Staff Report. Considering acceptance of annual write-off of uncollectible accounts receivable in the amount of $212,811 for FY

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1 5.b Staff Report Date: June 26, 2018 To: From: Reviewed and Prepared by: Subject: City Council Valerie J. Barone, City Manager Karan Reid, Director of Finance (925) Considering acceptance of annual write-off of uncollectible accounts receivable in the amount of 212,811 for FY Report in Brief While the Finance Department makes every effort to collect unpaid accounts receivable, some inevitably become uncollectible and must be written off the books in accordance with Generally Accepted Accounting Principles (GAAP). While written off of the City s accounting records, collections efforts continue. For instance, many of the accounts will be submitted with the Contra Costa County Small Claims Court. Council is requested to approve the write-off of the following accounts: Code Violation Inspections/Abatements 26 invoices for 136,682 - Eighteen (18) invoices for 20,204 Damage to City Property - Nine (9) invoices for 55,925 All efforts to collect on these invoices have been unsuccessful and staff recommends the debt be written off of the City s accounting records. The total of the recommended write-off for FY is 212,811. Recommended Action Authorize the write-off of uncollectible accounts receivable on the City s ledger in the amount of 212,811. Page 1 of 5

2 City Council Agenda Report Agenda Item No. 5.b June 26, 2018 Background City policy requires formal approval by the City Council before any uncollectible receivable over the amount of 750 can be written off as uncollectable. Prior to recommending write-off of accounts receivable, the Finance Department makes every effort to collect unpaid accounts. Actions taken are as follows: 1. Invoices are mailed with 30 days to pay 2. Past due notices are mailed after 30 days of non-payment 3. Statements are mailed to the customers 4. Phone calls are made as reminders and to possibly set up payment options (as a courtesy, not legally required) 5. Follow-up statements are mailed 6. Ten-day letters are mailed to inform customers of possible legal action (this usually prompts phone inquiries) 7. Explanations of the different payment options that the City can offer, as well as consideration of waiving finance charges if payments are made promptly 8. Lastly, file in small claims court and utilize the State s Interagency Intercept Collection Program (IIC), where the Franchise Tax Board offsets refunds when individuals have delinquent debts with the City Only after all efforts have failed is a receivable considered for write-off consistent with financial reporting guidelines. Analysis A summary of the invoices is as follows: Billing Type Number Amount Code Violation , ,204 Damage to City Property 9 55,925 Total Bad Debt Write-Off 212,811 Of the twenty-six invoices for code violation inspections/abatements, one property owner is responsible for the largest amount and owes approximately 103,000. This owner is in default of payment of property taxes for at least 5 years and it is highly unlikely the City will be able to collect this debt. In addition, ten invoices totaling about 15,000 are to individuals we ve been unable to locate. Two individuals in this category are deceased. The remaining nine invoices (12,059) were submitted to small claims Page 2 of 5

3 City Council Agenda Report Agenda Item No. 5.b June 26, 2018 court and the City received favorable judgements but has not received any payments in over 1 ½ years. We ve been unable to locate individuals responsible for eight (10,601) of the false alarm invoices and the remainder have been submitted to small claims court. All of the invoices for damage to City property have been submitted to small claims court. While these accounts must be written off the City s accounting records for financial reporting purposes, collections efforts will continue. Generally, the City pursues small claims court actions for all accounts where the defendants can be located. The judgments remain on file for ten years and are renewable for an additional ten years. In addition, the Finance Department submits all uncollectible debts to the State s Interagency Intercept Collection program annually. Financial Impact The write-off of 212,811 recognizes the inevitability that the money will not be collected. All of this amount is attributed to the General Fund. In accordance with Generally Accepted Accounting Principles (GAAP), the uncollectible amounts cannot be categorized as deferred revenue due to the uncertainty of the collection of payment. Staff will continue to maintain a file of the write-off upon the event that collections occur. Public Contact The City Council Agenda was posted. Attachment 1. Summary of Uncollectible Accounts Page 3 of 5

4 Attachment 1 City of Concord Fiscal Year Accounts Receivable Write Offs OVER Date Invoice # Name Service Original Amt Amt Including Finance Charges 09/16/ HAROLD BURKLIN Inspections /24/ US BANK NATIONAL ASSOC. Inspections , /14/ US BANK NATIONAL ASSOC. Inspections 1, , /23/ US BANK NATIONAL ASSOC. Inspections , /04/ RAMIRO MARTINEZ Inspections , /06/ GABRIELLE DALE Inspections 1, , /04/ GABRIELLE DALE Inspections , /18/ GABRIELLE DALE Inspections , /24/ ALAN URRICELQUI Inspections , /12/ MOLLIE SHEA Abatement /15/ MOLLIE SHEA Abatement /21/ CHRISTOPHER ROCKENBAUGH Inspections 2, , /21/ CHRISTOPHER ROCKENBAUGH Inspections 1, , /12/ CHRISTOPHER ROCKENBAUGH Inspections /03/ CHRISTOPHER ROCKENBAUGH Inspections , /21/ CHRISTOPHER ROCKENBAUGH Inspections /09/ ALLEN RADABAUGH Inspections 2, , /29/ BEVERLY WESTBROOK Inspections /12/ BEVERLY WESTBROOK Inspections , /02/ ROBERT MCDAVID, JR Abatement 25, , /02/ ROBERT MCDAVID, JR Inspections 2, , /22/ ROBERT MCDAVID, JR Abatement 48, , /29/ MELENDRINA DAOANG CHEW Inspections , /24/ ALAN URRICELQUI Inspections , /22/ KAREN KUREK Inspections , /16/ NANCY DELU, TRE Inspections , Sub Total Inspections/Abatements 136, /15/ ALLA REVKOVA Damages , /15/ DONNY ALLEN Damages 1, , /15/ ERNA WYSOCK Damages 23, , /14/ KHAE SAECHAO Damages 2, , /15/ MICHAEL TODD Damages /29/ MAYA WESTWIND Damages 11, , /13/ ANDY JAUREGUT Damages , /15/ RICHARD CARAMELLA Damages 1, , /12/ ANGEL CARRERA LOPEZ Damages 8, , Sub Total Damages to City Property 55, /16/ ROCKY DUDEM CORP 1, /10/ ROCKY DUDEM CORP 1, /20/ ISLAND BUFFET 2, , /14/ ISLAND BUFFET , Page 4 of 5

5 ATTACHMENT 1 City of Concord Fiscal Year Accounts Receivable Write Offs OVER Date Invoice # 08/27/17 05/14/17 05/14/17 07/28/17 09/08/17 09/12/17 07/21/17 09/12/17 09/08/17 01/12/18 10/08/ Name TRC SOLUTIONS STEVE WILLHITE LUXI HOUSE Sub Total Total Uncollectible Receivables Service Original Amt 1, , Amt Including Finance Charges 1, , , , , , , , Page 5 of 5