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03-05-2012 - Utility Billing Workshop CITY COUNCIL OF EDGEWATER UTILITY BILLING WORKSHOP MARCH 5, 2012 5:00 P.M. COUNCIL CHAMBERS MINUTES CALL TO ORDER Mayor Thomas called the Workshop to order at 5:04 p.m. in the Council Chambers. ROLL CALL Mayor Michael Thomas Present Councilman Justin Kennedy Present Councilwoman Gigi Bennington Absent Councilman Michael Ignasiak Present Councilman Gene Emter Present City Manager Tracey Barlow Present City Clerk Bonnie Wenzel Present City Attorney Aaron Wolfe Present MEETING PURPOSE City Manager Barlow introduced Janet Shira, the City's new Economic Development /Event Coordinator. Finance Director McKinney explained the purpose of the workshop was to get final policy direction on how they were going to transition the tenant utility billing and /or tax bill assessment. He then went through the attached Powerpoint Presentation with regard to Utility Billing and Collection. Councilman Kennedy asked if the write offs were net after deposits were recaptured. Mr. McKinney informed him it was before and described what happens. Councilman Kennedy then asked in designing the policy if they could have a trigger that says if the bill is unpaid for 60 days they automatically close the account and capture the deposit. City Manager Barlow described they would be missing the minimum availability charge due to it still being in the tenants name and not reverting back to the landlord's name. Councilman Kennedy had no problem with it reverting back to the landlord. Mr. McKinney informed him it could be done and described how they could reconfigure the system where it would pull the deposit. Councilman Kennedy felt the deposits should take care of the delinquencies. Councilman Kennedy liked the idea of the IVR and this helping alleviate some of the wiggle room in the staffing and this not 1 Council Utility Billing Workshop March 5, 2012 addressing the field staff. He felt with the increased field services that there may be an opportunity for revenue there. He then spoke of his research on the tax deductibility of an assessment was saying they couldn't do it. Mr. McKinney disclosed he spoke to Becky Jones and a local CPA and they said yes but that it was up to the individual property appraiser. Councilman Kennedy liked the idea of holding the deposit in perpetuity, even if it were for all homeowners. In terms of payment arrangements with regard to the deposit, he would have to have a minimum of half up front and no more than one more month. He liked Option 2 and described why he felt it provided the most fairness for everybody. Councilman Ignasiak liked the presentation, program and options. He felt it was all well researched. The arguments from an economic point were sound and made sense. He felt what he has run into is a classic case of government efficiency. He then commented on citizens desires and the message he has received from the public being pretty strong and pretty consistent and almost being a resounding no, leave it the way it is with regard to not putting the stormwater, refuse and recycling on the tax bill. He commented on this possibly being a reaction to change. Councilman Emter echoed what Councilman Ignasiak said and had also heard the same thing from people. He felt if they looked at the tenant versus the land owner, the onus should be on the tenant. He resented the fact that putting the onus on the tenant causes the City a loss of revenue. He applauded Mr. McKinney's presentation. He was wondering if there might be even another option. He presented an example of having a system where the primary bill went to the tenant. At the time the water contract was brought up between the home and the City, it would be a combination between tenant and land owner, a single contract. The tenant has primary responsibility for payment, the deposit is collected. If there is a default, the bill slides from the tenant to the homeowner so the City is basically held harmless. The water is provided. He didn't know about the turn off situation and whether there would need to be any modification. He asked if something like this was conceivable. Mr. McKinney explained he could send two bills for one location but he could not do it on a consumptive base. He could not send the base bill to the landlord and the consumption to the tenant. Councilman Emter suggested sending both to the tenant with a copy going to the land owner. The responsibility is on the tenant and the landlord is notified but not responsible. Mr. McKinney commented on the City already sending a hard copy to the tenant and an email to the property owner /property manager if somebody is signed up for e -bill. He further commented on if bills were mailed to