Agenda Date: 03/17/2015
Subject:
Title
Ordinance on second reading amending section 7-5-22 of the city code regarding sanitary sewer delinquency charges.
Body
Presented By: |
Doug Farmen, Finance Director |
POLICY QUESTION:
Does city council support changing the delinquency charges for outstanding sanitary sewer service account balances?
BACKGROUND:
The city's 25 percent delinquency charge for sewer utility account balances (outstanding balances after August 15 due date) was in effect for decades. In January 2012, staff proposed reducing the 25 percent rate to 15 percent to provide a more reasonable charge and lessen the impact on staff. However, the city council proposed and implemented a 'tiered' approach: 10 percent on balances owed after August 15, an additional 10 percent on balances owed after September 15, and an additional 5 percent on balances owed after October 15, for a maximum total of 25 percent.
STAFF ANALYSIS:
'Tiered' Approach (adopted in 2012)
The new due dates and delinquent charges have a three-year history with these results:
· In 2014, staff received approximately 500 phone calls (more than 1 percent of accounts) from customers asking questions about the delinquent dates. This is confusing for customers and consumes valuable staff time.
· Considering all of the charges and account adjustments, the city's staff cannot send out bills after each delinquent date, making it difficult to provide timely account balances to customers.
· There is a greater chance for software and manual errors.
· If city staff waives a delinquent charge (due to a customer's prompt payment history), the multiple fees result in a higher volume of manual account adjustments.
· The city receives complaints that the combined 25 percent delinquency rate is too high.
Staff recently surveyed other municipal utility services:
Jurisdiction (may include water utility service) |
Late Fee Policy |
Arvada |
$10 after 12-day grace period |
Boulder |
$15 after 90 days; shutoff after 110 days |
Broomfield |
$5 and $25 reconnection fee; 10-day grace period |
Castle Rock |
After 5-day grace period, $5 penalty |
Denver Water |
5% (maximum of $250); 6-day grace period |
Englewood |
Annual 25%, Quarterly 5% |
Glendale |
20% penalty |
Golden |
$10 after 5-day grace period |
Lafayette |
$10 or 15% late fee (whichever is greater) |
Lakewood |
5% penalty, not to exceed $15 |
Parker |
Tier - 30 days past due: $25; 60 days additional $25; 90 days additional $25 plus property lien |
Thornton |
$10 late fee; no grace period |
Westminster |
$5 after 5-day grace period |
FISCAL IMPACTS:
It is difficult to approximate the fiscal impact to the Sewer Utility Fund. The average current delinquency charge is estimated to be 10%-15% so it is likely that the impact to these revenues is immaterial.
Delinquent Fee History
Year |
Revenues - Delinquent Charges |
2011 |
$242,859 |
2012 |
$240,188 |
2013 |
$171,793 |
2014 |
$216,291 (estimated) |
STAFF RECOMMENDATION:
Staff recommends eliminating the tiered system and replacing it with the recommendation made in 2012: 15 percent delinquency charge for payments received after August 15 (with a five-day grace period to August 20).
PROPOSED MOTION:
Proposed Motion
I move to approve on second reading the ordinance amending section 7-5-22 of the city code regarding sanitary sewer delinquency charges.