Utility Accounts: Billing, Collection and Lien Mechanics April 13, - PowerPoint PPT Presentation

Utility Accounts: Billing, Collection and Lien Mechanics April 13, 2017 Lee Marchisio Brad Nelson, Finance Manager 206.447.6264 | lee.marchisio@foster.com 425.337.3647 | bnelson@slwsd.com

Overview  Billing and Collection Basics  Lien Mechanics  Special Issues Managing Utility Accounts  Visit Municipal Research and Services Center for additional materials, some of which are incorporated into this presentation. http://mrsc.org/Home.aspx. 2

Billing Basics: Accounts  Type: residential, commercial, mixed, multi-family  Disclose policies/procedures for billing, collection, etc.  Combined utility accounts  Application of payments  Penalties … irrigation … stormwater … garbage … sewer … water  Budget billing or equal payment plan. RCW 35.21.300(4).  Low income senior and disabled relief. RCW 74.38.070; RCW 36.94.140(4); RCW 35.92.020(5), 35.92.380. 3

Billing Basics: Deposits  May require deposit to guarantee payments.  Cities and Towns. RCW 35.21.217(1).  Water-Sewer Districts. RCW 57.08.081(2).  Counties. RCW 36.94.020, .130 (general authority).  How much?  How long held?  Re-imposition?  Unclaimed deposits. Chapter 63.29 RCW (Uniform Unclaimed Property Act) 4

Billing Basics: Underpayments  Delinquencies  Billing Errors  Unlawful/unauthorized connections  Cities and Towns. E.g., RCW 35.67.350 (sewer).  Water-Sewer Districts. RCW 57.08.180. 5

Billing Basics: Underpayments (cont.)  Duty to Collect: pursue them  Rate discrimination. Housing Authority v. Northeast Lake Washington Sewer and Water District , 56 Wn. App. 589 (1990) (failure to collect constitutes an impermissible rate preference).  Gift of public funds. Wash. Const. art. VIII, § 7.  Otherwise, protect agency from audit exception by prompt write-off of delinquencies. 6

Billing Basics: Underpayments (cont.)  Statute of Limitations  If treated as accounts receivable: 6 years. RCW 4.16.040(2).  If not accounts receivable: 3 years. RCW 4.16.080(3); see City of Snohomish v. Seattle-Snohomish Mill Co., Inc. , 118 Wn. App. 1032 (2003) (unpublished) (3-years).  Discovery rule: when agency knew or should have known. See City of Snohomish v. Seattle-Snohomish Mill Co., Inc.  Written utility services agreement: 6 years. RCW 4.16.040(2).  Good housekeeping by regular administration of collections. 7

Billing Basics: Overpayments  Refund plus interest  Statute of limitations  6 years if written agreement. RCW 4.16.040(1).  3 years from discovery. RCW 4.16.080(3), (4).  Scope of refund: entire overcharge. Western Lumber v. Aberdeen , 10 Wn. App. 325 (1973) (false representation of water consumed due to faulty meter). 8

Collection Basics: Penalties and Interest  Interest  Cities and Towns. Chapter 35.92 RCW.  Water-Sewer Districts. RCW 57.08.081.  County. RCW 36.94.150.  Rate of interest? Check applicable statute.  Late charge or penalty. Specify in policy:  Fixed rate or flat amount.  Its application to the delinquent utility bill.  May be cumulative.  Shutoff, reconnection and other fees must relate to costs. 9

Collection Basics: Shutoffs  Combined Accounts  Most current water bill as last priority.  Ordinance/resolution establishes order of application of payments.  E.g., first $ to storm; second $ to sanitary sewer, then last $ to water.  Easies/most effective to shut off water.  Policy considerations. Effective, but …  Agency perception.  Public health: sewer, garbage … 10

Collection Basics: Shutoffs (cont.)  Proper notice.  Consistency of notice process (alternative langue?).  Letter  Door hanger  Call  Second door hanger (?)  Shutoff  Opportunity and procedures to protest (due process).  Agency contact information.  Duration of notice prior to shutoff?  Timing: certain limitations.  Cities and Towns: 4 months’ delinquent charges. RCW 35.21.290, 300.  Water-Sewer Districts: 30 days before shutoff. RCW 57.08.081(5). 11

Lien Mechanics: Attachment  To the premises (not owner or tenant).  Counties. RCW 36.94.150.  Cities. RCW 35.21.290; 35.67.200.  Water-Sewer Districts. RCW 57.08.081(4).  Filing: the utility department must periodically certify delinquencies to the county to pursue lien enforcement. 12

