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 CITY COUNCIL AGENDA ITEM NO. 22



Meeting Date: May 13, 2008

Subject/Title: Adopt a Resolution approving the Collection Policy (City Council/Administrative Policy No.10-15) and approving an amendment to the Cost Allocation Plan and Schedule of City Fees, adding cost for attorney services, collection agency services and cost associated with liens and assessments.

Prepared by: Kerry Breen, Business Services Manager

Submitted by: Pamela Ehler, Director of Finance and Information Systems



RECOMMENDATION
Adopt a Resolution approving the Collection Policy (City Council/Administrative Policy No.10-15) and approving an amendment to the Cost Allocation Plan and Schedule of City Fees, adding cost for attorney services, collection agency services and cost associated with liens and assessments.

PREVIOUS ACTION
On August 8, 2007, City Council adopted Resolution 2007-197 adopting the 2007/08 Cost Allocation Plan and Schedule of Fees.

BACKGROUND
This is a new policy for the City. While the Finance Department currently operates with a set of collection procedures in place, the intent of this new collection policy is to establish a process to formalize the steps involved in the City’s collection efforts.

Increased enforcement efforts by City Code Enforcement staff combined with the threat of the deterioration of abandoned and foreclosed properties have resulted in increased citations and an additional amount of uncollectable accounts. These factors have necessitated that the City formalize an aggressive approach in recovering all revenues.

The collection process includes, but is not limited to, past due notices, the services of a collection agency and the placement of liens and special assessments against property. City staff will utilize all legal means to collect payments due to the City under local, State and Federal statutes that govern collection practices.

In a separate action before City Council tonight, staff is recommending that the City enter into a Professional Services Agreement with Contra Costa County’s Office of Revenue Collection ("ORC") to assist in the collection process. The City will be charged 25% of each invoice amount for those accounts assigned to the County which they successfully collected on behalf of the City.




An Amendment to the Cost Allocation Plan and Schedule of Fees is recommended to recover costs for attorney services, collection agency services and costs associated with liens and assessments. This policy will instruct staff to recover the applicable fees which is determined by the type of collection item.

FISCAL IMPACT
There is no fiscal impact associated with Council’s action tonight. The change to the Cost Allocation Plan and Schedule of Fees is only to recover expenses incurred by the City during the collection of accounts receivable.

Attachments:
Resolution
Exhibit "A" Council/Administrative Policy No. 10-15
Exhibit "B" Amendment to 07/08 Cost Allocation Plan and Schedule of Fees




RESOLUTION NO.

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BRENTWOOD APPROVING THE COLLECTION POLICY (CITY COUNCIL/ADMINISTRATIVE POLICY NO. 10-15) AND APPROVING AN AMENDMENT TO THE COST ALLOCATION PLAN AND SCHEDULE OF CITY FEES, ADDING COST FOR ATTORNEY SERVICES, COLLECTION AGENCY SERVICES AND COST ASSOCIATED WITH LIENS AND ASSESSMENTS

WHEREAS, new collection policy was necessary to establish a process to formalize the steps involved in the City’s collection efforts; and

WHEREAS, the threat of the deterioration of abandoned and foreclosed properties have resulted in increased citations and an additional amount of uncollectable accounts; and

WHEREAS, the collection process includes, but is not limited to, past due notices, the services of a collection agency and the placement of liens and special assessments against property; and

WHEREAS, staff will utilize all legal means to collect payments due to the City under local, State and Federal statutes that govern collection practices; and

WHEREAS, the Cost Allocation Plan and Schedule of Fees will allow the city to recover costs for attorney services, collection agency services and cost associated with liens and assessments; and

WHEREAS, this policy will instruct staff to recover the applicable fees which is determined by the type of collection item.

NOW, THEREFORE BE IT RESOLVED that the City Council of the City of Brentwood does hereby:
1) Approve the Collection Policy ( City Council Council/Administrative Policy No. 10-15), a copy of which is attached as Exhibit "A"

2) Approve an amendment to the 07/08 Cost Allocation Plan and Schedule of Fees to recover costs for attorney services, collection agency services and costs associated with liens and assessment, a copy of which is attached as Exhibit "B"

PASSED, APPROVED AND ADOPTED by that the City Council of the City of Brentwood at a regular meeting held on the 13th day of May 2008 by the following vote:





1. PURPOSE

The purpose of this policy is to establish guidelines to maximize the collection of accounts receivable in a professional and consistent manner.

