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12-05-2011 - Utility Billing Workshop CITY COUNCIL OF EDGEWATER UTILITY BILLING WORKSHOP DECEMBER 5, 2011 5:00 P.M. COUNCIL CHAMBERS MINUTES CALL TO ORDER Mayor Thomas called the Utility Billing Workshop to order at 5:00 p.m. in the Council Chambers. ROLL CALL Mayor Michael Thomas Present Councilman Justin Kennedy Present Councilwoman Gigi Bennington Present Councilman Michael Ignasiak Present Council Seat District 4 Vacant City Manager Tracey Barlow Present City Clerk Bonnie Wenzel Present Assistant City Attorney Mike Ciocchetti Arrived at 5:06 p.m. City Clerk Wenzel recognized Council Seat District 4 seat was vacant due to the passing of Councilman Ted Cooper. MEETING PURPOSE City Manager Barlow identified during the Utility Rate Study Workshop Councilman Kennedy was authorized by Council to do some additional research with regard to landlord versus tenant billing. He further identified Councilman Kennedy would be making a presentation with regard to his findings and would present some additional recommendations. Councilman Kennedy thanked the Mayor and Council for giving him the opportunity to discuss this further. He spoke of one of the most popular phone calls he gets being from landlords who are found responsible for their tenants' water consumption. He spoke of conversations he has had with Finance Director John McKinney and City Manager Tracey Barlow as well as a group of landlords and property managers throughout the City. Councilman Kennedy then went through the attached Powerpoint Presentation. Councilman Kennedy pointed out they were looking for consensus for staff to move forward on a new policy. 1 Utility Billing Workshop December 5, 2011 Councilman Ignasiak commented on the 1% that was used in the study being a standard deviation for statistical analysis that was used when they have unknown probabilities. He felt the figure used was extremely conservative. The standard deviation was usually 2 -3 %. He further mentioned not being able to be 100% certain on anything. Councilman Ignasiak further commented on liens working and the money being collected. If liens didn't exist they would have a higher proportion of people walking away. Councilman Ignasiak then pointed out that a landlord /tenant thing is a civil agreement and government is not involved. He further commented on the citizens not sharing in the profit that is made by the landlords. He looks at this as a risk and the risk being with the landlord and this being a civil risk. Any damage done by a tenant is a burden that is borne by the landlord himself when they rent and that is one of the risks that is there. He spoke of the additional risk of the water that is not shared by the citizens. Councilman Ignasiak was intrigued by one of Councilman Kennedy's options for deposits. He expressed his main concern was how they protect the citizens from that risk and keep them from assuming a risk they don't have right now. He agreed it wasn't right that a tenant who doesn't pay their water bill at one home could then rent a home down the street and still get water. He wanted to be shown where the deposits themselves will secure that risk from the taxpayers and will not be passed on to them. He sympathized with landlords because they have to have places for people to rent because they can't afford to buy a home. Councilwoman Bennington had the same concerns as Councilman Ignasiak. She commented on the figures presented by Councilman Kennedy with regard to collecting a $200 deposit from 2,600 they would have $520,000 and they would have that available. That wouldn't be available to the good customers that pay. She asked if they still give the deposits back or if they hold them. City Manager Barlow informed her if they went to tenant billing, they would hold the deposits for as long as they had a contract with that tenant. Councilwoman Bennington felt they couldn't then count the $520,000 as the City's money. Councilman Kennedy stated when they default they would get that money. Councilwoman Bennington stated Councilman Kennedy was saying that 2,600 people from those figures would default and that money would offset the liens and put $75,000 in the good on that. She felt he was bending the truth a little bit. If they can show that the ratepayers and property owners would not suffer increase due to having the tenant pay the billing, then she didn't have a problem with it. She felt Councilman Kennedy brought up some good points that they should look at. She also did not want the rest of the City to bear the burden of the tenants. 