PURPOSE
To establish standard guidelines for City staff for the internal control, collection and write-off of housing loans receivable related to Housing and Community Services Division Programs. To ensure that the housing loans receivable are collected fairly, equitably, and timely.
SCOPE
This policy applies to all City employees who are responsible for recording and collecting housing loans receivable for the Housing and Community Services Division Programs.
POLICY
It is the policy of the City of Santa Clara (City) to actively pursue collection of past-due housing loans receivable, regularly review the status of past-due accounts, and write-off amount determined to be uncollectible. A write-off of uncollectible housing loans receivable from the City’s accounting records does not constitute forgiveness of the debt or gift of public funds.
PROCEDURES
The Housing & Community Services Division is responsible for establishing the collection procedures for its programs. Efforts should be made to pursue the timely collection of delinquent accounts. Collections should be recorded in the Finance Department’s accounts receivable system and deposited timely and accurately. Housing loans receivable should generally be written-off during the fiscal year in which an account is determined to be uncollectible. Subsequent collection of an account previously written-off will be treated as new revenue in the appropriate fund.
All accounts referred for write-off should be reviewed and approved by the department head prior to submission to the Director of Finance or for final write-off approval.
Internal Controls
All aspects of revenue recording and housing loans receivable monitoring shall be subject to proper internal controls established by the Finance Department’s staff. Departmental internal control procedures should be approved by the department head and sent to the Finance Director or designee for review and approval.
Housing Loans Receivable Collection
All housing loans receivable should be recorded in a manner to permit an analysis of the aging of such receivables (e.g., <30 days, 30-60 days, etc.).
The Finance Department will review accounts, by Department, periodically for collection rates and performance.
For those accounts that become past due, the initiating Department should ensure that proper delinquent notice is provided to the customer and continued service is restricted, unless continuation of service is required by law or resolution, until such accounts are current.
Receivables aged over one hundred and eighty (180) days may be sent to the City’s outside collection agency with management approval, unless they are subject to legal action, lien, or determined by management that they should be sent at an earlier time to improve collection efforts.
Delinquent accounts subject to legal remedies should be brought to Small Claims Court, or referred to the City Attorney’s Office or the City’s outside collection agency, with management approval.
Delinquent accounts where real property may be liened for non-payment should be included in lien cycles established by the Department in coordination with the Finance Department, with management approval.
Designation of an Account as Uncollectible
An account will be considered uncollectible after the appropriate collection procedures have been followed if it meets one or more of the following criteria:
The debt is disputed and the City has insufficient documentation to pursue collection efforts; The cost of further collection efforts will exceed the estimated recovery amount; The account remains unpaid after the lesser of four years or the applicable period for commencement of a recovery action (statute of limitations); The debtor cannot be located, nor any of the debtor’s assets; The debtor has no assets and there is no expectation they will have any in the future; The debtor is deceased and there is no known estate or guarantor; The debtor is a company which is no longer in business; The debt is discharged through legal action (bankruptcy or court judgment); The debt has been forgiven by action of the City Council.
Preparation of Request for Write-Off of Housing Loans Receivable At least annually, the Department will identify any housing loans receivable for which it is responsible that meet the criteria for designation as an uncollectible account. A request for write-off of housing loans receivable will be prepared by department staff, signed by the department head, and submitted to the Director of Finance. The request for write-off of housing loans receivable must include an itemized list of the uncollectible accounts to be written off specifying the following:
Debtor name;
Account balance;
Due date;
Brief description of receivable type;
Criteria under which the account was deemed uncollectible; and Account number of the receivable in the City's accounting system.
For each uncollectible account, documentation must be attached to the request to support the uncollectible account designation and substantiate that the Department has followed its collection procedures and exercised due diligence in its collection efforts. Due diligence documentation could include:
Invoices, reminder letters, or collection letters (and any documentation that are returned as undeliverable, no known forwarding address, etc.); Information from the California Division of Corporations; Referral to the City's collection agency;
Bankruptcy claim and any related plan or discharge;
Judgment awarded by a court or settlement agreement; and Notice of discontinuation of services.
Approval Authority for Write-Off Requests
Upon receipt of a request for write-off of housing loans receivable by the requesting department, Finance Department staff will review the request to ensure that it is complete and that all necessary due diligence documentation has been attached. Once Finance Department staff has completed its review of a request, the qualified accounts to be written-off will be presented to the City Council for approval by the department requesting the write-off.
AUTHORITIES
Santa Clara City Charter Section 904
The functions of the Finance Department and the powers and duties of the Director of Finance shall be, except as otherwise provided in Article XII of the Charter, to receive or collect all monies or revenues due the City.
Community Development, Housing & Community Services Division: Housing Loans Receivable Collection and Write-Off Policy