Sean C. Morgan
After a lengthy discussion of the current policy governing how the city pursues payments for delinquent water and sewer service accounts, the Sweet Home Public Works Committee decided it will recommend no changes to that process.
The conversation on Tuesday, Jan. 7, focused on how the city’s policy for collecting on delinquent bills left behind by departed renters works and how it might be improved to help landlords who end up stuck with those bills.
“Questions have come up from people in the community, primarily property owners that have rental properties,” said Public Works Director Mike Adams.
The city has been sending notifications to the owners of properties that have outstanding water and sewer bills, including those of renters who leave without paying the bill.
The city tries to collect from the person who accrued the outstanding bill. Ultimately, if the outstanding bill remains unpaid, the debt may become a lien against the property.
It’s a debt to the city, and it’s recoverable, Adams said. The lien is against the property regardless of who caused the delinquent account.
The current policy originated in 2005, he said. A 2006 resolution set late fees, rates and notification requirements, and another resolution set the deposit requirement for accounts.
The legal justification underlying the policy is set forth in Oregon state law, Adams said. It allows the transfer of a debt to property owners with the proper notification. The law also discusses the property owner’s responsibility in the establishment of water and sewer accounts.
Renters with delinquencies must pay the outstanding bill before opening another account elsewhere in the city, he said.
If city officials find out a former tenant lives elsewhere, and someone else has opened an account in his or her stead, they’ll require payment before allowing the account to continue, he said. Landlords have informed the city of that type of situation, letting city officials know they never rented to the person who opened the account.
If a property owner clears up a debt, then the debt is off the city’s books, Adams said. After that, the renter can open a new account.
Scott Morrelli, a property owner and landlord in Sweet Home, pointed out that while he’s forced to pay an outstanding bill for his renters, they can move on and run up charges on someone else.
“I have to pay this bill even if it’s not mine,” he said.
When renters want to open an account, they must show the city a copy of their rental agreement, Adams said. The property owner also is notified about the opening of the account. The tenants and landlords are provided copies of the same rules and regulations.
Bills are considered delinquent if they are not paid by the 15th of each month, Adams said. The city delivers a delinquency notice to the tenant and property owner. The notice explains the amount that is delinquent. The deadline for payment is 5 p.m. on the last Wednesday of the month.
After that, the account is assessed a $2 late fee and charged 1.5 percent interest, he said. The service is then subject to shutoff if the outstanding amount is more than $80. Shutoffs are completed on the second Wednesday of month.
Morrelli pointed out that if rent isn’t paid, the landlord has to wait three days to start eviction, while the fact that the shutoffs don’t happen until the 15th leaves another month after a due date for a bill to grow larger.
“You’re giving them a month and a half of water I’m going to have to pay for,” Morrelli said. “Why does it take two weeks to turn it off?”
Renters know the due dates, and they play the game, he said.
With an earlier shutoff date, the city would deal with more shutoffs and take multiple days to do it, said City Manager Craig Martin.
Since January 2010, the city has averaged 52 accounts per month on the shutoff list, Adams said. Since January 2012, the city has had 50 accounts on the list. Of those, the average amount delinquent was $131.95 since January 2010 and $128.23 since January 2012.
Maximum, bills can actually accrue for up to about two months. The January bill covers the last two weeks of November and the first two weeks of December, he said.
If no customers were allowed to carry a balance, Adams said, then 309 would be on the shutoff list each month.
If a customer carrying no more than $80 delinquent into December did not pay in January, the customer would face a shutoff on the second Wednesday of February, further increasing the water and sewer bill up to that point, up to about eight weeks – plus the $80. Deposits for water and sewer services are $50 each.
City Councilor Scott McKee Jr. asked Adams what action property owners can take.
They can pay it or they can tell the tenant to get into City Hall and get it paid, Adams said.
The property owner could attempt to collect, Martin said, but in that case, the city becomes a third party.
“The thing I like about this policy is it allows the customer some leeway to carry a balance,” Adams said of the 2006 resolution. The old way of doing it, the city was shutting off services over a couple of dollars.
The city is making a sort of contract with the tenants, but ultimately, it falls back on the property owner, McKee noted.
The property owner is responsible, Adams said. They have to provide water and sewer service, and they have to tell the tenant how they are going to receive the service, either by getting an account or paying the landlord.
Sewer-only accounts must be in the property owner’s name, he said.
Morrelli told the committee he went in to pay two outstanding bills in the $150 to $200 range left by renters, one of whom deliberately left him the bill; and then he found out he had other properties with outstanding bills and had to pay more than $1,800.
“I don’t mind paying the bill so much,” he said, but it’s doing it again and again – and he can’t turn the water off.
Councilor Craig Fentiman said he didn’t know if there was anything that could be done.
City Attorney Robert Snyder said the city could start keeping a separate book of renters who have left landlords to pay their bills.
But they’re often moving out of town, to apartments, or in with family members, said Finance Director Pat Gray, noting that there is no way a clerk working the counter is going to be able to look at a “black book.”
Morrelli suggested not charging the late fee or the interest, leaving that on the renter.
The city drops late charges and interest on outstanding bills when the property owner comes in to clear up a bill, Adams said, but he doesn’t know how to carry interest and late fees on the renter without showing it as a debt, which is what is liened.
“I think what we’ve got works fairly well,” Adams said, but he said he understands Morrelli’s position.
Maybe there is a way to establish a renter’s credit history, Adams said.
Fentiman asked whether a bad credit report could prohibit a prospective tenant from getting water service. He questioned what would happen if water were shut off earlier, with no extensions.
Martin asked how many people pay between the 15th and the end of the month.
Adams envisioned more accounts on the shutoff list.
Martin said he didn’t think there was a good solution. He said some other cities are more aggressive, while others don’t pursue delinquent accounts as vigorously. The majority will ultimately try to recover the debt using a lien on the property.
Morrelli said the system works better now than it did five years ago. He would just like to know regularly what bills his renters may have outstanding.
That’s something the city has already started doing, Adams said.
Based on what he was hearing at that point, Fentiman asked the committee whether it wanted to do anything.
Councilor Dave Trask said he didn’t think so. McKee agreed.
The Public Works Commitee includes Chairman Fentiman, Trask and McKee.
As far as it goes keeping the ordinance, Morrelli told The New Era he was satisfied as long as the city is notifying landlords every six months or year.
He doesn’t like paying the bill, he said, but since it’s state law and the city is following the lead of other cities, he sees any changes there as an uphill battle.
“I don’t think it’s right at all,” Morrelli said. As a landlord, he is required to assume the liabity for an agreement a renter makes. “I don’t think that’s right. I know other cities do it. It’s legal, but I don’t think it’s right.”