AGENDA MEMORANDUM

 

 

Meeting Date:           August 13, 2007

 

From:                          Bill Pfeilsticker, Finance Director

 

Subject:                      Ordinance Amending Section 22-181 of The Code Of Ordinances Pertaining To Utility Deposits For New Accounts; Allowing For Personal Credit Checks At Customer’s Expense In Lieu Of Deposits

 

 

Staff Recommendation:

Staff recommends adoption of the amendment to Section 22-181 of the Code of Ordinances allowing for personal credit checks at customer’s expense in lieu of deposits for new accounts

 

Analysis:

Section 22-181 currently requires that new customers provide deposits for all new utility accounts, or, in lieu of the deposit required, a new residential customer may furnish a letter of good standing from another utility company showing the customer has had a satisfactory payment record with that utility company for the immediately preceding twelve monthly billing cycles.

 

Residential deposits are: Electric $175.00, Gas $50.00, Water $50.00. Deposits required for residential customers are refunded after two years upon a good pay record. Good pay is defined as not more than two late payments and no notices of termination for nonpayment in a consecutive 12-month period.

 

The proposed amendment provides that, in lieu of the deposit required, a new residential customer may provide positive identification and agree to a personal credit check at their expense. Customer Service will contact a nationally recognized credit reporting agency via internet to check the applicant’s credit rating. If the personal credit report demonstrates a credit record satisfactory to the City, the initial deposit may be eliminated or reduced. The Finance Director and Customer Service Manager will determine the minimum credit rating acceptable to mitigate deposits.

 

Staff is analyzing three nationally prominent credit rating agencies (TransUnion, Experian, Equifax) to determine cost, internet access times, available options, downtime, and user friendliness. The rates quoted at this time range from $1.95 to $5.00 per search, $0 to $550.00 one time startup fee, and $0 to $100 monthly fee.  We estimate we will have a maximum of 100 searches per month. The final search fee amount will be determined after final selection of the credit reporting firm and after a three month test period. The final search fee amount will then be proposed to be added to the Utility Fee Schedule with the Commission approval.

 

Reasons to approve the proposed change:

·        The required deposit amounts and the two year escrow period can cause undue financial hardship on customers that have proven good credit

 

·        The required deposits often cause delay in setting up a new account because the applicant has to wait for a letter of good standing from another utility company or they do not have the deposit money; thereby causing a hardship

 

·        If the change is approved and an applicant has acceptable credit, an application for a new account can be accomplished quickly and fees can be paid by credit card, all by telephone

 

·        Progress Energy, SECO and most public utilities now offer personal credit checks in lieu of deposits or letters of good credit – Leesburg  should provide the same convenience to its  customers 

 

Options:

1.  Approve the changes to Section 22-181 as proposed; or,

2.  Such alternative action as the Commission may deem appropriate

 

Fiscal Impact:

There will be no material fiscal impact because most applicants present letters of good credit and any deposits received are returned with interest to the customer.  All costs will be recouped by the fees charged to the applicant requesting a credit check.

 

 

Submission Date and Time:    8/24/2007 5:26 PM8/8/2007 10:28 AM____

 

Department: ______________________

Prepared by:  ______________________                      

Attachments:         Yes____   No ______

Advertised:   ____Not Required ______                     

Dates:   __________________________                     

Attorney Review :       Yes___  No ____

                                                 

_________________________________           

Revised 6/10/04

 

Reviewed by: Dept. Head ________

 

Finance  Dept. __________________                                     

                              

Deputy C.M. ___________________                                                                         

Submitted by:

City Manager ___________________

 

Account No. _________________

 

Project No. ___________________

 

WF No. ______________________

 

Budget  ______________________

 

Available _____________________

 

 

A redline copy showing the changes is an attachment in OptiView

Scroll down for a final copy


ORDINANCE NO.                                    

 

AN ORDINANCE AMENDING §22 – 181 OF THE CODE OF ORDINANCES OF THE CITY OF LEESBURG, FLORIDA, PERTAINING TO UTILITY DEPOSITS; ALLOWING FOR PERSONAL CREDIT CHECKS AT THE APPLICANT’S EXPENSE IN LIEU OF DEPOSITS FOR NEW ACCOUNTS; REPEALING CONFLICTING ORDINANCES; PROVIDING A SAVINGS CLAUSE; AND PROVIDING AN EFFECTIVE DATE.

 

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

 

SECTION I.

 

§22 – 281 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. 

 

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

 

(a)        Residential Deposits

 

(1)   Amount

 

            The amount of deposit required by utility is as follows:

                        Electric                                                $175.00

                        Gas                                                      $  50.00

                        Water                                                   $  50.00

                        Internet                                                amount of monthly bill

 

In lieu of the deposit required, a new residential customer may:

 

(1)  furnish a letter of good standing from another utility company showing that the customer has had a satisfactory payment record with that utility company for the immediately preceding twelve monthly billing cycles.

 

(2) provide positive identification and agree to a personal credit check at the applicant’s expense. If the personal credit check demonstrates a credit record satisfactory to the city, the initial deposit may be eliminated or reduced.