2 Utility Billing Workshop December 5, 2011 Mayor Thomas stated this is the biggest complaint he has gotten since he was elected Mayor. He expressed his appreciation to Councilman Kennedy for the effort put into his presentation. Mayor Thomas asked for citizen comment on Councilman Kennedy's plan. Shirley Boyce, complimented Councilman Kennedy on a wonderful, thought out, most gracious presentation. She felt they would have to be pretty simple minded to not understand the thoughts he had put forth. She has been a property owner in Edgewater for 25 years and has fought this battle continuously the entire time she has been a property owner in Edgewater. It has fallen on deaf ears every time she has brought it up. She made mention of a City official telling her she was renting to the wrong people. She spoke of eating the utility bill of people over and over again. If she had any option at this moment, she would sell everything she owns in Edgewater and be out of dodge. She is tired of paying the bills for deadbeat people. She commented on the days when there was a $5 penalty that went to $50 over night. She was sure the City got a lot of complaints and it was lowered to $30. Marcia Barnett, 3301 S. Ridgewood Avenue, asked the Council to consider the responsibility is to the person who uses the water. She felt one of the things they were losing touch with in the whole economy was accountability. She spoke of it no longer being wealthy people with rental properties and a lot of the properties she manages are for people who could not afford to sell their home and had to get a job out of town and the only responsible thing they could do was to rent out that home. She further spoke of people bailing on their responsibilities. She felt legally there was something they could do with the homes that are vacant with regard to liens. Agnes Witter, 223 Flagler Avenue, was wondering how long it took for the City to turn the water off when a bill becomes overdue for a month. At the request of City Manager Barlow, Finance Director McKinney identified someone has 20 days from the bill date to pay the bill. On the 25 day they assess a 5% late fee. On the 31 day, they assess a $30 delinquency fee. They shut off the water around the 35 day which is also 50 days from the time they read the bill to when they would shut the water off. When they have shut the water off, they are already at the point where another bill has been sent. He further commented on what they have done internally to reduce from 15 days before they send out a bill to 5 days. City Manager Barlow felt the $200 deposit, if it was only for water and sewer consumption, would cover that period of time. He further identified refuse, recycling and possibly stormwater being placed on the tax bill, which the landlord would be still be responsible for, which could be included in the rent. 3 Utility Billing Workshop December 5, 2011 Councilman Ignasiak asked about the man hours administratively that are involved and if they would be more or less or the same. City Manager Barlow explained they would have more man hours associated with the accounts. They didn't anticipate it would be an overburden. He further commented on the interactive voice recognition system that was authorized by Council. He felt some of the time saved with the IVR system would offset what it would require additional burdens for changing the accounts out as tenants come and go or when an account is put back into the landlords' name. Councilwoman Bennington asked what an average water bill is without the refuse, recycling and stormwater. Mr. McKinney informed her $40.82. Councilwoman Bennington felt the $200 would be more than enough to cover the time. Councilman Ignasiak questioned who would be responsible for the turn on fee. City Manager Barlow informed him the new tenant would be responsible and /or if the landlord wanted it back in their name, then the landlord could. That could be flexible. Councilman Kennedy commented on active rentals and there not being any liens on active rental properties. The liens are on abandoned, foreclosed, bank owned properties. Their active landlords, who he is trying to protect, their properties aren't embroiled in the lien thing. Mr. McKinney commented on having a handful of properties that are rentals with liens. Ms. Witter asked what the law was regarding water service to a family that hasn't paid their bill and they have children and if the law is different if there are children in the home. Councilman Kennedy stated the way the law is currently, it doesn't matter who is in the house. The tenant has a right to water service. The City won't sell them water therefore the landlord has to provide it. He has been told personally by former Judge Henderson that if he didn't turn the water back on for a tenant, he would be liable for three times the rent and she read him the Statute and he read it and she was right. Regardless, if it is children or adults the landlord under their policy has to leave the water on. Ms. Witter stated she was informed if there are children in the home they can't turn the water off. Councilman Ignasiak commented on there being provisions in the law that dealt with medical exceptions. Mayor Thomas felt the user should pay and that it should be the tenant's responsibility to get utility services. 