AGENDA MEMORANDUM

 

Meeting Date:           August 24, 2009

 

From:                          Jerry Boop, Finance Director, and Lori Beach, Customer Service Manager

 

Subject:                      Ordinance amending sections 22-181 of the Code of Ordinances pertaining to utility deposits and section 22-263 pertaining to nonpayment of utility bills.

                                   

 

Staff Recommendation:

Staff recommends approval of the ordinance changes pertaining to utility deposits and nonpayment of utility bills.

 

Analysis:

In an effort to mitigate extensive losses related to utility bad debt, staff recommended, and the City adopted an identity theft protection policy and various changes to customer deposits and fees.  These changes were recommended with the full intention of being reviewed, changed and or tweaked as needed.     The adoption of the current policy has exposed unintended consequences to a sector of the City’s community that prompted the review and subsequent changes to the policies previously adopted at the April 27th 2009 City Commission meeting.  Summarizations of those changes are as follows:

 

Definitions

Definitions for good credit history and transfers of service have been added.

 

Deletions

Section 22-181

The amount of deposit by utility and item (2) pertaining to rental accounts has been eliminated and replaced with common language related to credit score applicable to all residential type accounts. 

 

Section 22-263 former item (2) Late notice

Language has been eliminated.  Late notices are no longer sent.

 

Additions

Section 22-181 item (1) Residential deposits

Language has been added to reflect the maximum amount of deposit to be collected up front is not to exceed $350.00.  The amount of deposit and how the deposit is to be funded is determined by credit score.  Updates to the application process have been added to include charges to the customer for the actual cost of the identity and credit checks.   Additional deposits will not be required for customers with good credit history if a service is being transferred.  Language for re-evaluation of deposits and application of deposits were also added.

 


Section 22-181 former item (3) new  item (2) Non-Residential deposits

Item “b” was added reflecting acceptance of bonds and letters of credit for deposits that exceed $10,000.  Item “h” Master rental utility deposits was added to provide an alternative to the rental community for deposits on rental units during renovation.

 

Section 22-181 former item (4) new item (3) Poor payment policy

Updated to reflect credit score and delete reference to rental.  Deleted poor pay definition to eliminate any potential conflicts with the definition for good credit history.

 

 

Fee Schedule for Meter Tampering, Meter Testing, and Re-Read Fees

The fee for utility applications has been eliminated and replaced with the actual cost to the City for identity and credit checks.  The after hours connection/reconnection fee remains the same for the first service at $55.00 with each additional connection/reconnection assessed a fee of $20.00.

 

 

Options:

1.  Approve the ordinance changes pertaining to utility deposits and nonpayment of utility bills. Or;

2.  Such alternative action as the Commission may deem appropriate

 

Fiscal Impact

Implementation of these changes should be revenue neutral.

 

 

Submission Date and Time:    9/10/2009 10:47 AM____

 

Department: _Finance______________

Prepared by:  Lori Beach/Jerry Boop___                     

Attachments:         Yes_X__   No ______

Advertised:   ____Not Required ______                     

Dates:   __________________________                     

Attorney Review :       Yes___  No ____

                                                

_________________________________           

Revised 6/10/04

 

Reviewed by: Dept. Head __JB____

 

Finance  Dept. __________JB______                                     

                              

Deputy C.M. ___________________                                                                         

Submitted by:

City Manager ___________________

 

Account No. _________________

 

Project No. ___________________

 

WF No. ______________________

 

Budget  ______________________

 

Available _____________________

 

 


ORDINANCE NO. ________

 

AN ORDINANCE OF THE CITY OF LEESBURG, FLORIDA, AMENDING SECTION 22-181 OF THE CODE OF ORDINANCES PERTAINING TO UTILITY DEPOSITS; AMENDING SECTION 22-263 PERTAINING TO NONPAYMENT OF UTILITY BILLS; PROVIDING FOR CONFLICTS; PROVIDING A SAVINGS CLAUSE; AND PROVIDING AN EFFECTIVE DATE. 

 

BE IT ENACTED BY THE PEOPLE OF THE CITY OF LEESBURG, FLORIDA, that:

 

SECTION 1.

 

Section 22-181, of Chapter 22 of the Code of Ordinances of the City of Leesburg, Florida, is hereby amended in its entirety to read as follows: 

 

Sec. 22-181.  Utility deposit policy.

 

A. Definitions: As used in this Ordinance, the terms below shall have the meaning shown:

 

Good Credit History- In the past 24 consecutive months, customer has had no more than two late payments, no NSF’s, no return checks or checks written on a closed account, and no disconnects.

 

Transfer of Service-Transfers between City of Leesburg utilities only.

 

B. Policies:

The following policy shall govern all deposits made for utilities provided by this chapter.

 

(1) Residential deposits.   

 

a.       Maximum amount of initial deposit to be collected up front is $350.00. 

 

b.      Failure to timely remit any monthly installment shall be grounds for termination of the utility service for which the deposit is required. Customers who have failed to timely pay installments due on a utility deposit shall not be eligible to elect to pay any future utility deposits on an installment basis.

