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Title:
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SUBJECT: Report to Council Regarding the Expiration of Governor's Executive Order N-42-20 (Water Shut-Off Moratorium)
REPORT IN BRIEF
Provide direction to staff regarding the expiration of Governor's Executive Orders N-42-20 (Water Shut-Off Moratorium).
RECOMMENDATION
City Council - Adopt a motion providing direction to staff regarding the expiration of Governor's Executive Order N-42-20 and when to reinstate the utility billing delinquency and water shut-off process.
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Report Prepared by: Venus Rodriguez, Finance Officer
Title
SUBJECT: Report to Council Regarding the Expiration of Governor's Executive Order N-42-20 (Water Shut-Off Moratorium)
REPORT IN BRIEF
Provide direction to staff regarding the expiration of Governor's Executive Orders N-42-20 (Water Shut-Off Moratorium).
RECOMMENDATION
City Council - Adopt a motion providing direction to staff regarding the expiration of Governor's Executive Order N-42-20 and when to reinstate the utility billing delinquency and water shut-off process.
Body
ALTERNATIVES
None.
AUTHORITY
Charter of the City of Merced, Section 200.
CITY COUNCIL PRIORITIES
City Council ratified Local Emergency due to COVID-19 On March 16, 2020 with Resolution 2020-10.
DISCUSSION
Background
The novel coronavirus outbreak began in Wuhan China in 2019 and spread across the globe into the United States. On Friday March 13, 2020 the President of the United States declared a national emergency due to the outbreak. Merced County followed suit declaring a state of emergency on the same day. This followed the March 4, 2020, California state of emergency that was declared by Governor Newsom. The City of Merced City Manager also declared a local emergency as the Director of Emergency Services. On March 16, 2020, the City Council ratified the Local Emergency with Resolution 2020-10 and then on May 18, 2020, the City Council ended the local emergency declaration for the City of Merced although financial impacts have continued due to the increase in COVID-19 spread in Merced county.
As part of the state of emergency and as a result of the threat of COVID-19 several Executive Orders were issued. Governor Newsom issued Executive Order N-42-20 on April 2, 2020. This order suspended any discontinuance of water service due to non-payment for residential customers and any business in the critical infrastructure sectors designated by the State Public Health Officer as critical to protect the health and well-being of Californians.
The order was issued for the following reasons:
* Every human has the right to safe, clean, affordable, and accessible water adequate for human consumption, cooking, and sanitary purposes.
* In order to limit the spread of COVID-19 it is crucial that Californians wash their hands regularly and thoroughly.
* Many Californians will experience substantial losses of income as a result of business closures, loss of work hours or wages, or layoffs related to COVID-19, which may hinder their ability to make payments for water service.
* Many small businesses that provide services essential to the health and well-being of Californians have experienced substantial reductions in income, which may hinder their ability to make payments for water service.
The Executive Order did not specify when the order would expire but was assumed it would end when the State Emergency declaration was formally rescinded. On June 11, 2021 Executive Order N-08-21 was issued. This order rescinded several COVID-19 related Executive Orders or portions of them. This included explicitly stating that Executive Order N-42-20 suspending water-shutoffs would expire on September 30, 2021.
Current State of Utility Billing
The Executive Order only specified that water systems could not shut-off water service. The City of Merced also decided to suspend all penalty and late fees and to allow customers to make partial payments. We have not added any utility billing penalty fees or shut-off water service due to non-pay since February 2020.
Due to the ability to shut of water service for non-payment utility billing had historically low delinquencies. On a monthly basis delinquency was less than 1% ($50,000 or less). Over the past year and a half, the delinquency has risen significantly and continues to rise. As of September 2021, the delinquency is 18%, ($931,400). There are over 300 residential accounts with a current balance between $1,000-$3,000. It is difficult to know if the delinquency is being caused by financial impacts due to COVID-19 or if customers are choosing not to pay for the utility service because they know it will not get shut-off. Some customers are opting to make partial payments monthly but have not caught up.
City Council Direction
Now that the Governor's Executive Orders have expired staff is seeking Council direction for reinstating the utility billing delinquency and water shut-off process.
There are a couple items pending that could influence the Council's direction.
1. The State Water Resources Board is currently creating a new program to provide relief to community water systems for unpaid bills related to the pandemic. The funding will cover water delinquency from residential and commercial customers accrued between March 4, 2020 and June 15, 2021. Guidelines for the program were adopted on September 21, 2021. Applications from water systems will be
accepted over a two-week period and there will be a 60-day review process. It will likely be December until the City of Merced knows if it qualifies and/ or will be approved for funding.
2. The City Council is currently going through the community engagement process regarding the use of the American Rescue Plan Act funding. There is a possibility that the City Council could allocate funding for utility delinquencies. It will likely be December until we know the City Council's final plan for use of the ARPA funding.
Due to the adoption and implementation of SB 998, water services may not be shut off prior to an account being a minimum of 60 days delinquent. The delinquency process in place as of February 2020 is summarized below per Administrative Policy A-33:
1. Every customer receives a bill for water services monthly, which is due upon receipt. A grace period of 20 calendar days from the bill date is allowed before a delinquent penalty may be imposed. The penalty is 10% of the unpaid balance.
2. Customers that have an unpaid balance will be mailed an Initial Notice advising them of their "Payment delinquency and Impending Discontinuation of Services for Nonpayment" after the 21st calendar day following the initial bill date.
3. If payment is not received within 14 calendar days from the Initial Notice, then a second notice of "Delinquency and Impending Discontinuation of Service for Nonpayment" will be mailed to the customer.
4. If payment is not received within 14 calendar days from the Second Notice, then a final notice of "Delinquency and Discontinuation of Services for Nonpayment" will be mailed to the customer. In addition to the Final Notice, an automated courtesy call will be placed instructing the customer to contact the Finance Department regarding the status of their utility account.
5. If payment is not received, then water services shall be discontinued on the date specified in the Final Notice. This date shall be at least 60 days from the initial bill date and at least seven business days from the date of the Final Notice.
6. In order to restore services, customers will need to pay a restoral fee not to exceed $75. If a deposit is not currently on the account, a three-month security deposit may also be required.
If we follow this same process the delinquency time frame would be as follows for the next few months as reference point:
Bill Date
Due Date
Penalty applied
Initial Notice
Final Notice & Courtesy Call
Water Shut-Off
10/1/2021
10/20/2021
10/21/2021
10/22/2021
11/19/2021
12/01/2021
11/1/2021
11/22/2021
11/23/2021
11/24/2021
12/22/2021
1/04/2022
12/1/2021
12/20/2021
12/21/2021
12/22/2021
1/19/2022
1/31/2022
1/1/2022
1/20/2022
1/21/2022
1/22/2022
2/18/2022
3/02/2022
ATTACHMENTS
1. Presentation