Property Tax Liens for Delinquent Utility Accounts
June 9, 2026
1 • Adopt a Resolution to:
• Collect delinquent utility account service charges on the San Joaquin County property tax roll beginning with fiscal year 2026/2027; and
• Direct staff to prepare the written report of delinquent accounts, file it with the City Clerk, give the required notices, and schedule a public hearing
Recommendation
2 • City provides water, wastewater, and stormwater service and charges fees for that service • Before incorporation, utilities were operated by MHCSD, which collected delinquent charges on the County property tax roll under its community services district authority • With incorporation, the City assumed the utility function • The district-specific authority no longer governs; the authority available to a city is found in California Health and Safety Code sections 5470 through 5473.11
• A number of utility accounts have become delinquent; staff has identified approximately 430 delinquent accounts
Background
3 • City already addresses delinquencies by recording property liens against the delinquent owner’s property under Health and Safety Code section 5473.11
• Recording a property lien secures the debt but generally does not produce payment until the owner sells or refinances
• Collecting the delinquency on the tax roll causes the past-due amount to be paid when the annual property tax bill is paid
• The two tools are alternative and complementary; electing tax-roll collection does not give up the property lien remedy
• Staff recommends that the City add tax-roll collection as a second tool for collecting delinquent accounts
Background
4 • Process for electing to place delinquent charges on the tax roll under CA Code Section 5473:
• Adopt a resolution (two-thirds vote) electing to collect delinquent accounts on the tax roll - this is the action recommended tonight
• Prepare a written report describing each delinquent parcel, stating the past-due charge for each parcel, and filing it with the City Clerk
• Give public notice of the public hearing
• Publication once a week for two successive weeks in Tracy Press, stating that the report has been filed and giving the time and place of the hearing
• Written notices mailed to each account owner of a property to be assessed, at the address shown on the tax roll
Direct Assessments Process
5 • Hold the hearing - staff proposes that the public hearing be scheduled for July 22, 2026 • City Council hears and considers all objections or protests • If the owners of a majority of the separate parcels described in the report protest, the report cannot be adopted, and the charges must be collected separately — not on the tax roll — and do not constitute a lien
• If there is no majority protest, the City Council may adopt, revise, change, reduce, or modify any charge, overrule objections, and approve the report, and its determination is final • City Clerk files the report with the County Auditor-Controller by August 10 Direct Assessments Process - Continued
6 • Approximately 430 delinquent accounts are eligible for a property tax lien • Total of the proposed assessment is $634,500, an average of $1,380 per account • Staff has already placed a property lien on most of these properties and others have balances in excess of $500, which would be considered for a property lien were it not for the timing of this proposal for property tax liens
• Number of accounts proposed for property tax liens is significantly greater than in previous years Delinquent Accounts
7 • Termination of utility services has been proven to an effective tool to curb delinquencies • SB 998, the Water Shutoff Protection Act, became effective in 2020 • SB 9998 provided specific requirements before services could be terminated • Before the conversion to in-house billing, Utility Billing staff was able to maintain schedules for terminations and property liens
• Issues described in previous slide required significant staff effort to verify delinquencies to ensure the information was correct
• Staff intends to resume all remedies available under SB 998. This will reduce the number of delinquent accounts
• In prior years, mailing letters to delinquent account holders resulted in payments that reduced the number of accounts to be added to the tax roll; staff will send letters to the 430 accounts and expects a reduction in the number of accounts to be assessed this year as well.
Discussion
8 • Collecting delinquent charges on the tax roll is expected to improve recovery across the approximately 430 delinquent accounts
• The aggregate amount of the current delinquencies proposed for collection is approximately $634,500, an average of $1,380 per account
• The direct costs associated with the process include publications, mailing of letters, and the 1% fee charged by the Auditor-Controller
Fiscal Impact
9 • Adopt a Resolution to:
• Collect delinquent utility account service charges on the San Joaquin County property tax roll beginning with fiscal year 2026/2027; and
• Direct staff to prepare the written report of delinquent accounts, file it with the City Clerk, give the required notice, and schedule the public hearing described in this staff report.
Recommendation
10