4 Utility Billing Workshop December 5, 2011 City Manager Barlow felt he had a good enough consensus from Council. Staff would go back and work with legal and start to research the required amendments to the ordinances as well as starting the advertising process to transition the refuse, recycling and possibly stormwater onto the annual assessments such as other cities have done. Councilman Kennedy asked for an approximate time line. City Manager Barlow agreed to have a good timeline laid out by their next meeting. Councilman Kennedy asked for the landlords in the audience, when they could expect to call their tenants and let them know they had to put the water in their name. City Manager Barlow expected to have a pretty definite timeline at the January meeting. Mayor Thomas pointed out the purpose of the meeting was because they recognize there is a problem and they are trying to get something done. ADJOURNMENT There being no further business to discuss, the Workshop adjourned at 5:54 p.m. Minutes submitted by: Lisa Bloomer, CMC 5 Utility Billing Workshop December 5, 2011 Who Should Pay the Water Bill? The Landlord? The home Builder? The Mortgage Company? The realtor who sold the house? How about the person who used the water? HISTORY • Historically, the city did not collect sufficient deposits from water customers. In order to safeguard the city from Revenue loss, an ordinance was passed that prohibits non - property owners from establishing their own water accounts. • This puts undue financial and legal burden on property owners. (Landlords) The Law • The law requires the landlord provide access to water services. • The city does not provide service to non- property owners therefore the Landlord must open and be responsible for the account. • If landlord fails to provide water, the law allows a Max penalty of up to 3X's the rent. Law Continued • The law provides the tenant the right to water service. The city forces the landlord to pay for the water. • The tenant gets free water! The "Rate Study" • The rate study was never meant to include any facts or data on landlord /tenant issue. • In fact, the RFP and bid docs never addressed the issue, therefore, the contractor was not obliged to conduct any work on it. • The 1% ($75,000) was literally pulled from thin air. There are no other cities in the State that share our landlord /tenant policy. Meaning there are no comps. Therefore the 1% suggested by Burton &Assoc. is nothing more than an Uneducated Guess. THE LIENS • 688 Total liens @Value of $684,181.00, uncollected.. • 38% of lien values are a result of the delinquent account accruing fees until it meets $300 threshold. • This leaves a value of $424,193.00 uncollected Staff time spent on liens • Estimates range from 10 -15 hours per week for staff • Estimates range from 10+ hours per week for Clerk • Estimates range from 10+ hours per week for Lega • 30 -40+ hours per week (Equivalent to one full time staff position) How much do we REALLY collect from Liens? ......... ............................... Who Owns the Water /Sewer Dept.? Edgewater Property owners (taxpayers /ratepayers) • Enterprise creates money to help reduce the expense burdens of the rest of the city. Without this enterprise, ad- valorem taxes would be even more $$$. • Example: City Manager, Finance Director, City Council, City Clerk, Admin. Staff. Etc... Who should benefit from the revenue generated by the water /sewer dept.? • Renters and non - property owners? Realtors and builders who do business within the city? • Mortgage Companies holding mortgages within the city? Edgewater property owners? (tax payers /ratepayers) Who should be responsible for losses that water /sewer dept. may incur? • Landlords.? • Realtors and other housing related industries? • Banks and Mortgage companies? • The owners of the Water /Sewer enterprise (Property owners /tax payers /ratepayers)? • All Owners /rate payers, not just landlords! Our New Policy • Allow the consumer(tenant if applicable) to be responsible for water bill. • Requires Deposit for non - landowners in the amount of $200 (this covers 45 days avg bill, plus late fees) • Port Orange: $175.00 for non - owners • NSB: $50.00 - 290.00 depends On credit, also provides electric. Revenue Enhancements • Additional revenue increases by providing more connect /final read services. Unknown. • Revenue increase, provides for additional staff positions if needed. • Also time saved from lien paperwork will allow current staff to cover additional workload. The Deposit • Outstanding Liens (after late fee reduction) $424,193.00 • Non - homesteaded accounts +/- 2600 • Collect $200.00/ deposit • Total amount on deposit: $520,000.00 • Actually ahead $75,000 + /- Our "Water" bill Is more than just a water bill. Unlike other cities, we place charges for: Refuse Recycling Storm water On the monthly bill Ranked 5 of 19 lowest rates • Perception is not reality. • We are actually lower than 14 other cities in combined water and sewer average bill. Including NSB, Volusia Unincorporated areas and every city north of Port Orange.(exc Ormond) Even lower Exposure • By moving these items to the annual tax bill, Edgewater's loss exposure is reduced by $30.65 per ratepayer. • This also removes confusion about these services by absentee owners. The Pro's • Relieves undue burden on small group of property owners (landlords) • Gives the city immediate access to deposits upon defaults instead of pie in the sky liens. • Deposit funds balance would exceed outstanding lien balance • Create much needed improvement in the relationship between the city and the customer. • Creates new revenue stream for the city. • Gives landlords the billing option. • Holds the consumer responsible for their own consumption!