Thousands of city residents are not paying their sewer bill under a new payment system after Tennessee-American Water Company discontinued including it with the water bill, Andrew Kean, city chief operating officer, told the City Council on Tuesday.
When sewer billing was put on the water bill, the collection rate was 98.8 percent. That number has now dropped to 92 percent. Out of 50,000 accounts, 13,000 are in arrears. This rate is around 25 percent of the total number of accounts and represents a loss to the city of $1.
8 million, said Mr. Kean.
Mr. Kean said the problem really lies with the customers and what the city can do to receive payment. Being considered as an enforcement tool is the interruption of service if sewer charges are not paid. Before this is done, there is a need to address the billing policy and assure that there is the right customer service solution in place and that it will be able to communicate the process to consumers, he said. This plan should be completed soon and before the end of October. Notification will be sent to customers that will let them know what to expect.
When the water company dropped out of the picture in January, the City Council considered using EPB which has the capacity to do third-party billing. However, it would have required 18 months of preparation. Therefore Enko, a utility services company that sends and processes bills, was selected to perform the service. That company based in Anaheim, Calif., was awarded a four-year contract to bill on behalf of the city.
The council was told that the city, being the sewer provider, does have the right to interrupt service through Tennessee American if the consumer is not willing to work out a payment plan for late bill payment. A plan will be available that allows a 25 percent payment each month until the amount owed is satisfied. Chattanooga officials are waiting to begin doing this until they make sure that the water company can handle the requests. If water is turned off, there will be a $15 charge and another $15 charge to turn it back on. The responsibility for this penalty will lie totally with the customer.
Almost every council person said he/she had been contacted by constituents in his/her districts concerning other problems with the billing service by Enko and how they do business. To find an alternative is expected to take 18-24 months. The fact that there is a multi-year/multi-party contract in place will also affect what action is taken. Before changes could occur, a determination will need to be made if Enko has done enough to break its contract, which ends in August 2016.
The problem with delinquent bills creates an immediate need for deciding how to handle accounts receivable. There is also a need to determine what is best for the city over the long term. All options are being evaluated, such as the city doing the billing itself or finding another third party to do it, Mr. Kean said.
In other business, a resolution authorizing the administrator of the Department of Transportation to apply for a grant from TDOT will be discussed at the next council meeting. This will be for no more than $1.5 million, and would be used for streetscaping on Manufacturers and Hamm roads between Highway 27 to the planned Moccasin Bend Visitor Center. The city would be responsible for 20 percent of the cost with the remainder coming from TDOT. The application must be made before the Nov. 1 deadline.
Blythe Bailey, transportation director, also presented another request for approving a contract with the 3M Company for replacing or renovating signage throughout the city in order to comply with the reflective qualities that must be in place by 2014. To be done in-house by June 14 would require adding six full-time people to perform the needed work and would not be cost effective, he said.
The request will be discussed at the council meeting next Tuesday along with another resolution for the chief of police to enter into an agreement for $35,000 for computer software used in training for industrial safety, computer skills and workforce development. This will enable the department to share information about its documentation policies which can be reviewed and used in training. This will be for the third year of a five-year contract.
The city is preparing to issue bonds not to exceed $40 million. The sale date will probably be before the end of this year. There will be an education session/bond issuance presentation next week to answer questions that have been asked by the council.
The administrator of the economic and community development department explained another resolution that will be taken up by the council. A development of single-family dwellings specifically for low income or disabled citizens was created with city funding, by Rosewood Supportive Services, Inc. That company has notified the city that it is going out of business, so the property will need to be transferred to another company that will assume all the responsibilities of managing it.