“It can come back to bite you now a little bit on your credit,” said Jeff Kimel, who handles billing issues for the Water Resources Department.
The change is expected to help the city collect $1.1 million in overdue fines and fees...
...unpaid parking tickets...top $2 million.
Greensboro used to have better luck collecting water bills, due to a law that allowed the city to put a lien on a property for unpaid fees.
Privatize the Gains, Socialize the Losses?
But the City Council recently changed the law so it does not apply to overdue tenant water bills.
Why did they change the law Amanda?
Who voted to change the law?
Who benefited from the law change, and who didn't Amanda?
Was there a correlation to campaign contributions and the "law change"
that transfered liability from the few to the many Amanda?
That means the city needs another way to collect some $300,000 in unpaid water fees.
The city has taken the burden off landlords for tenants’ unpaid water bills.
…the rest of the city’s water users will have to pick up the costs for unpaid bills…
It is debt that other water users would have to cover, according to a staff memo.
Greensboro News and Record
Wednesday, October 21, 2009
...private companies ...will earn a 20.5 percent fee on what they collect.
If the city didn't have to pay 20.5% before
why should we have to pay now?
...The city has about 2,500 overdue tenant water accounts..."
Didn't staff recomend against the law change?
1. Current system nearly eliminates write-offs; any other system would require deposits for all customers, property owners as well as tenants, to minimize annual bad debt expense.
2. Other municipal utility systems expect losses of from ½ to 1 ½% of sales revenue annually requiring increase in user rates or account sign-up fee and/or deposit
3. Current system helps underpin bond ratings
4. Lost investment in city processes that were designed to assist landlords
5. Cost to revise business processes for sign-up and deposit collection
6. Increase staff or contract with collection agencies to pursue increase in delinquent accounts.
Crony capitalism is a pejorative term describing an allegedly capitalist economy in which success in business depends on close relationships between businesspeople and government officials.
Crony capitalism is believed to arise when political cronyism spills over into the business world; self-serving friendships and family ties between businessmen and the government influence the economy and society to the extent that it corrupts public-serving economic and political ideals.
Lien Law abandonment impacts (What would happen):
1. Bad debt write-off will increase significantly from $12,000 per year to range of $640,000 to $800,000 annually for all customer accounts if Lien Law cannot be used to enforce payment of delinquent utility accounts
...All customers will be impacted by the change in policy.
This could be accommodated by:
a. Raising rates (user fees) of all customers
b. Increasing sign-up fee from $15 to $50-$75 for all accounts (this is a one-time non-refundable charge)
c. Increasing deposits dramatically for renters and collecting deposits from property owners.
2. Because property owners that rent residences realize they may have to pay outstanding City of Greensboro utility bills, they have a greater incentive to keep the property free of leaks and other problems. Removal of the lien law has the potential of leading to problems with low income housing in the rental community because landlords will no longer have an incentive to fix leaks if they believe they will not be held responsible for them.
...Water Resources may have to investigate running credit reports as many other cities do to determine deposit levels for our customers to help minimize risks.
4. This would have a negative impact on our bond rating since we have almost no bad debt write-off each year.
5. The City of Greensboro would need to change financial procedures to recognize the potential losses that would occur in revenue.
...There is a reason why every other municipal utility in the State of North Carolina is envious of the City of Greensboro and the lien policy we have.
...It has been a State Statute since at least the 1950s."
DATE: October 15, 2009
TO: City Manager’s Office
FROM: Allan E. Williams, Director
SUBJECT: Lien Law Reversal