2. POLICY

2.1 Applicability

The provision of this policy applies to the collection of all accounts receivable. City staff will utilize all legal means to collect payments due to the City under Federal and State Statutes that govern collection practices, including: The Fair Debt Collection Practices Act, The Fair Credit Reporting Act, California’s Rosenthal Fair Debt Collection Practices Act under Civil Code 1788, and the Brentwood Municipal Code (“Code”).

3. PROCEDURES

The Business Services Division of the Finance and Information Systems Department (“Finance”) is responsible for the collection of revenues that are owed to the City. When accounts become past due, the City will take certain collection actions that may include, but are not limited to: invoicing, sending statements or notices, making phone calls, and placing special assessments, liens or court judgments. The City may also utilize a collection agency to assist in the collection process.

The collection action taken will depend on the type of account being collected.

Certain types of accounts receivable are listed below with guidelines on how to proceed with the collection process.

4. TYPES OF ACCOUNTS RECEIVABLE

4.1 Utility Billing

The due date for utility bills is dictated by Code. If the invoice for utilities is not paid by the due date, the collection process in initiated. The next course of action will depend upon whether the customer account is active or closed.

4.1.1 Active Accounts

• If payment is not received by the due date, notices are mailed to account holders on the thirtieth and the thirty-seventh day after the original bill date.

• Service will be disconnected if not paid by the fortieth day after the original bill date. (Code Section 14.01.580)


4.1.2 Closed Accounts

• If payment is not received by the due date, notices are mailed to account holders on the thirtieth day after the original bill date.

• If not paid by the sixtieth day after the original bill date, the account is scheduled to be assigned to collections.

• Prior to assigning to collections, Utility Billing staff will review existing accounts to determine if former account holder(s) has/have an active account. If an active account exists, the final balance on the closed account will be transferred to the active account and the customer is notified. (Code Section 14.01.160)

• If no active account exists, the account is assigned to collections

• If a former account holder with an outstanding balance or a prior account tries to open a new account, water service shall be refused until all outstanding charges are paid.

4.2 Citations & Abatement Orders

Designated enforcement officers have the authority to issue citations for violations of Municipal Code. Payment of a citation is required within 30 days from the date of citation issuance. (Code Sections 1.08.040 & 1.08.060)

Payment for costs associated with an abatement order is required by the due date indicated on the invoice. (Code Section 8.00.040)

The designated enforcement officer will forward the following to Finance so that an invoice can be issued:
• all citations
• all abatement orders, if costs are associated with them, including supporting documentation for those costs

If the invoice is not paid by the due date, the next course of action is based on whether the amount owed is for a citation or abatement.

4.2.1 Citations

• Citation fines shall be paid to the City within (30) thirty days from the date of the citation. (Code Section 1.08.060)






• Any recipient of a citation may contest the violation of the Code or that he/she is the responsible person. The individual shall deliver a letter to the City Clerk within (30) thirty days from the date of the citation to request a hearing. Payment due for the citation must be included with the hearing request. (Code Section 1.08.070)

• The City Clerk will notify Finance of hearing requests and decisions of the hearing officer.

• If the citation is cancelled, a refund will be issued. If the citation is upheld the City will retain the fine amount. (Code Section 1.08.110)

• If a hearing is not requested, collection actions will proceed if the citation is not paid by the due date. Finance will determine the most effective way to proceed with the collection options available, including collections actions used for Other Accounts Receivable. (Section 5 of this Policy)

• The designated enforcement officer may record a notice of pending action with Contra Costa County’s Recorders Office. (Code Section 1.08.015)

• The City may use all available legal means which includes, but is not limited to: recovery through the small claims court or a lien and or placement of a special assessment on the real property upon which the citation was issued. A lien against the real property must be recorded with the County’s Assessors office prior to the placement of a special assessment. (Code Section 1.08.130)

• Before a lien or special assessment can be placed on a property, the City Council must adopt a resolution authorizing the recording of the lien or special assessment.

