foregoing resolution was passed and adopted this 12th day of August, 2024, by the following vote of the City Council, to wit:
AYES:
NOES:
ABSENT:
ABSTAIN:
Sonny Dhaliwal, Mayor
ATTEST: APPROVED AS TO FORM:
Teresa Vargas, City Clerk Salvador Navarrete, City Attorney
PAGE LEFT
INTENTIONALLY
BLANK