In an effort designed to reward city services customers for their responsible bill paying and reduce the amount of bad debt the City is owed, customers establishing service with the City will soon experience new ways the City is handling deposits.
Starting this April 1, the City will begin conducting “soft” credit checks of new and relocating City customers, meaning the credit check will be conducted in a manner that does not affect the customer’s credit score. The City is teaming up with a third-party vendor, so City employees will not have access to view any individual’s credit report.
The City’s vendor, Online Utility Exchange, will report back to the City which of three classifications -- color-coded similarly to a traffic signal – the customer’s credit history suggests the customer should fall under.
- Green: Those with superior history will pay no deposit up front.
- Yellow: Those who fall under this category will pay the equivalent of one month of the average city customer’s bill, currently $125.
- Red: Those who fall under this category will pay the equivalent of two months of the average city customer’s bill, currently $250.
- No Social Security number provided: Deposit will be $300.
Those with no credit history or score will fall into the yellow category.
Additionally, all parties listed as a homeowner or lessee on a rental agreement will be required to be on the city services account, and documentation will be required at time of signup (this could include a copy of the deed, settlement statement, or lease or rental agreement).
“We experience large amounts of bad debt each year,” said Budget and Revenue Manager Teresa Laurent, noting that City utilities are operated under self-funded enterprise funds that are not supported by taxes. “We sought a plan that would reward good behavior rather than simply penalize everyone.”
With this new structure, Yuma is still “below other cities” for deposit rates, she said.
On any random day, Yuma could have approximately 15 percent of its bills in some stage of delinquency. The City averages roughly 542 service disconnections per month due to unpaid bills. Without an ample deposit collected to cover the period between notice of delinquency and date of disconnection, and without a means of positively identifying delinquent customers for collection purposes, the City would be at risk for not recovering outstanding balances.
The City Council adopted an ordinance in September 2018 to allow this deposit structure and also ensure that the City’s utility application follow guidelines in the Privacy Act of 1974 to ensure proper handling of Social Security numbers.