Lien Mechanics: Foreclosure  Water:  Cities and Towns: NO. Shutoff only. RCW 35.21.300(1).  Counties: YES. RCW 36.94.150(4).  Water-Sewer Districts: YES. RCW 57.08.081(4).  Sewer.  Cities and Towns: YES. RCW 35.67.220.  Counties: YES. RCW 36.94.150(4).  Water-Sewer Districts: YES. RCW 57.08.081(4).  Electric:  Cities and Towns: NO. Shutoff only. RCW 35.21.300(1). 13

Lien Mechanics: 4-Month Rule  Cities and Towns. RCW 35.21.290.  “a lien against the premises … for four months charges therefor due or to become due, but not for any charges more than for months past due.”  Absolute 4-month limit?  Balance accrues beginning 4 months prior to shutoff to present?  Check with counsel … 14

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Special Issues Managing Utility Accounts: Bankruptcy  Automatic stay: date petition filed.  Pre-petition charges stayed.  Restore service if terminated for pre-petition debt.  Create new billing account for post-petition charges.  Collecting pre-petition debt:  File lien notice.  File “secured” claim in bankruptcy court. Attach backup materials.  Notify trustee of intent to foreclose lien.  DO NOT contact debtor (contact debtor’s attorney and bankruptcy trustee). 18

Special Issues Managing Utility Accounts: Bankruptcy (cont.)  Collecting post-petition debt.  Close pre-petition utility account.  Open a new utility account for post-petition debt.  Track developments in the case by using PACER account.  Assurance of payment deposit.  May not refuse service or otherwise discriminate because debtor filed for bankruptcy or pre-petition charges are still owed. 11 U.S.C. § 366(a).  May require within 20 days of the stay “adequate assurance of payment.” 11 U.S.C § 366(b).  A cash deposit  A letter of credit  A certificate of deposit  A surety bond  A pre-payment of utility consumption  Another form of security that is mutually agreed on between the utility and debtor or the trustee. 11 U.S.C. § 366(c)(1) 19

Special Issues Managing Utility Accounts: Property Sales  Seller Responsibilities. Chapter 60.80 RCW.  Satisfy liens for delinquent utility bills.  Provide a list of utility providers to the closing agent.  Closing agent is to make written request for final utility billings.  Final billing includes all outstanding charges as of the stated closing date and average daily utility charges.  If utility fails to provide final billing info within 7 business days, then it loses the right to collect the billings from the new property owner (but not from the seller). 20

Special Issues Managing Utility Accounts: Collection Agencies and Costs  May use collection agencies. RCW 19.16.500.  To recover delinquent charges.  May add reasonable collection agency fees to outstanding charges, paid by debtor.  30 days’ notice to customer before assignment.  Federal Fair Debt Collection Practices Act (15 USC § 1692); State Collection Agency Act (Ch. 19.16 RCW).  Contract attorneys are debt collectors  Follow statutory requirements 21

Special Issues Managing Utility Accounts: Landlord/Tenant  Name on account? [Utility’s discretion]  Owner  Tenant with owner’s permission  Owner with copy of bill to tenant  Transfer to owner upon delinquency  Ultimate responsibility: Owner. RCW 35.21.290 (water/electricity); RCW 35.67.200 (sewer).  Notice to owner of tenant delinquency? Optional, but required upon owner request.  Cities and Towns. RCW 35.21.217.  Water-Sewer Districts. RCW 57.08.081(7).  Shutoff may not be used as an eviction tool. RCW 59.18.300. 22

Special Issues Managing Utility Accounts: Tips from Silver Lake  Billing Policy Overview  SLWSD bills Property Owners with copies of bills provided to tenants and/or Property Managers: http://www.slwsd.com/forms/statementcopy.pdf  No Inactive Account Status 23

Special Issues Managing Utility Accounts: Tips from Silver Lake (cont.)  Basic Billing & Collection Schedule Date Billing Action Typcial Number 2/28/2017 Regular Billls 9,500 3/15/2017 Due Date 8,000 3/31/2017 Mailed Payment Reminder Notice 1,500 4/14/2017 Mailed Shut-Off Notice 835 4/24/2017 Last Day for Payment or Arrangements N/A 4/24/2017 Customers Making Arrangements 300 4/25/2017 Shut-Off Day 125 5/1/2017 Lock Off Day 10 5/1/2017 Mailed Payment Arrangment Confirmation 25-75 5/5/2017 Last Day for Payment N/A 5/8/2017 Arrangement Shut-Off Day 0-10 Special Arrangements - Medical, Death, Divorce, 0-3 Up to Abuse etal 5/31/2017 Managed by Outlook Calendar 24

Special Issues Managing Utility Accounts: Tips from Silver Lake (cont.)  Account Status Defined and Tracked  Turn Offs with Consumption  Lock Off  Liens Filed  Bankrupt  Arrangements 25