The City of Prince Albert is seeking a legal opinion on how to collect some of the $1.4 million in outstanding utility bills it is owed.
The vast majority of the unpaid accounts are from renters who have not settled their water bills, and the mayor has suggested the city may go after property owners for that money. At the same time the city is looking to contract a new debt collection agency in the hopes of improving on what has been a dismal rate of return in recent years.
“Quite a bit of the debt is old and probably needs to be written off but we needed a legal opinion on what our options are,” Greg Dionne told paNOW. “Do we add it on to taxes or is there another way we can collect?”
The city currently does not exercise its municipal right to add outstanding water accounts from rental units to the owner’s property taxes and has been using a collection agency instead, but without much success. The agency was commissioned since 2003, and while their last agreement expired in 2016 it has still been working for the city.
“We’ve issued a request for proposals for collections services, but while we go through that process we want to explore what’s there and collectible,” Dionne said. With 4,657 outstanding accounts dating to 2007 he added they were also seeking legal counsel on how far back they could go to collect.
“At the end of the day it needs to be collected. We’ve upped the [utility] deposits and we’ve worked really hard to try to prevent further erosion of our water system,” Dionne said. To that end he said it was possible the city might consider holding the property owners liable for the debt, even though the utility accounts were in the tenant’s name.
“We’re looking at options to add it onto the owner’s property taxes and we think we can do that by bylaw,” Dionne explained. “The biggest issue is rentals, so unfortunately whether they like it or not, landlords are going to be dragged into the conversation.”
The stats show over 87 per cent of the total amounts owing are from renters and just over 12 per cent are from property owners.
Coun. Don Cody said the problem of collecting was complicated “because those people just cannot be found and you can never find them again.”
He said that’s why the city was pondering collections agencies as well as the legal route.
Cody said council had the right to pin the debt on property owners although that idea had been rejected by the majority of council in the past, but it could be pondered again. He added it was something council was reluctant to do though.
“You know, here’s a poor landlord sitting with an outstanding bill that was not of their making and as a result of that we’re saying, ‘is that fair?’”
Poor returns from collections
Meanwhile, the success rate of the city’s contracted debt collection agency has been underwhelming. A document supplied by the city’s finance department shows since 2015 the agency was able to collect almost $11,000 in unpaid bills. However, the city paid over $26,000 in commissions for that service.
Cheryl Tkachuk, the city’s director of financial services, said it was important to note commissions were also paid for the efforts the agency may have already made in trying to collect, even when it was the city who ultimately managed to get the account holder to pay up.
But Tkachuk was hopeful a new deal with another agency could see a better overall negotiated commission rate. She was not able to say what rate was offered as part of the previous agreement.
“You know, if the agency has already done some of the work, but the city ends up collecting the owed amount, perhaps the commission charged can be lowered,” she said.
Asked if she was satisfied with the rate of return from the collections agency Tkachuk said she was “disappointed.”
Coun. Charlene Miller summed up the mood on behalf of taxpayers.
“They should be absolutely frustrated, but if we don’t go to collections then we don’t get any money whatsoever," she said. “But it’s frustrating that we have to go to collections and try to get paid and don’t get paid as well. I don’t know what the answer is. I’m puzzled, too.”
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