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Home My WebLink AboutFS 2016-10-04 Item 2B - Resolution - Cancellation of Past Due Accounts ReceivablesCity of Tukwila Allan Ekberg, Mayor INFORMATIONAL MEMORANDUM TO: Finance and Safety Committee FROM: Peggy McCarthy, Finance Director BY: Laurie Anderson, Fiscal Specialist CC: Mayor Ekberg DATE: September 28, 2016 SUBJECT: Cancellation of Accounts Receivable ISSUE Each year a resolution comes before the Council for the cancellation of uncollectible accounts receivable. For 2016, these items include: False Alarms equaling $411.07, Miscellaneous Billings equaling $46,724.68 and Returned Checks equaling $544.71 in the total amount of $47,680.46. 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 into 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 the status change and advising that all payments must now be made through the collection agency. • While in active collections, 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 of our books; it is still active in Armada's collection process. 23 INFORMATIONAL MEMO Page 2 DISCUSSION The proposed amount of the 2016 cancellation of Accounts Receivable of $47,680.46 is higher than last year's total of $27,887.91. This is attributable to the following factors: • There are two write -offs totaling $26,760.03 resulting from Hit and Run incidents where the responsible party is unknown. These make up 56% of the write -offs for this year. These damages are not covered by Washington Cities Insurance Authority. • There are three additional write -offs for damages to City property that total $11,399.93. These also were not covered by Washington Cities Insurance Authority as none met our $5,000.00 deductible threshold. The responsible parties had no insurance, were DUI or Driving While License Suspended. These write -offs comprise 23.9% of this year's write - offs. The last write -off of note is for $7,678.36. It involves an auto accident resulting in the City needing to repair a signal head and install a new jersey barrier. Our charges are currently being disputed by Geico Insurance, the driver's insurance company. While we may still see payment of this debt, in order to not overstate our Accounts Receivable on the balance sheet, we have chosen to include this receivable with this year's write -offs. This receivable is 16.1 % of this year's write -offs. • In all, 96% of our write -offs are from the above -noted items. FINANCIAL IMPACT The financial impact of cancelling $47,680.46 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. Again 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 a responsible party cannot be identified. 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 17, 2016 Regular Meeting. ATTACHMENTS Draft Resolution with Attachment A. 24 WA2016 Info Memos\AR Write -off Info Memo.doc YrY 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 $47,680.46 (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 , 2016. ATTEST /AUTHENTICATED: Christy O'Flaherty, MMC, City Clerk Joe Duffie, Council President APPROVED AS TO FORM BY: Filed with the City Clerk: Passed by the City Council: Resolution Number: Rachel B. Turpin, City Attorney Attachment A — Past -Due Accounts Receivable and Returned Check Write -offs as of August 31, 2016 W: \Word Processing \Resolutions \Past Due Accts Recv & Write -offs 9 -22 -16 LA: bjs Page 1 of 1 25 W . Date 12/06/13 12/31/13 11/03/14 11/03/14 Attachment A- Past Due Accounts . . .. . - Customer Fund # Invoice/Ck # Receivable and False Alarms Amount 1 $ 25.00 � $ 11.07 $ } $ 150.00 $ 200.00 , $ 25.00 Returned Check Write For -offs as of 8/31 /2016 Notes To collections 04/24/14 -no assets or income CADS Sun Y Kim Mailiku Habte for is g g 000 PF -02363 PF -02398 _ PF -02612 PF- 02613 Police False Alarm Police False Alarm Police False Alarm � 000 000 000 000 ,To collections 4/23/14- balance after pymt from collection agency Homeland Security ty /1 o To collections 03t 18/ 15 -will not respond to collections :Homeland Security Police False Alarm To collections 03/18/15- will not respond to collections To collections 4/24/14- business closed 3/30/15 12/06/13 I Pipeline Industries PF -02386 Police False Alarm Total False Alarms $ 411.07 Date Customer Fund # 000 000 000 000 000 000 000 000 000 000 000 000 000 Invoice /Ck # RF -01120 Miscellaneous Amount $ 60.00 $ 60.00 $ 85.00 $ 110.00 Billings For Fire Re- Inspection Fee Fire Re- Inspection Fee Fire Re- Inspection Fee Notes To collections 9/15/14 business closed 3/12/15 05/30/14 05/01/13 06/21/13 Airpro Equipment Inc. Amara Pointe Apartments -GWP RF -00991 To collections 11/25/ 13 Amara Pointe Apartments -GWP ;Amara Pointe Apartments-GWP RF -01005 RF -01009 To collections 11/25/13 07 /08 /13 Fire Re- Inspection Fee Fire Re- Inspection Fee Fire Re- Inspection Fee Replace streetlight pole To collections 11 /25/13 07/31/13 01/17/14 Amara Pointe Apartments -GWP Arden B RF -01023 , $ 135.00 $ 26.36 To collections 11/25/13 closed under this owner 5/24/12 ;Balance after payment from collection agency — — — RF -01069 MB -01445 12/31/13 ;Aaron Clark 1 $ 2,696.35 To collections 4/24/14- DUI and no insurance 03/14/13 05/30/14 07/22/14 12/17/13 Courtyard at South Station Apts Courtyard at South Station Apts !Courtyard at South Station Apts Emporio Raage Farah /Geico Insurance RF -00942 RF -01126 RF -01162 RF -01050 MB -01439 MB- 02074 $ 60.00 $ 60.00 Fire Re- Inspection Fee Fire Re- Inspection Fee To collections 6/6/13 To collections 9/22/14 To collections 11/20/14 $ 85.00 Fire Re- Inspection Fee $ 60.00 $ 7,678.36 Fire Re- Inspection Fee Repair signal head, new jersey barrier To collections 4/24/14-business closed 6/30/14 In dispute with Geico Insurance 12/31/13 12/30/15 Info Only -Hit and Run I Info Only -Hit and Run $ 18,573.22: Replace streetlight pole and cabinet Replace guardrail Replace fire hydrant Fire Re- Inspection Fee Hit and run- party who caused damage is unknown 12/30/15 000 401 000 000 000 000 MB -02075 $ 8,186.81 Hit and run- party who caused damage is unknown To collections 10 /14 /14- noinsurance 07/10/14 01/17/14 '!Yuanshan Jiang 'Mad Pizza UM -00037 $ 4,301.24 RF- 01074 l $ 25.00 To collections 4/24/I4-business closed 2/25/ 15 -bal after collections 08/12/14 Muna Mini Mart RF -01182 $ 60.00 $ 60.00 Fire Re- Inspection Fee Fire Re-Inspection Fee Replace complete light pole assembly 'To collections 11/20/14 but business had changed hands by then 02/19/14 Sunrise Suite Apartments RF -01099 To collections 4/24/14 08/18/14 Christopher Tjameberg MB -01596 $ 4,402.34 To collections 12/22/14-no insurance & driving while lic suspended Total Misc. Billings I Customer Fund # 000 Invoice /Ck # I $ 46, 724.68 Checks For Summer Camp -TCC Date Returned Amount Notes 8/18/14 !Sabreah Mason 1121 , $ 200.00 To collections 10/20/14 8/28/14 Sabreah Mason 000 1123 1 $ 200.00 Summer Camp -TCC To collections 10/20/14 6/26/15 7/24/15 Jhinea Martinez Jason Robbins Total Returned Checks 000 - 411 1105 I $ 90.00 , $ 54.71 Summer Camp TCC To collections 08 /14/15 1113 Greens Fees & Putter To collections 9 /4/15 $ 544.71 Write -off Grand Total $ 47, 680.46 Write -offs 08.31.16- Attachment A.xlsx 9/28/2016