City staff recommends water utility deposits

Interim City Manager Ed Wyatt distributed a memorandum dealing with the problem of delinquent utility bills in the city of Henderson.

The memorandum was pursuant to a discussion with the Henderson City Council during its workshop session on Monday, March 24, 2008.

Wyatt informed the council that there are over 600 water cut-offs each month out of 8,800 retail customers.

The interim manager suggested as one solution a recommendation from the North Carolina School of Government: he said that some money should be allocated to the Department of Social Services as a relief fund.

Wyatt also said that the Salvation Army could administer such a fund as well.

He also suggested a program called a “round up”, where customers increase their bill to the next nearest whole dollar figure and the difference is donated to a relief fund.

Another suggestion was a “check off” system where money is set aside on a customer’s bill for emergencies.

Wyatt warned that a reduction of the $40 cut-off fee or the $12 late fee might cause more delinquencies. He noted that the late fee brings in $300,000 in revenue to the city each year.

Assistant Finance Director Sandra Wilkerson circulated an information sheet comparing Henderson’s schedule of fees with that of comparable municipalities. She noted that Henderson is the only one that does not charge a deposit.

Noting that Henderson once charged deposits, she said that the deposits were returned fifteen years ago in favor of charging a connection fee.

Wilkerson opined that returning to a deposit system would be “helpful”. She also said that the amount of the deposit should be determined by a customer’s payment history.

Wilkerson also pointed out to council members that Henderson is the only municipality that cuts off service after the second month. Others cut service after the first month.

Council member Mike Rainey asked if it would be a one-time deposit and whether or not the deposit would travel with a customer moving within Henderson. He also asked if the deposit would be returned if customers move out of town. He also inquired as to whether the deposit was for homeowners as well as landlords.

It was determined that these were questions for the council to decide.

Council member Garry Daeke said that the connection fee is considered an administrative cost.

Member Lonnie Davis asked if the deposit would be put towards the bill if it is sufficiently delinquent. Wilkerson responded in the affirmative.

Council member Mary Emma Evans asked if a person would still be charged the $40 cut off fee if they put down a deposit. Wilkerson said that the matter would have to be decided by the council.

Daeke said that the deposit could carry over to the reconnection charge.

Evans noted that the staff felt that the $40 should be charged for customers put on the cut-off list regardless of whether or not they were cut off. She said that she hoped the council would look strongly on how the $40 is affecting many customers and encouraged the council to consider unemployment in the city and the hardship of many citizens.

“There are many things we need to consider more than how the staff feels,” Evans said.

Rainey echoed Evan’s sentiment that the $40 should not be charged if the water is not cut off.

Evans went on to say that the council has not had a lot of conversation involving anything too much. She said that she did not intend to have the staff dictate to the council.

Wyatt responded that staff has identified “a whole host of policy issues” that the council needs to address. He said that staff does not want to usurp [the council’s] responsibility.

Wilkerson explained that the $40 disconnection fee was programmed into the new billing software because of problems with the previous system. She said that those at the bottom of the cut-off list were sometimes able to pay their bill before the cut-off took place. She said that often there was debate between the employees and customers as to whether cut-off took place before or after the bill was paid.

Wyatt said that the city staff was asking the council for guidance. He said that the staff wants to be “as customer-friendly as we can under these circumstances”.

Council member Michael Inscoe asked what the deposit would create in revenue. He said he would like to see how it would offset the $250,000 in lost revenue per year due to non-payment.

Wilkerson said that she could look at how many connection fees the city has had and “run some numbers”.

Evans said that discussion is the reason that she comes to a meeting. She said that she thought a workshop should reflect discussion.

“A person should not be rushed into finishing what they’re saying,” Evans said.

People elected us to speak, Evans said. They want to hear how we feel.

Evans said that the people the council is representing “don’t know where we’re coming from”.

“It’s time for us to speak,” Evans inveighed the council.

“It’s up to the council to make a decision as to which way you want to go with this,” Henderson Mayor Pete O’Geary said.

Daeke commented that it was “probably time for the Public Utility Commission to meet”.