• After Council has authorized the placement of the lien on the property, the City Clerk will follow the necessary procedures to place the lien on the property for the unpaid fines. (Code Section 1.08.130)

• After Council has authorized the placement of the special assessment on the property, Finance will follow the necessary procedures to place the fines due for the citation as a special assessment on the real property. (California Government Code 38773.1 and 38773.5 and 53069.4) (Code Section 1.08.130)



4.2.2 Abatement Orders

• The responsible party who has received an abatement notice/order may file an appeal with the City Clerk within seven days from the date of the notice/order. A hearing will be scheduled and a hearing officer appointed. (Code Section 8.00.060)

• If there are costs associated with the abatement order and an appeal is upheld by the hearing officer, the City Clerk will submit a copy of the report of action and an accurate accounting of the cost of abatement including supporting documentation to Finance and an invoice will be issued. (Code Section 8.00.110)

• The designated enforcement officer may record a notice of pending action with Contra Costa’s County Recorders Office. (Code Section 1.08.015)

• If the responsible party does not pay the cost of abating the nuisance within thirty calendar days after receiving the invoice for abatement cost, the cost can become a lien and or special assessment against the real property upon which the nuisance was abated. (California Government Code 38773.1 and 38773.5 and 53069.4) (Code Section 8.00.130)

• Before a lien or special assessment can be placed on a property, the City Council must adopt a resolution authorizing the recording of the lien or special assessment.

• After Council has authorized the placement of the lien on the property, the City Clerk will follow the necessary procedures to place the lien for the abatement cost. (California Government Code 38773.1 and 38773.5 and 53069.4) (Code Section 1.08.130)

• After Council has authorized the placement of the special assessment on the property, Finance will follow the necessary procedures to place a special assessment for the abatement cost (California Government Code 38773.1 and 38773.5 and 53069.4) (Code Section 1.08.130)

4.3 Overtime Inspection

Overtime Inspection is a service provided by the City for inspections that are done after normal working hours. Departments are responsible for providing Finance with the overtime hours and billing information so that an invoice can be generated. Payment is due within 30 days from the invoice date.


If the invoice is not paid within 30 days, overtime inspections will be stopped until payment in full is made and the standard collection process is followed as indicated in Other Accounts Receivable. (Section 5 of this Policy)


5. OTHER ACCOUNTS RECIVABLE

Accounts not list above will follow the standard collection practice as noted below and in a manner consistent with this policy.


5.1 Collection Action

• At 30 days past the invoice date, a reminder notice is sent to the responsible party requesting payment upon receipt.

• At 60 days past the invoice date, a past due notice is sent to the responsible party requesting payment within 10 days of receipt.

• At 90 days past the invoice date, an urgent demand notice is sent to the responsible party requesting payment within 5 days of receipt.

• If at 120 days the citation is not paid, upon approval of the Director or his/her designee, a notice is sent informing the customer that their account is being referred to a collection agency.

• At 120 days the account will be forwarded to the collection agency including any identifying customer information on file such as address, telephone number, driver’s license and social security number.

6. COLLECTION FEES/PENALITES

The Cost Allocation Plan and Schedule of Fees will allow the City to recover costs for attorney services, collection agency services and costs associated with liens and assessments. Staff will recover the applicable fees which is determined by the type of collection item.

7. PAYMENT PLAN

In order to utilize all means available to collect outstanding receivables, the Director or his/her designee has the authority to execute payment plan agreements.


8. UNCOLLECTABLE RECEIVABLES

It is the intent of the City to reflect the value of its receivables and ensure that resources are used efficiently and not devoted to the recovery of uncollectible receivables; therefore, the City will not assign an account to a collection agency for an amount less then $25.00.

The timely identification of losses is an essential element in appropriately measuring the value of the City’s assets. When an outstanding receivable is determined to be uncollectible, a write-off will be accomplished pursuant to Council Administrative Policy 10-5 Budget and Fiscal Policies.

The Director or his/her designee has the authority to settle uncollectible accounts up to the limit granted for write-offs in Policy 10-5 Budget and Fiscal Policies.


EXHIBIT “B”



City of Brentwood

Finance & Information Systems
Collection Fees

Fee Description Fee
Attorney Services Costs Actual Cost

Lien & Special Assessment Costs Actual Cost

Collection Agency Services Cost * Actual Cost





*Past due amounts owed to the City that are assigned to a collection agency


 
City Administration
City of Brentwood City Council
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Brentwood, CA 94513
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