05/31/11 - Laserfiche WebLink

Home

Finance Committee Meeting Date: 05/31/2011 By: Tim Gladhill, Community Development Title: 4. 1. Consider Collection Procedure for Delinquent Escrow Accounts Background: The City currently has approximately $25,000 total in delinquent Escrow Account status from several escrow accounts. A majority of these delinquent escrows are related to development projects that stalled in various processes including prior to final approval or following final approval but before any development occurred. To date, the City Council's policy has been to not utilize collection agencies to attempt to recoup delinquent accounts. City Staff would like to address ways to close out these inactive accounts. For the Committee's information, the Fee Chart attached to all land use applications is attached for review. For purposes of this discussion, delinquent escrow accounts shall be considered those escrows with a negative balance that are no longer in the review or construction phase of development. Notification: No notification required. Observations: Staff sends out monthly Statements of Account to all escrow accounts with a negative balance. Charges to these escrow accounts include, but are not limited to staff time, public hearing fees, and recording fees. All costs incurred by the City are the responsibility of the Applicant. Although an escrow payment is collected up from, often time the cost incurred to the City exceeds the amount collected in escrow. In this case, a Statement of Account is sent to the Application or additional money is deposited into the escrow to cover remaining costs anticipated to be incurred by the City to finalize approval. Many of the delinquent escrow accounts date back several years and may exceed the statute of limitations to collect on certain charges. Unfortunately, many of the charges the City incurs, or bills, occur after final approval. Normally, these charges are recouped prior to releasing a Plat for recording, releasing a Building Permit for construction, or otherwise permit some type of development related to the Application. Many of these delinquent charges occurred with such timing that the City did not have a remaining hook to require payment due to the development project stalling. The City is incurring additional costs to continually send Statements of Account to accounts that City Staff do not anticipate a favorable outcome using the current process. City Staff recommends at this time to utilize a collection agency to attempt to recoup a portion of the delinquent escrow accounts where feasible. Due to the cost to collect on a single account, Staff recommends utilizing a collection agency for accounts that exceed $1,000 in delinquency. Staff would close out any delinquent escrow account under $1,000 unless there is another process (or 'hook') to collect delinquent funds, such as pending permits or processes. In order to attempt to prevent such as large delinquency in the future, Staff has already amended its process for Billable Time and billing procedures for land use applications. Staff has switched to a bi- weekly billable time procedure that coincides with regular time -sheet submission to keep a more up to date account of the escrow. In addition, as part of the normal review process, Staff will evaluate the status of each escrow account prior to forwarding the request to City Council following Planning Commission review. A condition of moving forward to final approval will be to ensure there are appropriate funds in escrow to complete the final review. This has essentially been the process in the past; however, lags in billing and reporting have not always made it feasible to accurately predict the status of an escrow account. The new billable time procedure will hopefully help close that