 

c.       Total deposit will be determined by credit score.

 

1.      Green level-Credit score of 685 or higher, the total deposit will be 1.5 times the average monthly consumption.  The maximum amount of initial deposit to be collected up front will be $350.00 with any remaining amount to be billed in 12 equal monthly installments.  Two cutoffs in any 12 month period will automatically bump customer to the Yellow level and an additional deposit will be collected prior to the 2nd reconnect, bringing the total deposit to 2 times the average monthly consumption. 

 

2.      Yellow level-Credit score between 550 and 684, the total deposit will be 2 times the average monthly consumption.  The maximum amount of initial deposit to be collected up front will be $350.00 with any remaining amount to be billed in 12 equal monthly installments.  Two cutoffs in any 12 month period will automatically bump customer to the Red level and an additional deposit will be collected prior to the 2nd reconnect, bringing the total deposit to 2.5 times the average monthly consumption. 

 

3.      Red level-Credit score below 550, the total deposit will be 2.5 times the average monthly consumption.  The maximum amount of initial deposit to be collected up front will be $350.00 with any remaining amount to be billed in 6 equal monthly installments.  In the event of multiple disconnects under the red level the deposit amount may be reevaluated prior to reconnection.

 

d.      Application. All customers must complete a utility application for new or transfer of services, provide state issued photo identification or driver’s license, and agree to a personal identity and credit check at the applicant's expense. Applicant will reimburse the City for the cost of the credit and identity check at time of application.

 

e.       Transfer of Service.  When a current City customer transfers to a new location, utility service can be provided to both locations simultaneously for seven (7) days without posting an additional deposit.  Deposit and/or final bill will be transferred to the new location.  If customer has a good credit history with the City of Leesburg at time of transfer, no additional deposit will be required.  Transfer of service only applies to those services transferred between City of Leesburg utilities.

 

f.        Re-evaluation of deposits.  At any time after six (6) months' service the city may re-evaluate the monthly bill and adjust the deposit up or down depending on billing history. 

 

g.       Application of deposits.  Deposits will be applied to account balances upon calculation of final bill. Any installment not paid when due shall bear interest at the rate of eighteen (18) percent per annum until paid in full. The city retains the right to apply any refundable deposit against the customer's account(s) when a balance exists and then to refund any credit balance remaining. 

 

 (2) Non-residential deposits.   

 

a.       Amount.  For non-residential customers, a utility deposit equal to two and one-half (2.5) times an estimated monthly average is required for all locations.

 

b.      If the account is an existing commercial account the City will continue to accept bonds and/or letter of credits in lieu of cash deposit.  If it is a new commercial account, a cash deposit will be required unless the deposit is greater than $10,000.  If greater than $10,000, the city will accept ½ cash deposit and ½  bond and/or letter of credit due upon initiation of services. 

 

c.       Installment payments.  If any non – residential utility deposit required by this Code exceeds the sum of one thousand dollars ($1,000.00), the customer may elect to pay the deposit in not more than three (3) monthly installments, each equal to one-third (1/3) of the total amount of the deposit. The first installment shall be due at the time service is initiated, and the two (2) remaining installments shall be payable as part of the first two (2) monthly utility bills rendered to the customer. Failure to remit timely any monthly installment shall be grounds for termination of the utility service for which the deposit is required. Customers who have failed to timely pay installments due on a utility deposit shall not be eligible to elect to pay any future utility deposits on an installment basis. 

d.      Re-evaluation of deposits.  At any time after six (6) months' service the city may re-evaluate the monthly bill and adjust the deposit up or down depending on billing history. 

 

e.       Transfers.  When a commercial customer transfers from one location to another, a utility deposit equal to two and one-half (2 1/2) times an estimated monthly average of the new location will be required.   Transfer of service only applies to those services transferred between City of Leesburg utilities.

 

f.        Multiple locations.  When a customer transfers to a new location, utility service can be provided to both locations simultaneously for fifteen (15) days without posting an additional deposit. 

 

g.       Application of deposits.  Deposits will be applied to account balances upon calculation of final bill. Any installment not paid when due shall bear interest at the rate of eighteen (18) percent per annum until paid in full. The city retains the right to apply any refundable deposit against the customer's account(s) when a balance exists and then to refund any credit balance remaining. 

 

h.      Master rental utility deposits.  From time to time the rental community needs to obtain utilities to facilitate cleanup and repairs to remarket properties.  The customer service manager is provided authority to negotiate master deposits for landlords and or property owners that measures the risk associated with the services provided.  Utility charges for services provided will be billed to the landlords or property owners.

 

(3) Poor payment policy.  Customers with a history of poor payment will be required to pay a deposit equal to their classification (residential, non-residential) and applicable credit score times the average monthly bill based on the most current twelve-month history.

