Payson Council approves $73,644 utility bad‑debt write‑off; staff outlines deposits, collection and policy options

The Payson City Council on June 18 approved a resolution authorizing the city treasurer to write off $73,643.74 in uncollectible utility accounts and heard a wide-ranging staff briefing on why the sum rose and what the city might do to reduce future losses.

Audrey, a city staff member who presented the item, told the council, “Our proposal is $73,643.74 for the bad debt write off this year,” and said the amount represents a sharp increase from the prior year’s write‑off of $47,348.09.

Why this matters: the increase reflects higher turnover among renters, more short‑term tenancies and collections challenges. Staff and council said the financial loss is a small fraction of annual utility revenue, but also noted administrative time and repeated write‑offs create operational burdens.

Numbers and patterns presented - Total proposed write‑off: $73,643.74 (2025 request). - Prior year write‑off: $47,348.09. - In‑house recovery before sending to collections: about $26,000 recovered this year (avoids collection fees). - Average write‑off per account: $446. - Distribution by customer type (of the accounts written off): renters 85%, homeowners 12%, landlords 2%, commercial 1%. - Cause categories: collections 96% of the total, bankruptcy 1%, deceased 3%. - New utility signups (through May 31): 1,316; final billed accounts: 1,061 — staff said the average residency for accounts written off this year was about 1.7 years.

Policy steps already taken and discussed options - Deposit policy: staff reinstated a $250 deposit requirement on Feb. 15; a cosigner option is allowed if the cosigner is a Payson homeowner who is current on their account. - Delinquency timeline: customers receive a 5% penalty if unpaid at month end and the city implements shutoff about 30 days after the penalty (staff described a roughly 60‑day window from nonpayment to disconnection). - Collection practice: staff said the city does not itself report to consumer credit agencies but sends Social Security numbers and accounts to third‑party collection agencies; collection agencies’ recovery rates are roughly 25–35%.

Ideas discussed by council and staff - Tiered deposits or advance billing: taking the first month’s utility in advance or a tiered deposit tied to creditworthiness or direct‑debit participation. - Credit checks and prepayment: councilors asked whether credit reports or prepaid meter options (pay‑as‑you‑go) could reduce risk; staff said some utilities and jurisdictions use those tools but cost and legal constraints vary. - Landlord accountability: councilors proposed pursuing judgments against repeat‑offender landlords and exploring whether utilities could remain in landlords’ names for certain complexes to reduce turnover losses. - Reporting and legal constraints: a council member read Utah Division of Public Utilities guidance noting procedural protections for customers (deferred payment plans, notice requirements, medical exceptions). Staff said legal and administrative costs must be weighed against likely recoveries.

Council action and vote Councilmember [motion maker not specified in the transcript] moved to authorize the city treasurer to write off the listed uncollectible accounts. The motion passed on roll call: Councilor Christiansen — yes; Councilor Hulett — yes; Councilor Rowley — yes; Councilor Moss — yes; Councilor Hyatt — yes.

What happens next Staff said they will monitor the effect of the reinstated deposit, research credit‑check and prepaid meter options, and return with proposals that balance collection effectiveness, administrative cost and legal constraints. Council members asked staff to evaluate targeted actions against large multifamily complexes where turnover is concentrated.