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Billing change helps city increase revenue
Billing change helps city increase revenue
By SUE REID
The City of Solon has realized substantial growth in revenue, particularly in the area of delinquent accounts, since completing the conversion to a self-sustained sewer billing system slightly over a year ago.
Prior to this conversion, all sewer usage collections were processed through Cleveland Division of Water, supplier of the city’s water and sewer services. Developing the process prior to the conversion took about a year. More than 8,000 bills go out quarterly in the city to residential and commercial accounts as part of the in-house program.
Finance Director Dennis Kennedy said that, although he inherited the process since beginning in his position in October, the primary goal early on was to eliminate the number of delinquent accounts being carried by Cleveland Water.
“One of the problems was that, like with most other suburbs, if someone paid less than what was due for water and sewer, Cleveland Water would apply it to the balance due them for the water,” Mr. Kennedy explained. “They applied payments – first come, first serve – to their portion of the balance, so there was a pretty sizable delinquent balance of receivables for sewer usage.”
By billing in house, the city would have the ability to have collections against those individual accounts as opposed to taking what Cleveland Water distributed.
“We were successful in reducing a large portion of the delinquent accounts because we were sending out individual bills, and we could follow up with those account holders individually,” he said, adding the challenge, like with any other bill, is to get someone to pay. “We are trying to handle it the same way as we process income tax bills.”
The city has seen more revenue as a result.
“We made a pretty huge dent in the amount of delinquent accounts we collected on once that transition came to us because we were actively collecting on those delinquencies,” he said. “From that standpoint, we cut into the balance due to the city.”
Cleveland Water collections were $4.58 million in 2008, $4.47 million in 2009 and $4.5 million in 2010. In 2011, partial collections were received from Cleveland Water prior to the conversion, with those revenues at $1.33 million. Subsequent to the conversion, the city collected $3.8 million for total collections of $5.28 million last year.
Mr. Kennedy noted that the increase in revenue in 2011 partially will be offset by internal program expenses of the city that didn’t exist prior to 2011. That includes salaries, equipment and payment to Cleveland Water for meter reads.
“Even with consideration to those costs, I believe the net impact to the city from a revenue and service standpoint has been positive,” he said.
In the area of service, Mr. Kennedy said, residential and commercial accounts in the city are getting more in terms of customer service.
“There had been serious issues with Cleveland Water, which most communities were experiencing in the area of customer service,” he said. “We hope that, by having a more direct relationship with the community, we would be able to assist in any customer service issues.”
The city has attempted to straighten out past billings that were incorrect. “From a service standpoint, this is better,” he said. “We can follow up and have more of a direct relationship.”
Ongoing goals with the program include formalizing an agreement with Cleveland Water to allow the city to get more of a consistent handle on what the charges will be in the future. The city is in the process of doing that, Mr. Kennedy said.
“Since the sewer bill is based on the water bill, if Cleveland Water raises the rates, it would have an impact on us,” he said.
The city also wants to keep a handle on costs associated with the meter reading portion, which is charged by Cleveland Water.
“Without an agreement, we are pretty much at their whim,” Mr. Kennedy said. “We are happy they are cooperating with coming up with a formal agreement to govern how the whole process works.”
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