 

            (2)        Good pay policy.

 

Deposits required for residential customers will be refunded after two (2) years upon a good pay record. Good pay is defined as no more than two (2) late payments and no notices of termination for nonpayment in a consecutive 12-month period.

 

            (3)        Multiple deposits and transfers.

                       

             (a)       A residential customer may use his good pay credit status to obtain service to a new account if the customer changes residences within the utility area. A residential customer may transfer his credit status to a maximum of two (2) residential units, one (1) of which is his primary residence. 

 

            (b)       A customer that transfers within the utility service area will not be required to pay an additional deposit if the payment record is satisfactory for the 12 months immediately preceding the date of transfer.

 

(4)               Multiple locations.

 

            When a customer transfers to a new location, utility service can be provided to both locations simultaneously  for seven (7) days without posting an additional deposit.

 

(b)        Non-Residential Deposits

 

            (1)        Amount

           

For non residential customers, a utility deposit equal to two and one half (2 1/2) times an estimated monthly average is required for all locations.  In lieu of a cash deposit, the city will accept a letter of credit or bond in a form acceptable to the city. A bond must be drawn upon a good and sufficient surety licensed to do business in the State of Florida. A letter of credit must be issued by a bank, savings and loan association or other financial institution licensed as such by the United States of America or the State of Florida, authorized to do business in Florida,, and acceptable to the City.

 

            (2)        Installment payments

 

If any utility deposit required by this Code exceeds the sum of $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 remaining installments shall be payable as part of the first two 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.  No customer who has failed timely to pay installments due on a utility deposit shall be eligible to elect to pay any future utility deposits on an installment basis.

 

            (3)        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.

 

            (4)        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.

 

            (5)        Multiple locations.

 

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

 

(c)     Poor payment policy.

           

Residential customers with a history of poor payment will be required to pay a deposit equal to twice the average monthly bill based on the most current 12-month history.  Poor pay is defined as two (2) disconnections for nonpayment in the 12-month period

 

 (d)     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 18% 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 is existing and then to refund any credit balance remaining.

 

 (e)     Future policy changes.

 

The city manager and city clerk-finance director are authorized, by joint action, to establish such further policies and procedures to implement 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.

 

(f)        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 deal to the new owners.  Legal documents must be provided to substantiate qualification for transfer under this subsection.

 

(g)     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:

 

(1)     Deposits will earn interest from the date of posting forward, to the date of final disbursement.

 

(2)     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.

 

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

 

(4)     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.

 

(5)     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.

 

(6)     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 II.

 

§22 – 196(1)(i) of the Code of Ordinances of the City of Leesburg, Florida, is hereby amended to read as follows:

 

(i)         Deposits.  Deposits for each account shall be required as set forth more particularly in §22 – 181 of this Code.

 

SECTION III.

 

§22 – 196(2)(h) of the Code of Ordinances of the City of Leesburg, Florida, is hereby amended to read as follows:

 

(h)        Deposits.  Deposits for each account shall be required as set forth more particularly in §22 – 181 of this Code.

 

SECTION IV.

 

§22 – 196(3)(j) of the Code of Ordinances of the City of Leesburg, Florida, is hereby amended to read as follows:

 

(j)         Deposits.  Deposits for each account shall be required as set forth more particularly in §22 – 181 of this Code.

 

SECTION V.

 

§22 – 211(a)(3) of the Code of Ordinances of the City of Leesburg, Florida, is hereby amended to read as follows:

 

(3)        Deposits.  Deposits for each account shall be required as set forth more particularly in §22 – 181 of this Code.

 

SECTION VI.

 

§22 – 232 of the Code of Ordinances of the City of Leesburg, Florida, is hereby amended to read as follows:

 

Sec. 22 – 232. Deposits.  

 

Deposits for each account shall be required as set forth more particularly in §22 – 181 of this Code.

 

SECTION VII.

 

§22 – 246(1)(b) of the Code of Ordinances of the City of Leesburg, Florida, is hereby amended to read as follows:

 

(b)        Deposits.  Deposits for each account shall be required as set forth more particularly in §22 – 181 of this Code.

 

SECTION VIII.

 

§22 – 246(2)(b) of the Code of Ordinances of the City of Leesburg, Florida, is hereby amended to read as follows:

 

(b)        Deposits.  Deposits for each account shall be required as set forth more particularly in §22 – 181 of this Code.

 

SECTION IX.

 

If any portion of this ordinance is declared invalid or unenforceable, then 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 X.

 

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 affected shall be hereby repealed in their entirety.

 

SECTION XI.

 

This ordinance shall become effective upon its passage and adoption according to law.

 

PASSED AND ADOPTED at the regular meeting of the City Commission of the City of Leesburg, Florida, held on the                    day of                                    , 2007.

 

 

THE CITY OF LEESBURG, FLORIDA

 

 

 

BY:                                                                 

Sanna Henderson, Mayor

 

 

Attest:                                                            

Betty M. Richardson, City Clerk