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Home My WebLink AboutFS 2013-10-22 Item 2C - Resolution - Cancellation of Past Due Accounts ReceivableTO: City of Tukwila Jim Haggerton, Mayor INFORMATIONAL MEMORANDUM Mayor Haggerton Finance and Safety Committee FROM: Peggy McCarthy, Finance Director BY: Laurie Anderson, Fiscal Specialist DATE: September 30, 2013 SUBJECT: Cancellation of Accounts Receivable ISSUE Each year a resolution comes before the Council for the cancellation of uncollectible accounts receivable. For 2013, these items include: False Alarms equaling $200.00, Miscellaneous Billings equaling $29,644.47 and NSF checks equaling $858.50 in the total amount of $30,702.97. BACKGROUND The process for tracking accounts receivable is quite thorough. The steps below are followed prior to preparation of the attached write -off resolution. • Invoice is sent to recipient by the Finance Department payable in 30 days. • If payment is not received within 30 days, the receivable is forwarded to our collection agency, Armada Corp., and placed in pre - collect status. •At this time, Armada sends a Delinquency Notice to debtor notifying them of the past -due status of the receivable and asks them to contact the City to make payment. Payments can still be made directly to the City while in pre - collect status. •Once 30 days have passed in pre - collect status, the receivable then rolls over to active collections. At the onset of active collections, a letter is sent to the debtor notifying them of status change and advising that all payments must now be made through the collection agency. • While in active collections status, debtor is contacted both by phone and letter. A search is made for assets with which the debt could be satisfied. Once the debt has been in active collections for 45 days, it is then reported to the national credit bureaus. • The last process in the collections cycle is the pursuit of legal action. This includes attaching checking accounts, garnishments and lawsuits. • The City will not issue or renew a business license until all outstanding debt owed to the City is paid. • It should be noted that while a debt may be written off our books; it is still active in Armada's collections process. 11 INFORMATIONAL MEMO Page 2 DISCUSSION The proposed amount of the 2013 cancellation of Accounts Receivable of $30,702.97 is higher than last year's total of $8,777.89. This is attributable to two main factors: • One of the requested write -offs is for $20,035.60. The original amount of this invoice, which is for a foundation replacement and complete signal pole assembly replacement, was $103,480.31. Washington Cities Insurance Authority paid $83,444.71 which is the amount of the invoice net of our indirect costs of $15,035.60 and our deductible of $5,000.00. While we are requesting write -off of the remaining balance, WCIA is pursuing the collection of the remainder. • Another of our requested write -offs is for an invoice for damage to a pedestrian pole. It was damaged by a hit and run driver and, as such, we do not know whom to bill. The invoice total is $6,006.80. • The total of these two receivables is $26,042.40 which is 84.8% of the 2013 write -off total. FINANCIAL IMPACT The financial impact of cancelling $30,702.97 will be to reduce our accounts receivable balance by this amount in keeping with Generally Accepted Accounting Principles (GAAP) for the writing off of bad debt. Please note that while we are writing off the accounts receivable for accounting purposes, the accounts are still being actively worked for collection purposes with the exception of those accounts where we cannot identify the responsible party. Accounts covered by bankruptcy law cannot be pursued. RECOMMENDATION The Council is being asked to approve the annual resolution authorizing the cancellation of Accounts Receivable and to forward this item to the Consent Agenda of the November 4, 2013 Regular Meeting. ATTACHMENTS Draft Resolution with Attachment A. C:1Users1 laurielDesktoplInfo Memo 2013.doc 12 AST A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, ORDERING THE CANCELLATION OF PAST DUE ACCOUNTS RECEIVABLE AND RETURNED