City may look at added actions to prompt utility payments

John Howell
Posted 11/18/14

The city administration may look at ways in addition to a tax sale to prompt people to pay their water and sewer bills in a more timely fashion, City Planner and acting chief of staff William …

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City may look at added actions to prompt utility payments

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The city administration may look at ways in addition to a tax sale to prompt people to pay their water and sewer bills in a more timely fashion, City Planner and acting chief of staff William DePasquale said yesterday.

DePasquale’s comments came into response to questions about the tax sale scheduled for Dec. 5 to collect unpaid water and sewer usage fees and sewer assessments.

The sale, one of the largest in the city’s history for unpaid utility bills, started with 2,500 properties three months ago. It has been reduced to about 850 properties that were listed in more than six pages of legal advertising in Thursday’s Beacon. It will be further reduced as payments are received prior to Dec. 5.

Suggestions on how the city might avoid tax sales for unpaid utility bills have included a “shutoff” policy.

“When I was town administrator for Jamestown, we didn’t have a tax sale [for unpaid utilities],” said assistant tax assessor Bruce Keiser.

Keiser said delinquent payers were notified their water would be shut off if they didn’t make a payment. Other utilities including electricity, gas, cable or cell phones use the threat of a shutoff as a means of prompting payments.

A shutoff policy could have the effect of reducing the amount of delinquencies, as bills would not be allowed to build up before the city took action. According to City Treasurer David Olsen, the city has not conducted a tax sale for delinquent utility bills since 2011. He said the amounts due range from $700 to $5,000.

There’s more to it than the amount of the payment due.

In order to implement a tax sale, the city follows a procedure requiring multiple notices, a title search of the property and a legal advertisement. The sale itself is an added expense. All of those expenses are passed on to the property owner and can amount to more than $250. That amount is calculated prior to the tax sale and added to the delinquent payment, so someone owing $700 could eventually face a bill of $1,000.

“It’s in your best interest to come in now and avoid the extra cost [of the tax sale],” Olsen said Friday.

He said final calculations on the amounts owed, which include the costs associated with the tax sale, plus interest accumulated through Nov. 15, will be finalized this week in preparation for the sale on Dec. 5.

Olsen believes there will be a high level of interest in the sale. Unlike tax sales for unpaid taxes that often include undersized lots and hard-to-market properties, this sale is comprised of a large number of inhabited properties.

“They know,” Olsen said of buyers, “they are going to get their money back and the mortgage companies are going to pay [to avoid a foreclosure].”

Under the provisions of the sale, the property owner has a year to pay off the amount due, plus a 10 percent penalty and accrued interest after six months, before the purchaser can take action to foreclose on the lien.

Olsen warmed to the suggestion about using shutoffs and other methods to get people to pay water and sewer bills.

“I’d go for that,” he said, “rather than being the heavy.”

DePasquale feared a shutoff policy could have repercussions, including the loss of heat if done during the winter.

“Let’s try to work with the residents and businesses in the city,” he said.

He said the city needs to look at different ways to get people to pay their bills before the point of a shutoff or a tax sale is reached.

“We should reassess the situation as we go forward,” he said.

As for avoiding the tax sale in the future or using it as a final resort, Janine Burke, director of the Warwick Sewer Authority, said, “We’ve been talking about better ways of doing it.”

She thought a shutoff would be an added mechanism to collect both water and sewer bills. She said the administration is looking at “sitting down and looking at the big picture of a collection policy and what other tools are available.”

Since tax sale notices went out to delinquent payers three months ago, Burke said the authority has experienced a noticeable increase in collections. She was unable to say what is the outstanding balance represented by the tax sale, but when the process started, $1.5 million was owed.

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