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City Utility Bill Delinquency, Returning to Normal OperationsCity of Dubuque City Council Meeting Action Items # 2. Copyrighted July 19, 2021 ITEM TITLE: City Utility Bill Delinquency, Returning to Normal Operations SUMMARY: City Manager recommending a process to use federal American Rescue Plan Act (ARPA) funds to assist with certain overdue City utility accounts and return the Water/City Utility Billing Department to normal operations. SUGGESTED Suggested Disposition: Receive and File; Approve DISPOSITION: ATTACHMENTS: Description Type City Utility Bill Delinquency, Returning to Normal City Manager Memo Operations-MVM Memo Staff Memo Staff Memo THE C DUUB_-_*._TE Masterpiece on the Mississippi TO: The Honorable Mayor and City Council Members FROM: Michael C. Van Milligen, City Manager SUBJECT: City Utility Bill Delinquency, Returning to Normal Operations DATE: July 15, 2021 Dubuque *Amrin Cia 2007-2012.2013 2017*2019 Housing and Community Development Director Alexis Steger and Utility Billing Supervisor Rose Hoerner are recommending a process to use federal American Rescue Plan Act (ARPA) funds to assist with certain overdue City utility accounts and return the Water/City Utility Billing Department to normal operations. The City of Dubuque suspended late pay fees and water -shut offs due to COVID-19. The City continued to send delinquency notices to make sure residents were informed that they were behind in payments, but no water -shut offs occurred. At the onset of these changes, the City of Dubuque had approximately $300,000 in delinquent payments. As of June 1, 2021, the amount of delinquent payments has increased to over $675,000. Staff has been reviewing options to return water billing and delinquency procedures back to pre-COVID operations, with the least amount of hardship to those that experienced COVID related losses. After review of the delinquent accounts there are five categories of accounts: 1. Businesses (171) 2. Homeowners/Renters who have made payments since the beginning of COVID (513) 3. Homeowners/Renters who have not made a payment since pre-COVID (128) 4. Residents Receiving Housing Assistance (52) 5. Homeowners/Renters who have overdue amounts but have executed a payment plan with the City of Dubuque and are current with that plan (92) As of June 1, 2021, there are 812 delinquent accounts in the first three categories listed above who are overdue on their accounts and do not have a payment plan in place. Several options were considered for potential funding from ARPA for delinquent utility bills, for those affected by COVID-19. Unfortunately, analyzing who is affected by COVID-19 requires significant labor hours and requires onerous applications from residents to prove they were affected. The Housing and Community Development Department reports that the #1 barrier to assisting those that needed assistance during COVID-19 was the large amount of information residents had to provide to qualify for assistance. The CARES Act Community Development Block Grant program for rent and utility assistance required a greater allocation for staff labor hours than money was provided to the community for the assistance. The State of Iowa is also reporting this barrier while administering the same program, leaving millions of dollars unallocated to residents still in need. Due to this barrier alone, City Staff is recommending the City Council consider using federal ARPA funding to assist with the payment of City utility bills from the March 2020 billing cycle through June 30, 2021, for categories 1-3 and 5 listed above after residents have accessed any other funds available to them. The 52 residents receiving housing assistance would not be eligible for this funding, due to already being provided utility assistance with their housing assistance. This assistance is calculated based on usage history and appliances in the unit. These residents were also able to immediately report income losses and receive additional assistance to offset the income loss; therefore, it is part of their required family obligation per Federal Regulations to stay current with utility bills. This does not preclude these families from applying for, and receiving, assistance from other programs such as LIHEAP crisis funds and the State of Iowa Rent and Utility Assistance or entering into a payment agreement with the Utility Billing Division. City staff have also contacted all of these residents to provide information about assistance, and several have already contacted utility billing to pay or enter into payment plan agreements. Water billing and delinquency operations that were suspended included the application of a late fee after 30 days of delinquency and water shut-off on accounts over 31 days and over $125 delinquent. City staff is requesting shut-off processes start again on August 1, 2021, and that late fees continue to be suspended until the end of calendar year 2021. Prior to August 1, staff will send written notices to those with delinquent accounts. These notices would provide information about payment required as well as a water shut-off date if no payment is received. Where phone numbers are available, staff will also attempt outbound calls to notify residents and discuss payment plan options. All residents are eligible for payment plan options and, if the City Council approves, funding from ARPA for portions of their bill incurred during COVID-19 shutdowns. The delinquency and shutoff notices, that will start in July 2021, would be tiered to allow City Staff the ability to field phone calls, set up payment plans and work through the funding options with each resident. This tiered approach also allows any water shut -offs to be managed within the capacity of the Water Department. Water shut -offs are the last resort for residents that are non -responsive to all other attempts to assist the resident with payment of their accounts. The recommended tiered approach is: 1. Accounts that have not made a payment since February 2020 (128). 