ITEM 3.31 TY OF
ot Cfgo
MINNESOTA
DEPARTMENT INFORMATION
Request for
City Council Action
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ORIGINATINGDEPARTMENT'
Utilities
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I E UE T R:
City Planner Licht
- -=.........
TING DATE:
10 December 2012
P E E TER(s):
REVIEWED BY:
ITEM #:
Consent Agenda
Finance Director Groen
3.3 —Warter Shut Off
City Attorney MacArthur
iterAdministrator Jh s n
AGENDA ITEM DETAILS
RECOMMENDATION:
City staff recommends approval of an ordinance amending the Utility Billing section of the City Code to
implement a policy of shutting off water service to delinquent accounts for non-payment.
ARE YOU SEEKING APPROVAL OF A CONTRACT? I IS PUBLIC HEARING REQUIRED?
No. icor
BAC R lD/JU T[F[CATION:
The City Council directed City staff to draft modifications to the City Code to implement a shut off
procedure for delinquent utility accounts noting that it is regularly the same accounts that are not
paying their utility bili and that stopping service may cause the bill to be pard by the due date. The
Administrative Subcommittee discussed this issue at their meeting on 14 November ber 2012 providing
direction to City staff. A follow up discussion with the Administrative Subcommittee occurred on 19
November 2012 at which time they recommended city staff bring this information forward to the full
City Council for discussion at a Special Meeting on 26 November ber 2012.
Current Policy. The City's current practice regarding delinquent accounts is to annually impose
penalties and interest and assess accounts more than 60 days past due for payment with next years'
property taxes This approach guarantees that the City receives payment for utility services provided,
imposes appropriate penalties onto those not paying their utility bills and provides that the City recoups
its administrative costs. The current policy also minimizes the City becoming involved in the personal
f inance issues of the account bolder or stopping service in a situation whe re a f mil r is in difficult
circumstances. The Finance Department provided a summary of the assessment of delinquent accounts
for 2008 to 2011, which illustrates the current assessment policy is effective at collecting on almost all of
the delinquent accounts quickly and the outstanding baiance will ultimately be paid over with property
taxes.
In 2011 the penalties and interest generated $32,.146 and the administrative fee added at the time of
certification generated and additional $10,600 (106 accounts). Through the October, 2012 billing, the
penalties and interest have generated $24,614 and the administrative fees added to those accounts the
gill be certified totaled $11,200 (112 accounts), These additional revenues are deposited into the sewer
and water operating funds. A change to shutting off utility service for non-payment will result in a
decrease in these revenues from interest and administrative fees although the City will still collect a
penalty amount and $250.00 in fees per account if a service is shut off and turned on. This approach will
also require staff time in terms of dealing with oust rners o r having City staff go to the field to shut-
f/turn on services.
Delinquent Accounts. There are 2,418 utility customers and, ofthat total, there were 440 accounts that
were more than 60 days past due when the most recent assessment process was initiated in September
(including the 112 accounts assessed at the 22 October 2012 City Council meeting that will be removed
in December). The Utility Department indicates that the number ofpast due accounts increases in the
summer months when water bills are higher dine to irrigation usage. with the current process of _
assessment in place, the Utility Department mailed notice of a proposed assessment ofall 440
delinquent accounts more than 60 days past due on 28 September 2012. By the time the assessment
roll was adopted by the City Council on 22 October 2012, 328 accounts had paid in full and 112
properties were assessed. To this end, the assessment process is effective at addressing the
delinquency issue annually as the notice in Septembergenerally prompts most to pair and leaves a
consistent number of accounts that remain unpaid for whatever reason.
Surrounding Cities. Utility Department staff contacted surrounding Cities regarding their utility shut off
practices:
Dayton, late payment penalty is $10 or five percent of the unpaid balance, whichever is
greater. The administrative fee of $50 is added to all unpaid accounts certified to the county for
collection. The City Code does not include provision for shutting off utility service,
Rogers. This policy mirrors the existing language in the Otsego City Code and further states
"The City does charge a penalty for late payments. Any annual unpaid utility bills are assessable
and will be applied to Hennepin Counter Property Tac statements with interest and possibility f
additional fees." There is an administrative fee of eight percent of the unpaid balance certified
to the county. Rogers does not shut off utility service for non-payment.
