AGENDA MEMORANDUM

Meeting Date:           April 13, 2009

 

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

 

Subject:                      FACTA Program and Implementation

                                    Collection Report and Write-Off Recommendations

                                    Ordinance Changes for Deposits

                                                -Deposits for Utility Accounts

                                                -Criteria for Refund of Deposits

                                                -Re-evaluation of Deposits

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

 

Staff Recommendation:

Staff recommends approval of the Identity Theft Prevention Policy, changes to deposits, fees, and customer billing timelines.

 

Analysis:

FACTA:  The Fair and Accurate Credit Transaction Act (FACT Act) 2003– has mandated utilities service providers to develop and implement an Identity Theft Program to identify, mitigate, and prevent identify theft effective November 1, 2008.  

 

The program will identify “RED flags” which include pattern, practice, or specific activity that indicates possible existence of identity theft.  This will protect our citizens’ information along with protecting the City of Leesburg. 

 

We currently use Online Utility Exchange to generate our credit checks.  Customers agree to a personal credit check at the applicant's expense of $5.00. If the personal credit check demonstrates a credit record satisfactory to the city, the initial deposit may be waived.  However, with the new FACTA regulation, we are required to implement an identity check on new accounts as well as existing accounts.  The cost of the identity check through Online Utility Exchange is $5.00 which will be passed on to the applicant for new and transfer accounts only.                                                                                 

Implementation of FACTA should reduce collections and write-offs as verification of identity will enable the City to obtain better information to pursue collections.   


Collection Report and Write-Off Recommendations

The proposal to eliminate reminder notices will save approximately $30,000 and reduce the collections timeline by approximately 15 days.  Customers will be sent a final notice in lieu of the reminder notice.  Ten percent of the customers receiving reminder notices are actually disconnected for non-pay and are more often than not repeat offenders. Changing our collections timeline from 45 days to 30 days will allow for more timely collections, decrease receivables and associated bad debt, and reduce the time it takes to turn off an account for non-pay. 

 

Customers will be eligible to receive an extension if the account is active for six months with good payment history.  Thereafter, the account will qualify for an extension no more than two times per year with good payment history.  In addition, a supervisor may grant one additional extension. 

 

Ordinance Changes for Deposits

Deposits for residential customers -–   Residential customers will be charged 2 x average monthly bill or minimum for all services. For deposits greater than $500.00, the customer may split the remainder of the deposit into two equal installments.

 

Change the process for rental customers -  Approximately 60% of our collections are due to accounts terminating less than a year with 30% of these accounts being less than six months with the City.  By the time we mail out the final notification, many of our transient customers have already vacated their homes and leave the City with a balance due.  Rental customers will be charged 2.5 x average monthly bill or minimum for all services. Rental customers will be provided the option of paying their deposit all at once or in monthly installments of $25.00 for the amount of deposit that exceeds 2 x the average monthly bill.  In addition, rental customers will be requested to provide the names of all adults living at the premises when applying for utility services.   

 

Commercial Accounts will be re-evaluated per current Ordinance 22-181(c) as a standard business practice. 

 

Criteria for Refund of Deposits

The good credit refund of deposits will be eliminated.  Deposits will be applied to the final bill upon termination.  If the application of deposit results in a credit status, the customer will be refunded. 

 

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

Meter tampering – Propose increase for each tamper from $100.00 to $275.00.   It is more advantageous for the customer to pay the current tamper fee of $100.00 than for the actual consumption.  By increasing the fee the loss to the City could be mitigated. 

 

Meter testing – The City will test electric meters at the customer’s request under the following conditions:  If Leesburg Electric staff determine a significant anomaly is present in the customer’s consumption records, the City will conduct the test free of charge.   If the test confirms the meter is inaccurate by more than 2%, the customer’s account will be adjusted accordingly.  If the test shows the meter to be within 2% accuracy, any future requests to test the meter will require a deposit of $100.00. 

 

If Leesburg Electric staff does not find a significant anomaly in the customer’s consumption records, and the customer would still like for their meter to be tested, a deposit of $100.00 will be required.  The deposit will be forfeited if the test confirms the meter’s accuracy within 2%, and it will be returned to the customer if the meter is found to be inaccurate by more than 2%.

 


 

 

Re-reads – Customers currently request re-reads to be done anytime they feel the initial read is inaccurate.  However, this has caused an undue hardship to the metering department in addition to  added expense for gas, vehicle wear and maintenance, extended time of staff, and overtime to meet each customer’s needs.  Staff recommends allowing one re-read at no charge and charging a fee of $50.00 for any additional requests.  If the re-read shows the initial read to be in error, the $50.00 fee will be waived.  In addition, customer billing generates an exception report showing any major differences in consumption.  Staff will generate work orders for any significant variances that could indicate a problem.  

 

Options:

1.  Approve the Identity Theft Prevention Policy effective May 1, 2009; Approve proposed changes relating to deposits, fees, customer billing timelines and reminder notices or;

2.  Such alternative action as the Commission may deem appropriate

 

Fiscal Impact

Implementation of these changes should result in an increase in cash and a corresponding  reduction of receivables and bad debt.  Verification of identity and the receipt and retention of social security and drivers license information will provide our collections partner better resources to find customers that leave the City with a balance due.

 

 

Submission Date and Time:    4/23/2009 9:02 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.

 

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

 

(1) Residential deposits.   

 

a.       Amount.  The amount of deposit required by utility is as follows: 

 

Electric . . . $250.00 minimum or two (2) times the monthly average bill

 

Gas . . . . . . .  $50.00

 

Water . . . . . . $50.00

 

If the required deposit is greater than $500.00, which is due upon initiation of services, customer may split the remainder of deposit into two (2) monthly installments.  The two (2) remaining installments shall be payable as part of the first two (2) monthly utility bills rendered to the customer. 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. 

 

b.   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 check at the applicant's expense.

 

c.  Refund policy.  Deposits will be applied to account balances upon calculation of final bill. 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. 

 

d.   Transfer of Service.  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.  Deposit and/or final bill will be transferred to new location.

 

 

(2) Rental accounts.

 

a.   Amount.  The amount of deposit required by utility is as follows: 

 

Electric . . . 2.5 times the monthly average bill

 

Gas . . . 2.5 times the monthly average bill

 

Water . . . 2.5 times the monthly average bill

 

If the required deposit is greater than $500.00, which is due upon initiation of services, customer may split the remainder of deposit into monthly installments of $25.00.  The remaining installments shall be payable as part of the monthly utility bills rendered to the customer. 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. 

 

b.   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/credit check at the applicant's expense.

 

c.   Refund policy.  Deposits will be applied to account balances upon calculation of final bill.   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. 

 

d.   Transfer of Service.  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.

 

(3) 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.   Installment payments.  If any 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. 

 

c.   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. 

 

d.   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. 

 

e.   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. 

 

f.   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. 

 

(4) Poor payment policy.  Customers with a history of poor payment will be required to pay a deposit equal to their classification (residential, rental, non-residential) times the average monthly bill based on the most current twelve-month history. Poor pay is defined as customer who has had either a NSF check or a disconnect for non-pay during the last consecutive twelve-month period.

 

(5) 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 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. 

 

(6) 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. 

 

(7) 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 mailed a bill giving him twenty (20) days to pay after which time a penalty attaches.

 

(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) On or immediately after the preset date, service is terminated and 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 4:00 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 27th day of April, 2009. 

 

 

THE CITY OF LEESBURG

 

 

By: ____________________________

      Mayor

 

ATTEST:

 

_______________________________

City Clerk

 

 

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