Discussion:
Enwin Utilities administers the collection of the wasterwater charge for the City by including it on the Enwin bill. As part of their collection process, Enwin charges interest on overdue accounts.
The City does not receive the interest collected for these overdue accounts, but the net exposure of an overdue account remains with the City. Although the City is paid the amounts billed regardless of collection, when a write off or lien situation occurs, Enwin nets the outstanding balance that is uncollectible back against the wastewater revenue sent to the City.
Risk Analysis:
Given that the City does not receive the interest charges collected on overdue accounts, there is no risk of forgone interest revenue by approving this waiver. The risk is that by waiving interest charges on overdue accounts, more accounts may seek to defer payment and may ultimately become uncollectible in the future. This may reduce the amount of wastewater revenue collected.
Not providing relief from interest charges during this time may negatively affect residents that are experiencing financial pressures resulting from the COVID19 Pandemic.
Financial Matters:
There will be no immediate direct financial impact to the City as a result of forgone interest revenues as Enwin retains this revenue to administer the collection process.
There is the possibility however that wastewater revenue may be marginally impacted if more accounts become uncollectible as a result of interest not being charged over this period. Over the last couple of years, the average annual amount written off due to collectability was approximately $225,000. This amount, representing 0.29% of the total wastewater revenue of $76.8M including any unrecoverable interest was charged back against the wasterwater revenue received by the City.
Consultations:
Enwin Utilities
Conclusion:
Administration recommends that City Council approve the waiver of interest on overdue wastewater charges over the recommended 90 day period consistent with Enwin in order to provide relief to residents experiencing financial hardship because of the COVID 19 Pandemic.
Planning Act Matters:
N/A