Albertville. The City adds a ten percent penalty as a late payment fee. The unpaid balance is
charged the torr percent fee, which is slightly different than tsego's current practice to charges
a ten percent penalty on only the current charges. All delinquent accounts over 60 days may be
disconnected. The City must send the tenant or owner a two week notice to pay. if the account
is not paid in two weeps, the City issues a 48 hour shutoff notice. with no payment for the
service, the water service may be disconnected. The City charges a $35 shutoff and a $35
reconnect fee. The unpaid delinquent accounts are certified to the County for collectin. The
administrative fee added, when certified,. d, is ten percent of the unpaid balance.
Monticello. Monticello bills the utilities on a quarterly basis. late payment penalties of 1 are
added the day after the due date has passed. Property owners are notified after 60 days if they
are delinquent and have not made satisfactory arrangements for payment. if the payment Is
not made the service may be strut off and the bill and a $25 shutoff fee and a $25 reconnect fey
must be paid prior to service being restored. In actual practice however, the city does not shut
off service for nonpayment. All accounts 60 day or more past due are certified to the County for
collection along with an administrative fee of $75 to defray the cost of preparation and
certification of the assessment roll.
City Code. Section 6-2-5 of the City Code addresses delinquent utility accounts. The Section is
summarized ars follows along with recommendations by City staff for implementation of a shutoff policy:
Section A adds a late payment fee of 10 percent on all accounts with a past due balance. City
staff recommends that the 10 percent late payment fee be calculated on the total past due
balance and not just the current billing period charges.
For rental housing, both the Utility Billing Ordinance and Rental Housing ordinance state that
the utility bill is the responsibility of the property owner. Utility Department and the City Cleric
will coordinate when issuing a shut off order to also include a Citation for violation of the Rental
Housing Ordinance imposing an additional $200 fine for each month the account is past due but
the service would not be shut off as it would be the tenant penalized for the property owner's
failure to pay the utility bill as required by the City Code.
Section J of the City Code states that the City will assess past dine accounts for the first
occurrence once within a 24 month period and any subsequent non-payment is to be subject to
shut off procedures. Section C outlines the process for the Utility Department to issue a shut off
notice. City staff recommends that these two sections be combined to provide that:
o The City Code specify a minimum number of days an account is to be past due before
the amount would be assessed or Utility Department ill issue a shutoff notice. A 60
day period would be consistent with the current practice regarding assessment of
delinquent accounts. However, a 90 day period would reduce administrative demands
and reduce the number of delinquent accounts subject to the policy significantly.
o The first occurrence of a past due account within a 12 month period would be subject t
assessment plus penalties, interest and administrative fees as has been the current
practice. Subsequent delinquencies for the same account occurring after an assessment
would trigger a shat off process.
o Subsequent delinquencies after an residential account (but not rental housing) has been
assessed would be initiarted for assessment but the language will provide the City
Council the option of directing the Utility Department to commence discontinuing
service for non-payment. Non-residential properties delinquent again following n
assessment would be immediately subject to shut off procedures.
o For a shut off procedure, City staff will prepare a notice that advises the account owner
that the utility bill is past due and must be paid within 10 days or the City may shut off
service at any time beyond this period for non-payment. A regular schedule for
shutting off and turning on service may need to be established by the Utility
Department depending on the number of accounts and until there is awareness of the
City's revised approach to delinquent accounts. Access to the shut off valve must also
be considered in allowing the Utility Department to schedule the actual disconnection
as the City may be unable to coo so immediately due to winter conditions or the valve
being located beneath the driveway surface. Likewise, reconnection of service would
be scheduled at the determination of the Utility Department and the proposed language
would allow for up to 10 days from the date of payment for the City to act.
Section E states that a disconnection and reconnection fee of $75 each must be paid before
water service is restored. City staff further recommends this section be expanded to include a
$100 delinquent account administration fee, payment of the past due amount, current service
bill in addition to the disconnect/reconnect fees. City staff further recommends that such
payment must be in the form of credit card, cash or cashiers' check.