both, it would increase the cost with Pinnacle as well as the cost for postage. He estimated it would be an additional $20,000 to $25,000 a year to do that. 2 Council Utility Billing Workshop March 5, 2012 City Manager Barlow identified Florida Statutes was pretty clear that if they enter into a contract with a tenant they can no longer hold the landlord liable for the tenant's consumption, which was why they only contracted with the landlord so they could hold them liable for the consumption on that, while he did like the concept he didn't think the Statute would allow them to do that. Councilman Emter commented on the City being the only city in the County that has this system. He questioned if they eat the cost. City Manager Barlow commented on cities wanting to go back to the way Edgewater does things because of the liability. The liability is minimal and they have done everything they can to shrink that liability by going to tenant. Mayor Thomas identified he liked Option 2 and he thought they should get the deposit up front and keep it until the account was closed. Councilman Kennedy wanted to clarify they were talking about leaving the tax assessment status quo. City Manager Barlow identified he had received a lot of calls on both sides of the issue but a majority were against putting the refuse, recycling and stormwater on the tax bill. City Manager Barlow explained they may consider revisiting this later as they grow going forward. Staff was hearing Option 2, transition to the tenant billing and no tax assessment. Mr. McKinney referred to the timeline with regard to Option 2 and identified what the timeline would be. (Attached) The direct billing initiated for tenants would go into effect October 1, 2012. Mayor Thomas asked if anyone from the public wanted to voice their opinion. The following citizens spoke: Jim Fisher, 2941 Mango Tree Drive, pointed out the deposit in most of the other cities where they take a renters deposit is more than the normal homeowners' deposit. Councilman Kennedy stated at $200 they are higher than the renter deposits now. Mr. Fisher felt then maybe they were too much on the homeowners' deposits then. He felt there should be a difference in the deposit obtained from the landlord compared to the tenant. City Manager Barlow felt that was a very good point and that maybe when they look at the Chapter 19 and the fee resolution they may be able to reduce the deposit which could be an incentive for being a homeowner since they aren't such a liability because they can lien the property. 3 Council Utility Billing Workshop March 5, 2012 Mr. McKinney identified this Option 2 opens up that they can have a lot greater efficiencies in how they start accounts. He felt going to this would allow this to be much easier to open an account via, email or fax, without copies of deeds, settlement statements, etc. He felt they would be much more customer friendly with new people moving in. Shirley Boyce, owns property in Edgewater, she currently collects $200 from each tenant, which has been sufficient and felt it would be sufficient for the City too. She didn't think $250 or $300 would be too much to ask. She asked the City to consider going with Option 2 and let the people that use the service pay for the service. She felt if someone had said status quo that they like it the way it is, it's because it isn't affecting them. They don't care to have changes made because they are not affected. ADJOURNMENT There being no further business to discuss, Mayor Thomas adjourned the meeting at 5:45 p.m. Minutes submitted by: Lisa Bloomer, CMC 4 Council Utility Billing Workshop March 5, 2012 • E W ILED ATER City of Edgewater Utility Billing and Collection March 5, 2012 Purpose of Presentation To receive final policy direction from City Council regarding the possible modification of utility billing to allow for Tenant Utility Billing and / or Tax Bill Assessment. EDG 2 1 Current Practices •Currently 10,565 accounts . Monthly Bill - $54.04 •Water /Sewer = $23.29 (Availability) • Refuse / Recycling = $22.75 (Base) • Stormwater = $8.00 (Base) All utility accounts must be in the Property Owner's name. • Deposits held for 36 months and refunded to customers in good standing — Water - $100 / Sewer - $100 = $200 EDGEWATER 3 Current Practices •Unpaid utility accounts not subject to disconnection of balance less than $50 •Utility lien issued if unpaid utility account exceeds $300. •Ability to hold property owner responsible for unpaid tenant charges. •Ability to lien all unpaid utility bills to property owner EDGEWATER 4 2 Current Process 1 -Mar Read Meters cycle 1 billing for service 2 -Mar Manually re -read any unread / misread meter 3 -Mar Post and run charge calculations 3 -Mar Submit all adjustments