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Manteca writing off $338K, 46% due to delinquent utility accounts

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POSTED August 15, 2014 1:22 a.m.

Bad debt write-offs for non-payment of municipal utilities have inched up slightly after dropping for two straight years.

The Manteca City Council is being asked Tuesday to write off $153,675 in uncollectable utility accounts for water, sewer, and solid waste.  It represents 466 accounts which have been inactive since June 30, 2012. It reflects 4.45 percent of the total utility account receivables as of June 30, 2014. The losses are absorbed by other ratepayers. 

Most of the non-collectable accounts are from renters and homes that went into foreclosure. And as such, they have served as an indicator of the impact of foreclosures on Manteca.

Altogether, the council will be presented with a resolution to write off $338,493 of $761,608 in outstanding receivables. That includes a one-time “extraordinary” write-off of $101,953 for animal licenses due to issues related to converting animal licenses.

The write offs won’t negatively impact the budget for the current fiscal year since write offs are already factored into the municipal budgeting process.

The city four years ago instituted a policy requiring a renter’s agreement when water service is opened. That means to open a service, you must have a copy of the rental agreement. That makes it harder to simply shift the account into someone else’s name after it goes delinquent for several months unless a new rental agreement has been signed.

A number of those who were delinquent and had received final notices for water cutoffs would send someone else living in the household to say they were the new tenants and that they knew nothing about an outstanding water bill.

In most cases, the city had no way of verifying the validity of the story.

Oftentimes people who have stopped paying mortgage payments will — a month or so before they are sure they have to vacate the property — will stop paying for municipal utilities as well.

The city by instituting cutbacks in compensation for workers employed by municipal utility operations such as sewer, water and garbage has been able to absorb the losses without triggering rate hikes. Rates have been unchanged for all three services now for five years.

Utility write-offs had ballooned to over four years to $261,000 after being less than $70,000 for years

City officials had predicted without tightening up the rules on rentals plus sending out late notices quicker that the delinquency rate could have hit 10 percent and cost ratepayers who pay on time as much as $300,000 since they ultimately will have to absorb the losses Manteca is forced to write off.

In 2007, the city would issue 1,000 final notices to cut off water service for non-payment of municipal utility bills. Of those, 200 actually ended up with service turned off.

By 2008 when the housing market collapse started in earnest, there were 1,800 final notices mailed each month. City workers end up turning water service off to 400 homes in any given month.

 

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