HomeMy WebLinkAbout1987-10-13; City Council; 9178; Uncollectible Accounts0 w > 0
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er 'OF CARLSBAD -AGENt--BILL
AB#. 'f / 7 f::_ TITLE:
. MTG. 10/13{87
DEPT. FIN
UNCOLLBCTIBLE ACCOUNTS DEPT. HD._,,,_-._
CITY A TTY~:;..;_-
CITY MGR
RECOMMENDED ACTION: Adopt Resolution No. 'foJl/'j authorizing the City staff to remove certain
uncollectible accounts from the City records and to pursue collection, where
possible, through other means, and establishing a policy for removal of
minimal uncollectible accounts in the future.
Item Explanation:
From time to time, the City is forced to write off debts for utility or
other services that have become uncollectible through the normal course of
business. Every business experiences some losses and, although the staff
makes every effort to prevent these losses, these become a normal cost of
doing business.
Before accounts are written off, the staff must make every effort to locate
the responsible party and collect the amounts that are due. In the case of
utility services (i.e., water, sewer or trash), the City can control the
amount of the bad debt by discontinuing service to the occupant as soon as
the debt becomes delinquent. After a debt is recognized as uncollectible,
the City has the option of continuing to attempt collection or to turn
accounts over to a collection agency, or the use of small claims court
actions. The City uses collection agencies in certain cases such as damage
to City property or paramedic services and uses small claims court in the
case of business licenses or other taxes due the City,
The City has not written off uncollectible accounts for about 5 years.
During this time, about $62,809 has accumulated in uncollectible accounts or
an average of $12,560 per year. This represents a bacl debt rate for all
services billed by the City of 0.1% per year based on City charges. Within
this total is about $56,962 in water charges, $3,929 in sewer charges, and
$1,918 in refuse charges. The City will be responsible for absorbing
$13,840 in water and sewer charges, while Costa Real Municipal Water
District will be charged $47,051 in water usage and Coast Waste Management
will be charged $1, 918 in refuse service cos ts. Tlil s information is
summarized in the following table:
Responsible Agency
City of Carlsbad
Costa Real Municipal
Water District
Coast Waste Management
Total Uncollectible Accounts
Water
$ 9,911
47,051
$56,962
Sewer
$3.929
$3,929
Refuse
$--
1,918
$1,918
Total
$13,840
47,051
$62,809
Page -2-
Agencla Bill No, '-j/ 7~
The attach~d resolution also proposes a procedure for dealing with accounts that
become uncollectible by authorizing the City Manager to approve the write off of
bad debts up to $250 per account. Any account with an uncollectible balance in
excess of $250 would be referred to the City Council for removal from the City
books. The Finance Di.rector would be directed to pursue collection using any
means that is economically feasible,
Fiscal Iapact:
The eliminacion of $62,809 in uncollectible accounts from the City records will
be shown as an operating expense of $13,840 in the 1987-88 Water and Sewer
Enterprise Funds with $48,969 being charged to other entities. This represents
a 0,6% reduction in water revenue and 0.2t reduction in sewer revenue from the
current year, These accounts cover a five-year period bringing the average bad
debt ratio down to 0.1% for the Water and Sewer Funds for this entire period.
Rxbibits:
1. List of Uncollectible Accounts (on file in Finance Department).
2. Resolution No. ?.:l t.J'j authorizing the removal of uncollectible accounts and
establishing procedures for discharge of minimal uncollectible accounts.
Attachment A
Total Uncollectible Accotmts
Responsible Agency Water Sewer Refuse Total
City of Carlsbad $ 9,911 $3.929 $--$13, 8l10 Costa Real Municipal
Water District 47,051 47,051 Coast Waste Management 1,918
TOTAL: $56,962 $3,929 $1,918 $62,809
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RRSOLUT!O~ Nn. 92~9
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD,
CALIPORNI.A, DECLARING CERTAIN ACCOUNTS RECEIVABLE UNCOLLECTIBLE,
AUTHORIZING THE FINANCE DIRECTOR TO REMOVE UNCOLLECTIBLE ACCOUNTS
FROM THE CITY-BOOKS, AND ESTABLISHING CONTROLS ON DECLAMATION OF
FUTURE ACCOUNTS AS UNCOLLECTIBLE.
WHEREAS, u1 the process of operating City Services, certain accounts
receivable become uncollectible, and
WHEREAS, the Finance Director has reviewed the list (on file in the
Finance Department) covering a period of five years and has confirmed that
the possibility of timely collection of these accounts is remote, and
WHEREAS, it is necessary to remove these accounts from the City records
to properly state the City's Accounts Receivable balance, and
WHEREAS, said accounts will be divided into the parts chargeable to the
City, Costa Real Municipal Water District and Coast Waste Management as
shown in Exhibit A attached hereto, and
WHEREAS, The City Council finds that it is necessary to establish a
procedure for dealing with future uncollectible accounts.
NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of
Carlsbad, California, as follows:
That the amount of $69,809 shall be removed from the City's
Accounts Receivable records and recorded as uncollectible accounts. These
accounts are detailed on the list of Uncollectible Accounts on file in the
Finance Department.
2. That the Finance Director is authorized to pursue collection of
these accounts with whatever means are economically feasible
... J, That the City Manager is hereby authorized to deal with future
uncollectible accounts of $250 per account or less through administrative
procedures, including directing the Finance Director to remove such accounts
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froP'] c,trr~nt Ac:c:ounts R'?t:~iv.able and to pursue c.cllecticn effc::t~.
accounts in excess of $250 per account shall be referred to the City Council
on a periodic basis for action.
PASSED, APPROVED AND ADOPTED, at a Regular Meeting of the City Council
of the City of Carlsbad, California, held on the 13th day of October
1987,, by the following vote, to wit:
AYES: Council Members Lewis, Kulchin, Pettine, Mamaux and Larson
NOES: None
ABSENT: None
ATTEST:
~ /_ R ~
ALETHA L. RAUTENKRANZ I City Clerk \
(Seal)