HomeMy WebLinkAbout1995-06-27; Municipal Water District; 287; Adoption of Revised Late Fee PolicyCARLSBAD FwlNICIPAL WATER DISTRICT --QGENDA BILL
FL AB# a89 TITLE: 4 e 24 MTG. 6127195 Adoption of Revised Late Fee Policy DEPT. HD.
and Write-off of State of CA Late Fees CITY ATTY
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Adopt Resolution No. 90 3 revising the late fee policy for payment of utility bills
and Resolution No. 90 8 writing off late fees for various State of California water
accounts.
ITEM EXPLANATION
The City’s current method of calculating late fees on unpaid balances is to add 10% of
the total amount due when the next monthly billing is calculated. As a result, if there
are outstanding late fees from the previous billing, late fees are calculated on the late
fees as well as the rest of the unpaid balance.
The City has had an ongoing issue with the State of California concerning its
unwillingness to pay late fees on its water bills. Although some payments arrive before
the penalty date, there are often payments that arrive after the next billing has been
calculated. This results in late fees that are included on the next statement.
The few times that the State’s budget was not approved before the start of the next
fiscal year compounded the late fee problem. In 1992, the City didn’t receive payments
until well past the due dates for a few months until the budget was resolved. Staff
made several attempts to collect the late fees, and served the State a notice of service
termination. After many phone calls and written correspondence, the late fees
remained on the accounts in the hopes that the State would pay them. Since then, the
situation with the State and the late fees was brought up again because the accounts
have never been cleaned up. As a result of the method of calculating late fees, the
original late fees have been generating more late fees, and the total has continued to
grow. In an attempt to reconcile the billing accounts and correct the outstanding
balances, staff is requesting approval to write off the original late fees and the
corresponding penalties that were applied to those late fees.
The resolution containing the late fee policy states that “water bills are . . . delinquent if
not paid within 30 days of the date billed.” The current computer program that is used
for calculating the bills requires staff to follow a strict timeline for various procedures
that must be in a specific consecutive order. It is not always possible to wait the full 30
days indicated by the resolution before figuring the bills. Therefore, staff is
recommending that the policy be changed to read “water bills are delinquent if not paid
by the delinquent date indicated on the bills. Delinquent bills will be assessed a 10% late fee.” This change will correspond with current billing practices and accommodate
the limitations of the billing computer program.
In addition, staff is requesting that the Board approve a change in how the late fee is
calculated on utility bills. Currently, late fees are charged on the entire amount past
due, which may include prior late fees. Staff is recommending that the late fee only be
calculated on the actual service provided, and not on past late fees.
Page 2 of Agenda Bill No. 618 7
FISCAL IMPACT:
The total dollar amount to be written off in late fees to the State is $204,161.76.
Although it is difficult to determine what the original late fees were without doing an
exhaustive study, they are estimated to be about $6,000. Since then, the 10% late fee
has been calculated on the balance due, which includes the past late fees.
The effect of writing off the late fees will be to reduce our revenues for the 1994-95
fiscal year. However, revenues for the year will be greater than expenses, so the costs
will be absorbed by the current budget. No additional appropriation is necessary.
ENVIRONMENTAL REVIEW:
The process of setting rates is statutorily exempt from environmental review if the
increases are not for expansion of the water system.
EXHIBITS:
1. Resolution No. 90 3 Revising the Late Fee Policy for the Payment of Utility Bills.
2. Resolution No. 908 Writing Off Late Fees for the State of California.
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EXHIBIT 1
RESOLUTION NO. 907
A RESOLUTION OF THE BOARD OF DIRECTORS
OF THE CARLSBAD MUNICIPAL WATER DISTRICT
REVISING THE LATE FEE POLICY
FOR THE PAYMENT OF UTILITY BILLS
WHEREAS, the current method of calculating and charging late fees must be
revised to accommodate billing procedures and limitation of the computer billing
system; and
WHEREAS, late fees are currently charged on the total balance due on a utility
bill, which may include prior late fees; and
WHEREAS, the Board of Directors of the Carlsbad Municipal Water District
deems it more appropriate to charge late fees only the actual portion of the utility bill
that is past due and not on prior late fees.
NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the
Carlsbad Municipal Water District that:
1. The above recitations are true and correct.
2. A 10% late fee will be charged to utility accounts that have not been paid
by the delinquent date indicated on the utility bill.
2. Late fees will be assessed only on the portion of the utility bill that has not
been paid by the delinquent date, and not on previously assessed late fees.
3. The rates and charges established by this resolution shall on their
effective day supersede rates previously established.
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4. The effective date of this resolution shall be the July 15, 1995, billing cycle.
PASSED, APPROVED AND ADOPTED at a special meeting of the Carlsbad
Municipal Water District held on the 27th day of JUNE , 1995, by the
following vote, to wit:
AYES: Board Members Lewis, Nygaard, Kulchin, Finnila, Hall
NOES: None
ABSENT: None
ATTEST:
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CLAUDE A. LEWIS, President
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EXHIBIT 2
RESOLUTION NO. 908
A RESOLUTION OF THE BOARD OF DIRECTORS
OF THE CARLSBAD MUNICIPAL WATER DISTRICT
WRITING OFF LATE FEES FOR THE STATE OF CALIFORNIA
WHEREAS, the State of California was assessed late fees on their utility bills as
a result of the delay in approval of the State budget in 1992; and
WHEREAS, the State of California has been late in their payments prior to that
time, as well as since then, on occasion; and
WHEREAS, staff has attempted through various means to collect the late fees c . from the State; and
WHEREAS, the compounding method of assessing late fees has exacerbated
the situation with the State accounts; and
WHEREAS, the balances on these accounts has become excessive and doesn’t
reflect the true balance owing due to the compounding of late fees assessed on late
fees; and
WHEREAS, the late fee policy will be changed to avoid this situation in the
future.
NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the
Carlsbad Municipal Water District, that:
1. The above recitations are true and correct.
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2. Staff is directed to write off late fees in the amount of $204,161.76 from
the various accounts of the State of California.
PASSED, APPROVED AND ADOPTED at a special meeting of the Carlsbad
Municipal Water District held on the 27th day of JUNE , 1995, by the
following vote, to wit:
AYES: Board Members Lewis, Nygaard, Kulchin, Finnila, Hall
NOES: None
ABSENT: None
ATTEST:
. . ALETHA L. RAUTENKRANZ, Secretary