Section F states the unpaid charges may be certified to Wright County together with penalties,
interest and administrative charges $10set forth In the fee schedule. Under the new
policy of shutting off service to delinquent accounts, City staff anticipates that assessment of
unpaid utility bills would be limited to those past due amounts that remain unpaid even after
the City has shut off service, such as in the case of a vacant building.
City staff recommends including language in Section 6-2-6 requiring provision of the curb stop
and that the City reserves the right to access the curb stop in administration of the utility billing
ordinance. This section would also address that the property owner is responsible for
maintaining the curb stop in ars operable manner, as well as being accessible, that the City is not
liable for any damage either to the curb stop or in accessing the curb stop) resulting from
need to disconnect/restart service in accordance with the City Code or property owner request.
SUPPORTING DOCUMENTS: ATTACHED o NONE
A. Delinquent account assessment summary
B. Draft ordinance amendment
C. ordinance 2012 — 1
.Suri mary of ordinance 201.2-1
................... .....
POSSIBLE MOTION
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# easeword moon a you ould like it to appear in the minutes.
Motion to adopt ordinance 2012 — 18 related to utility service delinquent accounts and approve
publication in summary form.
BUDGET INFORMATION
FUNDING: I BUDGETED: ❑ YES
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ACTION TAKEN
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fl APPROVED AS REQUESTED o DENIED Li TABLED a OTHE.F ..(LI a es)
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ORDINANCE NO.: 2012 - XX
CITY OF OTSEGO
COUNTY OF WRIGHT, MINNESOTA
AN ORDINANCE AMENDING THE CITY CODE REGARDING UTILITY SERVICE
DEL[QUENT ACCOUNTS,
THE CITY COUNCIL OF THE CITY of OTSEGO DOES HEREBY ORDAIN:
Section 1. Section 2-4-2.J.3 of the City Code is hereby amended to read as
follows:
3 Delinquent Accountdr inistration Fee:
.$7-5100.00
Section 2, Section 2-4-2..4 of the City Code is hereby amended to read as
follows:
4
Vater L-., %�Flj A %.#
T, i,.pi nne�t F onne t Fees
a. Turn on at water service valve: $75.00
b. Turn cuff at grater service valve: ��00
Section 3, Section 6-2-5.A of the City Code is hereby amended to read a
follows:
rate payment fee of ten percent(10%) shall be assessed on the unpaid
portion(s) on all accounts �, h ::I ch » rh n payment of the balance is not
postmarked or received by..the_due_date. The unpaid portions and late payment
penalty shall be due immediately. Additional late -payment fees on the pastdue
amount shall be added each billing period the account is delinquent.
Section 4, Section -2-.0 of the City Code is hereby amended to read as
follows:
1
G: r hill For any account with a,
balance more than ninety (90) days past due, the assessment of unpaid feesE
usage charges and late cavrents or discontinuance of service shall be in
accordance with the followin
'l. The first occurrence of a delinquent account within a twelve 12 month
period shall be assessed to the ro ert In accordance with the provisions
of this Section
i. Subsequent delinquencies of an account previously assessed for non-
payment shall be subject to the following roced res:
a. For residential -properties,. ecce t those sub'ect to Section -2-
,C.2■b of this Chapte=rthe City Council may. at its discretion, direct
the Utility Department to commence the disconnection of services
as rovided for in Section 6.2-5.C.3 of this Cha ter. ---
b. Where service is required to be crovided by section 7-11-8 of the
City Code pertaining to rental of residential properties, the
delinquent account shall be assessed to the property erty in accordance
with the provisions of Section 6-2-5.C.3 of this Section and also
issued an administrative Citation for violation of the City Code for
each month that the account remains delinauent.-
C.
For all non-residential properties, the Utility Department shall
commence the disconnection of services as provided for in Section
-2-.C.3 of this Chapter.
3. The=.....:.li. .... p.artmenf,..=�g..al.l issue a shut off notice by first class nail
to the address on fila for the account that shall state that if full payment is
not rade b the date specified in the.. hli+_ , said notice # 1 %4,ri��
r r a ■
---��n � � grater service to the property shall be
1 t shut off at anv time after the date stated in the shut off -notice
for non-payment without further notice.