to account 3 -Mar Process and close all old accounts in cycl 12 -Mar Submit all routes in cycle In nightly update for billing 13 -Mar Send file to Pinnacle for printing 14 -Mar Utility bill taken to post office EDGEWATER 5 Current Process 1 -Apr Read Meters cycle 1 billing for service period 2 -Apr Re -read any unread meter 3 -Apr Post and run charge calculations 3 -Apr Utility bill due from prior billing Submit all routes in cycle in nightly update for 4 -Apr billing 5 -Apr Process and close all old accounts in cycle 7 -Apr 20 Penalty goes on account at 2pm for March bill 12 -Apr Submit all routes in cycle in nightly update for billing 13 -Apr Send file to Pinnacle for printing 14 -Apr Utility bill taken to post office 14•Apr30 day delinquent fee applied at 2pm for March bill \ EDGEWATER 21 -Apr Water Shut off for non - payment for March bill 6 3 Option 1- Status Quo •Make no change to billing process •Approximately 50 new accounts monthly (Resales) •Average staff time of 35 minutes per new account •Recommended Modification • IVR — Delinquency module • Text • Email • Fax •Ca ll � a Option 2 - Tenant Bill •Tenant — Base Bill plus consumption •Landlord — Base Bill during periods of vacancy • Estimated additional customer — 1,800 •Monthly estimated turnover — 75 •Fees generated - $22,500 • Increased postage and handling $1,229 • Increased administrative time $27,791 • Increased field time & equipment $45,995 • elinquency write -off $17,509 •Net estimated increase in cost $70,024 EDGEWATER 8 4 Option 2 - Tenant Bill •Recommended Modification •Staffing level — Customer Service Rep & Meter Tech •IVR — Delinquency module •Comparison to other Volusia cities Tenant Utility CITIES Billing (Yes or No) Ormond Beach Yes Holly Hill Yes Daytona Beach Yes Daytona Beach Shores Yes South Daytona Yes Ponce Inlet Yes Port Orange Yes New Smyrna Beach Yes Oak Hill - Volusia Cty Yes Edgewater No Deland Yes Pierson Yes Debary Yes Lake Helen Yes Orange City Yes EDGE "": WATE1 Deltona Yes Volusia County Yes 9 Option 3 - Tenant /Tax Assessment • Tenant base bill (Water /Sewer and Reclaimed) - $32.79 • Owner tax bill (Refuse /Recycling /Stormwater) - $369 . Monthly estimated turnover — 75 •Fees generated - $22,500 •Increased postage and handling $1,229 •Increased administrative time $27,791 • Increased field time & equipment $45,995 •Tax bill cost at $0.65 per parcel = $5,280 • ' elinquency write -off $10,624 • Net estimated increase in cost $68,419 15 1 EDGEWATER to 5 Option 3 - Tenant /Tax Assessment •Recommended Modification •Staffing level — Customer Service & Meter Tech •IVR Delinquency module •Volusia cities that have Utility Service Tax Assessment Ormond Beach None Holly Hill Stormwater Daytona Beach None Daytona Beach Shores None South Daytona None Ponce Inlet None Port Orange Stormwater New Smyrna Beach Stormwater Oak Hill Solid Waste Edgewater None Deland None Pierson None Debary Solid Waste and Stormwater Lake Helen Garbage and Stormwater Orange City Solid Waste Deltona Stormwater (Other(, Stormwater, Garbage Volusia County Garbage and Stormwater EDGE 11 Items to Consider •Administrative expenses •Staff time •Postage •Deposit refunds •Ability of deposit to cover all or a portion of unpaid amounts •Financial burden of unpaid accounts to rate payers •Ability to hold property owner responsible / liens •Delinquency write -offs estimated at 1 — 2% 1 EDG 12 6 Items to Consider (continued) Ability to make payment arrangements on deposit •Charges to Vacant Homes (Option 2 & 3) •Final Bills • Billing • Accounts Payable •Length of time to hold deposits .Property Owner .Currently 36 months •Tenant •36 months? EDGEWATER • When account closes? 13 Items to Consider (continued) •Items to Consider •Addition to IVR •Delinquency Notification - $22,500 EDGE4VATER 14 7 Council Direction •Options •Option 1 - Status Quo •IVR Delinquency - $22,500 •Option 2 - Tenant Bill •IVR Delinquency - $22,500 Net estimated increase in cost $70,024 •Option 3 - Tenant Bill / Tax Assessment •IVR Delinquency - $22,500 Net estimated increase in cost $68,419 E _.. _. DG 15 Council Direction EDG TEIZ 16 8 1 City nt 1 INTER - OFFICE MEMORANDUM FINANCE DEPARTMENT EDGEWATER, FLORIDA TO: Tracey T. Barlow, City Manager FROM: John McKinney, Finance Director Brenda Dewees, Environmental Services Director DATE: March 5, 2012 SUBJECT: Changes to Utility Billing — Option 1 & 2 May 7, 2012 City Council to hear 1 Public Hearing on Chapter 19 Ordinance changes. June 4, 2012 City Council to hear 2 Public Hearing on Chapter 19 Ordinance changes. July 1, 2012 Publish and distribute information regarding Utility Billing changes. September 24, 2012 City Council to consider Fee Resolution for FY 2012 — 2013.' October 1, 2012 Direct Billing initiated for Tenants