2. All other impacted accounts, given notice through the remainder of the calendar year and sorted by billing cycle. 2 The Public Information Office will start advertising resuming normal water billing operations prior to delinquency and water -shut off notices being distributed. Additional information will be released should the City Council approve an ARPA funded program for assisting with City utility bills. This is a significant undertaking for City staff. Support for answering phone calls, taking payments, applying funding and setting up payments plans will be required. Water shut -offs and turn-ons will be managed with current Water Department staff. It is anticipated that once notified that disconnects are being reinstated, many residents will enter a payment plan or pay their overdue amount in full. If none of the 812 overdue accounts did so, the budget impact would be approximately $675,000. Federal American Rescue Plan Act funds could be the source of funds for this amount should City Council agree. Not reinstating late fees until the end of calendar year 2021 will have some budget impact on the Water enterprise fund. Sixty-three thousand dollars ($63,000) was budgeted for late fee revenue in FY22, and a significant portion of this will not be realized if late fees are not collected for six months. I respectfully recommend approval of the recommendation for the funding of delinquent City utility accounts for usage between March 1, 2020 and June 30, 2021, using federal American Rescue Plan Act funds after all other options have been exhausted and that the City not reinstate late fees until the end of calendar year 2021, to give those impacted appropriate time to pay bills for actual utilities used without being negatively impacted by additional late fees. Normal operations for water billing and delinquencies would then return to pre-COVID operations on August 1, 2021. Mic ael C. Van Milligen MCVM:jh Attachment cc: Crenna Brumwell, City Attorney Cori Burbach, Assistant City Manager Teri Goodmann, Director of Strategic Partnerships Alexis Steger, Housing and Community Development Director Jenny Larson, Finance and Budget Director Rose Hoerner, Utility Billing Supervisor Christopher Lester, Water Department Manager William O'Brien, Water & Resource Recovery Center Manager John Klostermann, Public Works Director Anderson Sainci, Resource Management Coordinator Gus Psihoyos, City Engineer Deron Muehring, Civil Engineer 3 THE CITY OF DUB E Masterpiece on the Mississippi TO: Michael C. Van Milligen, City Manager FROM: Alexis Steger, Housing and Community Development Director Rose Hoerner, Utility Billing Supervisor DATE: July 13, 2021 RE: City Utility Bill Delinquency, Returning to Normal Operations Dubuque All•Merisa 6i� 2007-2012.2013 2017*2019 INTRODUCTION The purpose of this memo is to recommend a process to use American Rescue Plan Act (ARPA) funds to assist with certain overdue utility accounts and return the Water/City Utility Billing department to normal operations. BACKGROUND The City of Dubuque suspended late pay fees and water -shut offs due to COVID- 19. The City continued to send delinquency notices to make sure residents were informed that they were behind in payments, but no water -shut offs occurred. At the onset of these changes, the City of Dubuque had approximately $300,000 in delinquent payments. As of June 1, 2021 the amount of delinquent payments has increased to over $675,000. DISCUSSION Staff has been reviewing options to return water billing and delinquency procedures back to pre-COVID operations, with the least amount of hardship to those that experienced COVID related losses. After review of the delinquent accounts there are five categories of accounts: 1. Businesses (171) 2. Homeowners/Renters who have made payments since the beginning of COVID (513) 3. Homeowners/Renters who have not made a payment since pre-COVID (128) 4. Residents Receiving Housing Assistance (52) 5. Homeowners/Renters who have overdue amounts but have executed a payment plan with the City of Dubuque and are current with that plan (92) 1 As of June 1, 2021; there are 812 delinquent accounts in the first three categories listed above who are overdue on their accounts and do not have a payment plan in place. Several options were considered for potential funding from ARPA for delinquent utility bills, for those affected by COVID-19. Unfortunately, analyzing who is affected by COVID-19 requires significant labor hours and requires onerous applications from residents to prove they were affected. The Housing and Community Development Department reports that the #1 barrier to assisting those that needed assistance during COVID-19 was the large amount of information residents had to provide to qualify for assistance. The CARES Act Community Development Block Grant program for rent and utility assistance required a greater allocation for staff labor hours than money was provided to the community for the assistance. The State of Iowa is also reporting this barrier while administering the same program, leaving millions of dollars unallocated to residents still in need. Due to this barrier alone, City Staff is recommending the City Council consider using ARPA funding to assist with the payment of water utility bills from the March 2020 billing cycle through June 30, 2021 for categories 1-3 and 5 listed above after residents have accessed