 

(4) Future policy changes.  The city manager and finance director are authorized, by joint action, to establish such further policies and procedures to implement this section, not inconsistent with anything contained in this section, as they may deem necessary from time to time, which policies and procedures shall be presented to the city commission for its approval prior to the implementation thereof. 

 

(5) Name change on deposit.  A deposit can only be transferred to a different customer in the event of death or divorce or when a business has purchased all assets and the legal documents specifically state that the utility deposits are part of the assets transferred to the new owners. Legal documents must be provided to substantiate qualification for transfer under this subsection. 

 

(6) Interest on deposits.  All utility deposits held by the City of Leesburg, placed by customers of any utility service provided by the city, shall earn interest and the customers shall receive a credit for the interest so earned, in accordance with the following criteria: 

 

a.   Deposits will earn interest from the date of posting forward, to the date of final disbursement.

 

b.   Deposits shall earn interest at a rate adjustable monthly and equal to the rate promulgated by the Florida State Board of Administration for the month which is two (2) months prior to the month for which the rate is being computed. For example, the interest rate on deposits in the month of May will be the rate set by the State Board of Administration for the month of March.

c.   Interest will be compounded monthly and credited to the customer's account annually on September 30. For accounts that are terminated prior to September 30, interest will be credited as of the date of termination on a daily, prorated basis.

 

d.   At the time a utility account is terminated, the deposit and any interest earned thereon will be applied to the customer's final bill to the extent necessary to pay that bill. Any amount of the deposit plus earned interest then remaining shall be refunded to the customer.

 

e.   Only cash deposits shall earn interest. Any deposits held in the form of a bond or letter of credit shall not earn interest or receive any credit for interest.

 

f.   No customer shall be eligible for the interest credit unless and until the customer has furnished the city with the customer's Social Security number, or a Federal Taxpayer Identification Number.

 

Section 22-263, of Chapter 22 of the Code of Ordinances of the City of Leesburg, Florida, is hereby amended in its entirety to read as follows:

 

Sec. 22-263.  Nonpayment of bill, reinstating fee.

 

The following policies and procedures shall be followed with regard to nonpayment of utility bills:

 

(1) Approximately four (4) days after meter-reading the customer shall be billed providing twenty (20) days to pay after which time a late penalty is charged.  Service is subject to interruption ten (10) calendar days from the due date.

 

(2) Approximately twenty-five (25) days after meter-reading date, a disconnect notice shall be sent  warning of disconnection as of a preset date appearing on the notice. The preset date may be within  ten (10) days from sent date, depending on weekends and work schedule.

 

(3) Upon interruption of service, a notice is left at the premises advising the customer as to how service may be restored. Service shall not be reinstated until delinquent and reconnection charges are paid. Service may, however, be reinstated at the direction of the finance director in instances where payment is guaranteed by a social service agency.

 

(4) The disconnect notice shall contain a request to contact customer service if there are questions on the accuracy, validity or correctness of the bill. If customer service cannot resolve these questions, the customer shall be referred to the finance director and disconnect shall be suspended until the issues are clarified. Customer service shall notify the collections manager of the disputed bill in writing immediately. In the absence of the finance director the collections manager has the authority to suspend a disconnect in the event of a disputed bill.

 

(5) No disconnect shall result if the past due amount is a penalty amount and not a current bill unless the penalty is over a month old and is unchallenged.

 

(6) No disconnect shall result if the past due amount is less than twenty-five dollars ($25.00) unless it is a recurring amount. The finance director may increase this amount to a maximum of fifty dollars ($50.00) where disconnect volume is excessive for manpower available or the billing period is characterized by unusually high bills due to rates or weather and where relief is apparent.

(7) The finance director may delay any disconnect to the subsequent Friday where extenuating circumstances, such as incidence of paydays, warrant such action and collection appears secure.

 

(8) A reconnect fee per utility is required in accordance with the utility service fee schedule. If reconnection is requested after 3:00 p.m., the charge may be greater if so indicated in the fee schedule.

 

SECTION 2.

 

All ordinances or parts of ordinances which are in conflict with this ordinance are hereby repealed, to the extent necessary to alleviate the conflict, but shall continue in effect insofar as they are not in conflict herewith, unless repeal of the conflicting portion destroys the overall intent and effect of any of the conflicting ordinances, in which case those ordinances so effected shall be hereby repealed in their entirety.

 

SECTION 3.   

 

If any portion of this ordinance is declared invalid or unenforceable, and to the extent it is possible to do so without destroying the overall intent and effect of this ordinance, the portion deemed invalid or unenforceable shall be severed herefrom and the remainder of this ordinance shall continue in full force and effect as if it were enacted without including the portion found to be invalid or unenforceable.

 

SECTION 4. 

 

This ordinance shall become effective upon passage. 

 

PASSED AND ADOPTED at the regular meeting of the City Commission of the City of Leesburg, Florida, held on the 14th day of September, 2009. 

 

 

THE CITY OF LEESBURG

 

 

By: ____________________________

         Mayor

 

ATTEST:

 

_______________________________

City Clerk

 

 

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