Section . section 6-2-5.E of the City Code is hereby amended to read as
follows:
E. A disconnection fee and a reconnection fee, A%f f►
_'ni'3gzHy1la- - nee---.._. j.E111.._._.._...ndnn zci----hiI- nrel In=nf+�+ n an AccountD IIn un Y
Administration Fee as set forth In section 2-4-2.J of the City Code, must be paid
in addition to the outstanding delinquent balance together with current char es
before grater service will restored. Payment ent under this section
dcor cashiers _ check. Scheduling the
shah in the form -- f_ _edit card, s ............__ � - - - - -
reconnection of grater service by the Utility Department arty ent may require as many as
tern 1 days from the date payment is received.
Section 6. Section 6-2-5-J of the City Code is hereby repealed In its entirety.
Section 7, Section 6-2-6.A of the City Code is hereby amended to read as
follows:
A. Every premises, which for the -purposes of this Section mayjinclude more than
one residential dwellin unit if approved by the -City pursuant to a written
agreement recorded with the ro ertconnected to the muni i a[ water s stern
e� ,d hit P ; fn+pr-- nnkit -shall have the followin ;
r separate service line _rnr- nec.fi n connecting between the latera[ service
line and a separate meter,
2. Each service line shall have a grater service valve installed in accordance
with the Engineering Manual. The grater service valve shall be the
ro ert of the City but the property owner shall be responsible for
T aint *nin it in workina order and keeving it accessible at all times, The
City retains the right to access the grater service valve in the operation of
the utility system as provided for the City Code. Furthermore the Cit
shall not be liable for any damage resultin from the reed to aain access
to the water service valve or to the grater service valve itself if any damn e
should occur as a result of the o eration of the utilitv s stem pursuant to
this Section or services provided at the request of the account owner.
section 8. This Ordinance shall become effective immediately upon its passage
and publication,
MOTION
THOSE OPPOSED:
ADOPTED by the City Council of the City of Otsego this day of
7 201 2,
CITY OF OTSEGO
4v
Jessica L. Skr, Mayor
ATTEST:
Tamm ...off, City Clerk
ORDINANCE NO.: 2012- 18
CITY OF OTSEGO
COUNTY OF WRIGHT, MINNESOTA
AN ORDINANCE AMENDING THE CITY CODE REGARDING UTILITY SERVICE
DELIQUENT ACCOUNTS,
THE CITY COUNCIL OF THE CITY OF OTSEGO DOES HEREBY ORDAIN:
Section 1. Section 2-4-2.J.3 of the City Code is hereby amended to read as
follows:
3. Delinquent Account Administration Fee: 100.00
Section 2. Section 2-4-2.J.4 of the City Code is hereby amended to read a
follows:
4. Water Disconnect/Reconnect Fees:
. Turn on at water service valve: $75.00
b. Turn off at water service valve: $75.00
Section 3. Section 6=2-5,A of the City Code is hereby amended to read as
follows:
A. A rate payment fee of ten percent (10%) shall be assessed on the unpaid
portion(s) on all accounts when payment of the balance is not postmarked or
received by the due date. The unpaid portions and late payment penalty shall be
due immediately. Additional late payment fees on the past due amount shall be
added each billing period the account is delinquent.
Section 4. Section 6-2-.0 of the City Code is hereby amended to read as
follows:
I
C. For any account with a balance more than ninety 90days past due, the
assessment of unpaid fees, usage charges and late payments or discontinuance
of service shall be in accordance with the following:
The first occurrence of a delinquent account within a twelve 2 month
period shall be assessed to the property in accordance with the provisions
of this Section,
2t Subsequent delinquencies of an account previously assessed for non-
payment shall be subject to the following procedures:
a. For residential properties, except those subject to Section 6_2-
.C.2.b of this Chapter, the City Council may, at its discretion, direct
the Utility Department to commence the disconnection of services
as provided for in Section 6-2.5...3 of this Chapter.
b. Where service is required to be provided by Section 7-11-8 of the
City Code pertaining to rental of residential properties, the
delinquent account shall be assessed to the property in accordance
with the provisions of Section -2-5.C.3 of this Section and also
issued an administrative Citation for violation of the City Code for
each month that the account remains delinquent.
C. For all non-residential properties, the Utility Department shall
commence a the disconnection of services as provided for in Section
6-2-5.C.3 of this Chapter.
