CHICO — The Chico City Council agreed to write off more than $100,000 listed on the books as owed to the city as staff said they exhausted all legal remedies for collection.
The city could not collect the money in one case because the bill was invalid, another two filed bankruptcy, plus the almost 6- to 10-year-old cases passed the three-year statute for collection, said Jennifer Hennessy, city finance director.
“This is an opportunity to really take the financial position we”re in and use it as a reset and clean up the books,” Hennessy said.
Council members voted 6-0 to approve the write-offs June 21. Councilman Andy Holcombe was absent.
The finance director has to report uncollectible bills of $10,000 or more to the council.
Accounting manager Frank Fields thinks it is standard to have uncollectible accounts and impressive that the city has had so few in more than 10 years, he said.
“It”s very normal and probably less than what would normally be written off,” Fields said.
The city can still accept the money if it is offered, Fields said.
The uncollectible accounts are with AZCO Construction and owners Cynthia and Monte DuBose for $37,812 dated Sept. 22, 2005; Thomas and Sara Knowles for $27,267 dated March 31, 2004; Butte County Public Works for $22,329 dated April 24, 2001; and Pacific Gas & Electric for $16,904 dated March 16, 2001.
The write-offs will come from four city funds that could otherwise be used for purposes such as street and storm drain improvements.
The bulk of the money, $43,629, will come from the street facility improvement fund for Butte County and part of AZCO.
PG&E”s bill will come from the assessment district administration fund. The storm drain facility fund will cover the Knowles” bill. The remaining $16,511 of the AZCO account will come from 2001 tax allocation bonds fund.
In 2005, the city sent a check for $37,812 to the wrong AZCO Construction, the one in Durham owned by t he DuBoses rather than the Sacramento company that performed the work.
The DuBoses cashed the check and the city was unsuccessful in getting the money back. The city filed a suit against them but they filed bankruptcy, with no assets to pay the city”s judgment.
In 2006, city staff discovered the Knowles had not paid storm drain fees before being issued permits in 2004.
“From the information available, the Knowles were not aware of unpaid fees until the correspondence in 2006,” according to the city staff report. “In addition, they asserted that they had an informal partnership with this project and disputed that they were responsible for the fees. City staff was unable to determine the responsible party and the account became uncollectible.”
The three-year legal statute had surpassed, Fields said.
The city filed a bill with PG&E in 2001 for a betterment of facilities refund for construction completed in 1997 in the Eastwood Utility and Assessment District. But PG&E filed bankruptcy and the city”s claim was not paid.
In 2001, the city also billed Butte County for installation of traffic signals at East and Cussick avenues completed in the early ”90s. However, the city learned the county paid for the installation, making the bill invalid.
When the city sends a bill, accounting recognizes that money as revenue, Fields said. Though no cash is being moved in the Butte County case, the write-off will reverse that assumption of revenue.
Staff writer Katy Sweeny can be reached at 896-7760 or firstname.lastname@example.org.