Collaboration in Civic Spheres

Sammamish Mulls Writing Off Developers’ Bad Debt

by Matt Rosenberg April 11th, 2011

SUMMARY: The City Council of Sammamish April 12 will consider a proposed resolution to write off $113,309.55 in bad debts from approximately 30 developers who prior to 2010 didn’t pay service fees owed to the city. For these accounts, reminder letters and collection agency efforts have failed. The resolution would also authorize the city manager to write off future bad debts of up to $10,000 per account after all reasonable efforts to collect have been made.

BACKGROUND: Before 2010, developer fees to the city for public works department review time and for inspections of new projects were billed after construction, with 80 percent paying upon invoice and 20 percent paying late or failing to pay. Starting in 2010, the city began requiring developers to pay up front for all project-related fees. The city has continued trying to collect remaining developer fees owed and has succeeded in some instances but not in others. According to the draft resolution, factors contributing to the bad debts include the economic downturn, foreclosures, and bankruptcies.

KEY LINKS: Uncollectible Accounts Receivable, Staff Memo, City of Sammamish, April 12, 2011

Draft resolution authorizing current and future write-off of bad debt, City of Sammamish, April 12, 2011.

KEY FINDINGS:

  • The city had $376,614.18 in unpaid developer fees dating to before 2010. Of that, $214,681.31 has been collected or adjusted, with another $48,623.32 under review, or to be collected under a payment plan.
  • In a memo to the city manager, the city’s finance director recommends that the balance of the pre-2010 unpaid developer fees owed to the city, $113,309.55, be written off as uncollectible. In the memo the finance director states that a significant amount of staff time has been devoted to collections in the past three years and for these delinquent accounts, reminder letters and collections agency efforts have not yielded payments. The debts that would be classified as uncollectible are distributed among approximately 30 accounts that have been unpaid for more than a year.
  • A resolution to be discussed at a study session of the city council April 12, and voted upon as soon as the council’s April 18 meeting, would approve the write-off of the current bad debts, and give the city manager authority to write off future bad debts of up to $10,000 per account after all reasonable attempts have been made to collect.

The city council study session April 12 begins at 6:30 p.m. at Sammamish City Hall, 801 228th Ave. SE. (Directions).

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