City targets overdue accounts

About 2,500 people not paying their sewer or trash bill in Greenwood each month are about to hear from the city.

Greenwood filed sewer liens against more than 1,000 property owners last year and collected more than $750,000 in bills that were months past due in 2014. But there’s still significantly more money out there waiting to be collected — about $785,000 in unpaid bills right now.

The amount is so much that the city wants to add another employee who would go after delinquent accounts.

The new paralegal, who would also help the stormwater department, will cost the city about $72,000 in salary and benefits. But that new position should easily be able to pay for itself by helping amp up the city’s collection efforts. The city’s legal department already has proven it’s possible: the city has gone from collecting just $10,000 per year, to closing in on $1 million.

If the city can collect more of what is owed, that could help prevent future sewer rate increases or lead to smaller increases in the future.

The average monthly sewer bill is about $40 per month, while trash fees are $10 monthly. By the time the city gets involved, residents or businesses have typically accumulated more than $300 in past-due bills and late fees.

“There is more potential out there. We’re not getting close,” city attorney Krista Taggart said.

The city’s sewer utility serves about 25,000 customers and thousands of accounts are delinquent, especially in rental properties, Taggart said. The city also had a significant backlog of past-due accounts because of some changes in billing.

Previously Indiana American Water did utility billing for Greenwood and had a low rate of nonpayers because the company would threaten to turn off water if people didn’t pay their bills, Taggart said. The city also changed to become a second-class city, meaning billing went from the clerk-treasurer’s office to the newly created finance office. Staff were focused on getting out bills, making payments and managing the city’s books, so collecting past due bills fell to the wayside, she said.

The city then assigned collection duties to the legal department, which has been able to focus on filing liens and processing small claims cases. Collections rose from about $10,000 to $200,000 in 2013. The city added another assistant attorney, which helped boost the total last year.

Most of the money collected has come from filing liens, which are a debt attached to a person’s property taxes. When the owners pay their taxes in the spring or fall, they also have to pay that overdue amount. Greenwood is filing 200 or more liens per month.

The city has a harder time collecting from rental properties and past-due trash bills, since those have to be filed in small claims court.

Those cases require an attorney to respond to filings, make appearances in court and track payments. Those cases also take longer to resolve, but when the city wins, Greenwood gets a judgment for the amount of the past due bills, plus the court and attorney fees, which adds about another $350 to a person’s bill, Taggart said.

The new employee would take over part of the duties of filing liens, while a current employee would do more small claims work. Greenwood wants to ramp up small claims work to collect from tenants and people who aren’t paying for trash service, Taggart said. In the past, people would pay their sewer bill, but not their trash bill, because the city wasn’t doing anything to go after delinquent trash fees, she said.

“We can’t not collect trash,” Taggart said.

“But people knew that in the city, so they would pay sewer but not trash.”

Greenwood is hoping to whittle down the backlog and have enough staff to be able to keep up with delinquent bills as soon as they hit 60 or 90 days overdue.

That’s different from a smaller utility like Franklin, which files liens twice per year, utility billing manager Sherry Phillips said.

Franklin runs a report of any accounts that are 90 days or more past due in January and June, then sends letters demanding payment in each of the next three months and maintains a list to see who pays and who doesn’t. If the payment hasn’t been made, the city files liens for the past-due accounts, which is typically about 300 accounts each time, Phillips said. For rentals, the city sends a notice to both the tenant and the property owner, but if a payment isn’t received, the lien is filed, and the landlord will be responsible for paying it, she said.

Franklin has about 8,000 sewer customers and is able to process all of the liens in a short time, Phillips said. Since Greenwood has three times as many customers and more rental properties, trying to do all of the overdue accounts in one large filing isn’t feasible, Taggart said.

By the numbers

Greenwood is planning to add new staff to work on collecting past-due utility bills. Thousands of customers don’t pay every month, and the city is trying to collect more of what’s owed.

24,850: Sewer customers in Greenwood

2,500: Approximately number of accounts 90 days past due in an average month

$780,000: Amount currently past due (not including stormwater fees)

$490,715.72: Amount collected from liens in 2014

$250,000: Approximate amount collected from sending demand letters to customers in 2014 without liens

$300: Average amount of delinquent utility bill

$72,000: Cost for salary and benefits to add a new employee who will help with collections

SOURCE: City of Greenwood