CHECK WRITE -OFFS. WHEREAS, certain receivables and checks have been deemed uncollectible after efforts by both the City and a collection agency have been unsuccessful; and WHEREAS, the City will continue to pursue these receivables when practical; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, HEREBY RESOLVES AS FOLLOWS: Miscellaneous Accounts Receivable and Returned Checks. The total of $30,702.97 (per Attachment A) is deemed uncollectible. PASSED BY THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, at a Regular Meeting thereof this day of , 2013. ATTEST /AUTHENTICATED: Christy O'Flaherty, MMC, City Clerk Kathy Hougardy, Council President APPROVED AS TO FORM BY: Shelley M. Kerslake, City Attorney Filed with the City Clerk: Passed by the City Council: Resolution Number: Attachment A — Past -Due Accounts Receivable and Returned Check Write -offs as of September 30, 2013 W: \Word Processing \Resolutions \Past Due Accts Recv & Write -offs 9 -24 -13 LA:bjs Page 1 of 1 13 14 1 12/31/12 12/05/11 12/05/11 12/07/11 12/31/11 09/29/10 10/07/11 11/04/10 At rite -offs as of 9/3012013 achment A- Past Due Accounts Receivable and Returned Check Wr Customer Advance Interactive Systems Emerald City Marketing Emerald City Marketing Emerald City Marketing Emerald City Marketing Habitat for Humanity Hartung Building Kimco Realty Total False Alarms Fund # Invoice /Ck 000 PF -02109 000 PF -01751 000 PF -01752 000 PF -01783 000 PF -01857 000 PF -01500 000 FF -00166 000 PF -01576 False Alarms Amount $ 25.00 $ 25.00 $ 25.00 $ 25.00 $ 25.00 $ 25.00 $ 25.00 $ 25.00 200.00 For Police false alarm Police false alarm Police false alarm Police false alarm Police false alarm Police false alarm Fire false alarm Police false alarm Notes Chapter 7 Bankruptcy To Armada 9/17/12-Status-Skip-No Locate To Armada 9/ 17/12-Status-Skip-No Locate To Armada 9/17/12-Status-Skip-No Locate To Armada 9/17/12- Status- Skip -No Locate Unresponsive to calls -moved to Renton 9/13/10 Unable to locate owner -bad address To EPR 11/21/11 Date 05/06/11 01/26/11 06/08/11 12/07/10 06/08/11 10/07/11 12/13/12 11/15/11 03/27/09 06/15/11 07/30/12 Date 7/20/2011 8/16/2011 9/17/2011 12/5/2011 6/5/2012 6/20/2012 Customer African Paradise Restaurant Boulevard Home Furnishings Boulevard Home Furnishings CB Richard Ellis Deluxe Film Services Deluxe Film Services Info Only -Hit and Run Prabhjeet Malhi Norandex - Reynolds Godfrey Pamosoo Zoopa's Total Misc. Billings Customer Olalade Williams Oakes Pauline A. White James P. Taylor Lisa M. Milkey Jamila A. Baker Richard L. Murchison Total Returned Checks Write-off Grand Total Fund # 000 000 000 000 000 000 000 000 000 000 000 Fund # 000 000 000 000 000 411 nvoice /Ck RF -00678 RF -00643 RF -00697 RF -00622 RF -00709 RF -00739 MB -01179 MB -00906 RF -00318 MB -00817 RF -00827 Miscellaneous Amount $ 60.00 $ 60.00 $ 85.00 $ 30.00 $ 85.00 $ 110.00 $ 6,006.80 $ 20,035.60 $ 23.15 $ 3,088.92 $ 60.00 $ 29, 644.47 Returned Checks nvoice /Ck # Amount 1081 $ 160.00 1116 $ 290.00 2033 $ 120.00 104 $ 91.00 1021 $ 154.00 2770 $ 43.50 $ 858.50 $ 30,702.97 For Fire re- inspection fee Fire re- inspection fee Fire re- inspection fee Fire re- inspection fee Fire re- inspection fee Fire re- inspection fee Replace pedestrian pole Foundation & signal pole repl Fire re- inspection fee Repair of guardrail Fire re- inspection fee For Adventure Camp Day camp Adventure Camp Youth Basketball After School Program Golf Cart Rentals Notes To EPR 9/13/11-Business closed 4/4/12 To EPR 12/9/ 11- Business closed 6/ 16/ 11 To EPR 12/9/11-Business closed 6/16/11 Did not manage this property - Gateway Olympia pd. half To EPR 9/13/11- Business closed l0/ I / l I To EPR 9/13/ I l- Business closed 10/1/11 Unknown driver - unable to bill . Balance after payment by WCIA Bal. after payment from EPR -They have since moved. To EPR - 11/21/11 Chapter 7 Bankruptcy Notes To Armada Corp 9/11/12 To Armada Corp 9/11 /12 To Armada Corp 9/11/12 To Armada Corp 9/11/12 To Armada Corp 9/11/12 To Armada Corp 9/11/12 EPR= Evergreen Professional Recoveries; our former collection agency. Writeoffs 8- 31- 13.xlsx Armada Corp has been our collection agency since mid -2012. 9/25/2013