3. The Utility Department shall issue a shut off notice by first class mail to the
address on file for the account that shall state that if full payment is not
rade by the date specified said notice water service to the property shall
be shut off at any time after the date stated in the shut off notice for non-
payment without further notice.
Section 5, Section 6-2-5.E of the City Code is hereby amended to read as
follows:
E. A disconnection fee and a reconnection fee and an Account Delinquency
Administration Fee as set forth in Section 2--2.J of the City Code, must be paid
in addition to the outstanding delinquent balance together with current charges
before grater service will be restored. Payment under this section shall be in the
form of credit card, cash or cashiers' check. Scheduling the reconnection of
grater service by the Utility Department may require as many as ten o days
2
from the date payment is received.
Section 6, Section 6-2-5.J of the City Code is hereby repealed in its entirety.
Section 7, Section 6-2-6.A of the City Code is hereby amended to read a
fo l I yrs :
A. Every premises, which for the purposes of this section may include more than
one residential dwelling unit if approved by the City pursuant to a written
agreement recorded with the property, connected to the municipal water system
shall have the following:
separate service line connecting between the lateral service line and
separate meter.
2. Each service line shall have a grater service valve installed in accordance
with the Engineering Manual. The water service valve shall be the
property of the City but the property owner shall be responsible for
maintaining it in working order and beeping it accessible at all times. The
City retains the right to access the water service valve in the operation of
the utility system as provided for by the City Code. Furthermore, the City
shall not be liable for any damage resulting from the need to gain access
to the water service valve or to the water service valve itself if any damage
should occur as a result of the operation of the utility system pursuant to
this Section or services provided at the request of the account owner.
Section 8. This ordinance shall become effective immediately upon its passage
and publication.
MOTION BY:
SECOND Y:
ALL IN FAVOR:
THOSE OPPOSED:
ADOPTED by the City Council of the City of Otsego this Ioth d ay of
December, 2012.
3
CITY OF OTSEGO
Jessica L. Stockamp, Mayor
ATTEST;
Tani Luff, City Clerk
ORDINANCE NO.: 2012-,18
CITY OF OTSEGO
COUNTY OF WRIGHT, MINNESOTA
AN ORDINANCE AMENDING THE CITY CODE REGARDING UTILITY SERVICE
DELIQUENT ACCOUNTS,
THE CITY COUNCIL OF THE CITY OF OTSEGO DOES HEREBY ORDAIN:
Section It Section 2-4-2.J.3 of the Cit} Code is hereby amended to establish a
Delinquent Account Administration Fee.
Section 2. Section 2-4-2.J.4 of the City code is hereby amended to recodif
previously established Water Disconnect/Reconnect Fees,
Section 3. Section 6-2-5.A of the City code is hereby amended to revise late
payment penalties for delinquent accounts.
Section 4, Section 6-2-5.0 of the city Code is hereby amended to establish
procedures the assessment of unpaid fees, usage charges and late payments or
discontinuance of service
Section S., Section 6-2-5.E of the Cit} code is hereby amended to require
payment ent of a disconnection fee and a reconnection fee, account delinquency
administration fee in addition to the outstanding delinquent balance together with
current charges before water service will be restored.
section 6, Section 6-2-5.J of the city code that provides a process for
assessment or shut off of delinquent accounts is hereby repealed in its entirety.
Section 7i* Section 6-2-6.A of the city code is hereby amended to require that
all premises provide for and maintain a separate service meter and for a water service
valve to be accessible to the city for operation of the utility system.
1
Section 8, This Ordinance shall become effective immediately upon its passage
and publication.
MOTION BY,
SECOND BY,
ALL IN FAO:
THOSE OPPOSED:
ADOPTED by the C;ty ' Council of the City of Otsego this I oto' day of
December, 2012,
CITY of OTSEGO
Jessica L. Stockamp, p, Mayor
ATTEST;
Taml Loff, City Clerk
Pursuant to Minnesota Statutes 412.191, Subd. 4 and 331A.01, Subd.10, this
Ordinance is published in summary form. Complete copies of the ordinance are
available for inspection by contacting the City Clerk, Otsego City Hall, 13400 gosh Street
NE, Otsego, Minnesota 55330 during regular office fours.