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Home My WebLink AboutFS 2015-09-22 Item 2A - Resolution - Cancellation of Past Due Accounts Receivable and Returned Check Write-OffsCity of Tukwila Jim Haggerton, Mayor INFORMATIONAL MEMORANDUM TO: Mayor Haggerton Finance and Safety Committee FROM: Peggy McCarthy, Finance Director BY: Laurie Anderson, Fiscal Specialist DATE: September 10, 2015 SUBJECT: Cancellation of Accounts Receivable ISSUE Each year a resolution comes before the Council for the cancellation of uncollectible accounts receivable. For 2015, these items include: False Alarms equaling $275.00, Miscellaneous Billings equaling $27,437.91 and NSF checks equaling $175.00 in the total amount of $27,887.91. 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. INFORMATIONAL MEMO Page 2 DISCUSSION The proposed amount of the 2015 cancellation of Accounts Receivable of $27,887.91 is $8,352.71 lower than last year's total of $36,240.62. This is attributable to three main factors: • There has been an increase in the percentage of accounts that have been collected by our collection agency, Armada Corp. • Due to the fact that we do not issue a new or renewal business license to businesses with past -due debt owed to the City, businesses with long past -due invoices are clearing up their debt. • Most businesses that, in the past, would ignore a $25.00 or $50.00 false alarm billing are paying the new false alarm fees of $150.00 and $200.00 in a timely manner. • Of note, there are five street department invoices and one water department invoice where together damages total $23,124.99. This is 82.9% of the write -off total being requested. None of he parties involved had insurance. FINANCIAL IMPACT The financial impact of cancelling $27,887.91 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 October 5, 2015 Regular Meeting. ATTACHMENTS Draft Resolution with Attachment A. H:lwordllnfo Memo 2015.doc 2 k � 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 $27,887.91 (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 12015. ATTEST /AUTH ENTICATED: Christy O'Flaherty, MMC, City Clerk APPROVED AS TO FORM BY: Rachel B. Turpin, City Attorney Kate Kruller, Council President 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 August 31, 2015 W: \Word Processing \Resolutions \Past Due Accts Recv & Write -offs 9 -14 -15 LA:bjs Page 1 of 1 3 0 Attachment A- Past Due Accounts Receivable and Returned Check Write -offs as of 8/311 2015 False Alarms Fund # Invoice /Ck # Amount Date Customer For Notes 10/08/12 1MandiAhmed 000 PF -01961 25.00 Police False Alarm To Collections 01/22/13 10/04/13 ;Lisa Brenner 10/19/12 1 Hartman Escrow 000 PF -02295 25.00 Police False Alarm To Collections 11 /07/13- Now bankrupt -per collection agency 000 PF -01998 25.00 Police False Alarm To Collections 01/22/13-business closed 03/12/13 10/19/12 !Hartman Escrow 000 PF -02038 25.00 Police False Alarm To Collections 01 /22 /13- business closed 03/12/13 05/22/13 ( Mitel 000 PF -02161 25.00 Police False Alarm To Collections 09/16/13-business closed 01/6/14 05/22/13 'Mitel 000 PF -02162 25.00 Police False Alarm To Collections 09/16/ 1 3-business closed 01/6/14 06/03/13 Pipeline Industries 000 PF -02187 $ 25.00 Police False Alarm To Collections 09/16/13- business closed 03/30/15 06/03/13 1Pipeline Industries 07/10/13 Pipeline Industries 000 000 PF -02188 PF -02207 10/19/12 Ahmed Seinab 000 PF -02012 $ 25.00 Police False Alarm 25.00 Police False Alarm 25.00 Police False Alarm To Collections 09 /16 /13- business closed 03/30/15 To Collections 09 /16 /13- business closed 03/30/15 To Collections 03/16/13 10/19/12 Ahmed Seinab 000 PF -02013 25.00 Police False Alarm To Collections 03/16/13 Total False Alarms 275.00 Date 01/07/13 1African Paradise Restaurant RF -00900 Amount 60.00 For Fire Re- inspection Fee Notes To Collections 03/28/13 - closed in 2013 per business licensing 12/31/12 Shedrick Berfect 000 MB -01199 6,387.11 New pedestrian pole & landscaping To Collections 05/01/13-No insurance -hit & run -out of state driver 12/31/12 ;Robert Huynh 401 MB -01218 $ 6,439.32 Replace fire hydrant & water use To Collections 05/14/13- no insurance- damages done during felony 03/11/15 !Info Only -Hit and Run 09/18/12 1Ja mal Knight 000 MB -01767 $ 3,792.92 Replace streetlight pole Unknown driver 000 MB -01101 4,654.74 Replace streetlight pole /luminaire To Collections 02/15/13 - no insurance -hit and run 03/14/13 ;Quentin Control Systems Inc. 000 RF -00948 60.00 Fire Re- inspection Fee To Collections 06/06/13- business closed in 2014 04/04/13 Quentin Control Systems Inc. 07/31/13 :Quentin Control Systems Inc. 000 RF -00984 85.00 Fire Re- inspection Fee To Collections 09/16/13- business closed in 2014 000 RF -01027 $ 110.00 Fire Re- inspection Fee To Collections 01/02/14- business closed in 2014 09/18/12 ;Lorene Reimer 000 MB -01099 3,126.83 Replace streetlight pole /luminaire To collections 02/01/13- -no insurance 09/18/12 ;Demetrius Saunders 000 MB -01102 $ 2,516.99 Replace landscaping due to accident To Collections 01/02/14- no insurance -hit and run 01/18/13 !Seattle Pack and Ship 000 RF -00919 60.00 Fire Re- inspection Fee To Collections 06/16/13- business closed 07/15/14 06/06/13 1Tokyo Japanese Lifestyle 000 RF -01003 60.00 Fire Re- inspection Fee To Collections 09/16/13- business closed 08/13/13 06/21/13 1Tokyo Japanese Lifestyle Total Misc. Billings 000 RF -01008 85.00 27,437.91 Fire Re- inspection Fee Date Customer Fund # Invoice /Ck # 05/20/14 Angela M Psomos 000 1005 G Total Returned Checks Amount 175.00 $ 175.00 ecks' For To Collections 09 /16/13- business closed 08/13/13 Notes Summer Camp -TCC To Armada Corp 09/26/14 Write -off Grand Total $ 27,887.91 01 1 Write -offs 08.31.15.xlsx 9/10/2015