any other funds available to them. Residents receiving housing assistance would not be eligible for this funding, due to already being provided utility assistance with their housing assistance. This assistance is calculated based on usage history and appliances in the unit. These residents were also able to immediately report income losses and receive additional assistance to offset the income loss; therefore, it is part of their required family obligation per Federal Regulations to stay current with utility bills. This does not preclude these families from applying for, and receiving, assistance from other programs such as LIHEAP crisis funds and the State of Iowa Rent and Utility Assistance or entering into a payment agreement with the Utility Billing Division. City staff have also contacted all of these residents to provide information about assistance, and several have already contacted utility billing to pay or enter into payment plan agreements. Water billing and delinquency operations that were suspended included the application of a late fee after 30 days of delinquency and water shut-off on accounts over 31 days and over $125 delinquent. City staff is requesting shut-off processes start again on August 1, 2021, and that late fees continue to be suspended until the end of calendar year 2021. Prior to August 1, staff will send written notices to those with delinquent accounts. These notices would provide information about payment required as well as a water shut-off date if no payment is received. Where phone numbers are available, staff will also attempt outbound calls to notify residents and discuss payment plan options. All residents are eligible for payment plan options and, if the City Council approves, funding from ARPA for portions of their bill incurred during COVID-19 shutdowns. 2 Residents eligible for shutoff due to an overdue account will have approximately 3-4 weeks from the date they receive a disconnect notice to contact the City to arrange payment or a payment plan. Some "crisis" funding sources available from other institutions, such as; 1. LIHEAP Utility Crisis Program — HACAP 2. State of Iowa Rent and Utility Assistance Program — HACAP 3. County of Dubuque General Relief Funds — CSEI require disconnect notices before they can be accessed. City staff will work with these agencies to ensure that if a resident is in the process of applying for crisis funding, they are not disconnected until this application process has been completed and utilized if possible. Additionally, the State of Iowa Rent and Utility Assistance Program is under-utilized due to the barriers described above; however, the process of review is taking several months for some applicants. Forty (40) City of Dubuque Residents have applied and the applications are still in the queue for review, some applications as old as 60 days. Eight City of Dubuque Residents have received assistance with Water Utility Bills in the amount of $3,275. The amount applied for in the City of Dubuque for Water Utility bills under this program is $26,391; most of which is pending review of applications. City Staff will continue to work with those applying for this assistance prior to executing a water shut-off for non -pay. The delinquency and shutoff notices, that will start in July 2021, would be tiered to allow City Staff the ability to field phone calls, set up payment plans and work through the funding options with each resident. This tiered approach also allows any water shut -offs to be managed within the capacity of the Water Department. Water shut -offs are the last resort for residents that are non -responsive to all other attempts to assist the resident with payment of their accounts. The recommended tiered approach is: 1. Accounts that haven't made a payment since February 2020 (128). 2. All other impacted accounts, given notice through the remainder of the calendar year and sorted by billing cycle. The Public Information Office will start advertising resuming normal water billing operations prior to delinquency and water -shut off notices being distributed. Additional information will be released should the City Council approve a ARPA funded program for assisting with City utility bills. This is a significant undertaking for City staff. Support for answering phone calls, taking payments, applying funding and setting up payments plans will be required. Water shut -offs and turn-ons will be managed with current Water Department staff. 3 BUDGET IMPACT We anticipate that once notified that disconnects are being reinstated, many residents will enter a payment plan or pay their overdue amount in full. If none of the 812 overdue accounts did so, the budget impact would be approximately $675,000. American Rescue Plan Act (ARPA) funds could be the source of funds for this amount should City Council agree. Not reinstating late fees until the end of calendar year 2021 will have some budget impact on the Water enterprise fund. $63,000 was budgeted for late fee revenue in FY22, and a significant portion of this will not be realized if late fees are not collected for six months. RECOMMENDATION We respectfully request City Council consideration for the funding of delinquent water utility accounts for usage between March 1, 2020 and June 30, 2021 using ARPA funds after all other options have been exhausted. We further recommend that City Council not reinstate late fees until the end of calendar year 2021, to give those impacted appropriate time to pay bills for actual utilities used without being negatively impacted by additional late fees. Normal operations for water billing and delinquencies would then return to pre-COVID operations on August 1, 2021. cc: Crenna Brumwell, City Attorney 12