AGENDA TITLE:
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Adopt a Resolution Authorizing the Interim City Manager to Execute the Write-off of Uncollectible Utility Billing Bad Debts for the Years 2017 Through 2021, Approve the Total Write-off Amount of $1,573,855.04, and Approve Appropriations of $1,292,718 (IS-FIN)
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MEETING DATE:
March 4, 2026
PREPARED BY:
Tarra Sumner, Revenue Manager
recommendation
RECOMMENDED ACTION:
Adopt a resolution authorizing the Interim City Manager to execute the write-off of uncollectible utility billing bad debts for the years 2017 through 2021, approve the total write-off amount of $1,573,855.04, and approve appropriations of $1,292,718.
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BACKGROUND INFORMATION:
The Finance Department, through the Revenue Division, is responsible for administering and processing the write-off of accounts deemed uncollectible. The Council considered a similar item for General Billing Write-Offs at the October 15, 2025 City Council meeting, and now this item is before Council to address those uncollectible utility billing items similarly. The Electric Utility, Public Works, and Finance departments utilize the City’s utility billing system to assess and collect fees, fines, and service charges.
When outstanding balances remain in the General Ledger after all reasonable collection efforts have been exhausted, receivables become overstated and financial reporting becomes inaccurate. In accordance with standard governmental accounting practices, these accounts must be formally written off through an approved process once deemed uncollectible.
The utility billing module has not undergone a comprehensive write-off process since the implementation of Tyler Munis. Staff is currently reconciling and preparing accounts for write-off to ensure the City’s financial records accurately reflect collectible balances. Following the completion this write-off and one additional comprehensive write-off covering fiscal years 2022 through 2025, the utility module will be fully current, and annual write-offs will occur to maintain accurate financial reporting.
The City maintains a structured monthly collection process consisting of:
• In-house collection efforts
• Referral to an external collection agency
• Final write-off of uncollectible accounts
Debts are pursued internally for 45 days after the due date. If payment is not received, the account is referred to an external collection agency for additional collection efforts. The agency sends collection notices for 45 days and then initiates active collection measures. Utilizing external agencies increases the likelihood of recovery and reduces the overall amount ultimately written off.
After four years of non-payment, remaining uncollectible accounts are written off in the City’s financial system (Tyler ERP) in accordance with the City’s established write-off policy.
There are instances where it becomes impractical, uneconomical, or inappropriate to continue pursuing a debt. In such cases, it is more cost-effective for the City Council or City Manager to authorize the write-off rather than incur additional administrative or legal expenses.
At the discretion of the Council or City Manager, debt may be written off under the following circumstances:
a) The debtor has vacated the address and cannot be located;
b) The amount owed is too small to justify legal action or is not economically viable to pursue;
c) The debtor is deceased and the amount is uncollectible;
d) The debtor has filed for bankruptcy;
e) The Revenue Division has determined the debt is not collectible;
f) The debt is subject to a legal judgment or court order decision;
The total write-off for the years 2017 through 2021 is $1,573,855.04. This amount reflects an accumulation of uncollectible utility accounts from prior years. Staff anticipates that future write-off amounts will decline due to enhanced collection procedures and continued diligence in recovery efforts.
FISCAL IMPACT:
The total write-off amount for the years 2017 through 2021 is $1,573,855.04. Write-off totals fluctuate annually based on the accrual and aging of uncollectible accounts.
FUNDING AVAILABLE:
Appropriations are requested as follows:
Increase Expenditures of $1,292,718
• 10095000-72310 - $65,880 - Attachment 3
• 50060001-72310 - $810,950 - Attachment 1
• 53053001-72310 - $237,421 - Attachment 2
• 56052001-72310 - $178,467 - Attachment 2