17736_Authority_August

municipalauthorities.org | 21 S olicitor ’ s C o r n e r C ollecting C orrectly By Romel L. Nicholas, Esq., Gaitens, Tucceri & Nicholas, PC and Christine M. Seymour, Esq., Law Offices of Christine M. Seymour One area of the law that consistently presents challenges to municipal authorities is that of collections of overdue rate payments, assessments and/or tap-in fees. These struggles are often amplified by the fact that multiple options exist to deal with collections, and full capture of monies owed to the authority is not always possible. Bearing in mind that regardless of the types and methods of collection employed, it is rare to have a one hundred (100%) per cent collection rate, there are nevertheless steps that a municipal authority can take proactively to maximize collection efforts, make them transparent to their customer and ensure a cost effective and efficient process. I. Authorization for Collection Activities The first step is to consider the various collection options available and determine which one(s) your authority may wish to utilize. Some of the more common approaches considered include: (1) water service termination; (2) municipal liens; (3) litigation; and/or (4) disconnection of sewer service. Once the authority determines which collection mechanisms it wishes to employ, it is important to have the authority board authorize and memorialize these actions in a resolution which may also serve to amend the authority’s Rules and Regulations. Having a Board-authorized resolution in place and/or corresponding Rules and Regulations is important for several reasons. First, it provides an additional legal basis for collection activities beyond those statutorily provided. Authority personnel are also provided with guidance when addressing customer inquiries on delinquent accounts. Also, written memorialization will provide transparency and ensure that policies are applied equitably and fairly to the customers. In addition to setting forth collection options, the collections resolution/Rules and Regulations/ should also address: (1) threshold amounts that will trigger the use of a delinquency proceedings; (2) the process and procedures to be followed for each collection option; (3) penalties and interest rate to be charged for overdue accounts; (4) any administrative fees, penalties, interests and costs the authority will seek to collect for various collection efforts; (5) whether payment plans will be considered and ,if so, under what circumstances and what terms; (6) incorporation of relevant municipal ordinances; and (7) procedures for landlord/tenant billing. II. Collection Options A. Water Service Termination Given the obvious need for water service, termination of water supply is the initial and generally the preferred collection method utilized by most authorities to achieve quick and cost- efficient payment on a delinquent account. Initially, the authority’s solicitor should review the water service provider’s contract and discuss the procedural requirements the Authority must undertake, both contractually and statutorily, if a water shut off request is going to be submitted. In this context, it is important to keep in mind that water suppliers may have differing procedures and therefore it is beneficial to be familiar with the specific contractual provisions – particularly for authorities that are served by multiple water providers. Also, be mindful that additional notice requirements may apply in landlord/tenant situations. Because of this, if an authority does permit tenants to maintain sewage accounts, the notice needs at a minimum to meet the requirements of the Municipality Authorities Act by notifying the owner and the tenant within thirty (30) days after the tenant's bill for service first becomes overdue so that it can enforce the owner's duty to pay a tenant's bill for service rendered by the authority to the tenant. 53 Pa.C.S.A. §5607(d)(11). Of note is that there are situations where the Authority is unable to terminate water service, such was when a property is not served by public water, there is a shared lateral with two or more living units, and/or a medical exemption is provided and continues to be updated by the customer, as well as winter-month(s) prohibitions. B. Municipal Claims In cases where water termination is not an option, the second most common approach for collection(s) is for the authority to file a municipal claim with the Prothonotary’s office of the county in which the authority operates. Municipal claims or “liens” are governed by the Municipal Claims and Tax Liens Act, 53 P.S. §7101, et. seq.. If the authority wishes to recoup attorneys’ fees and other costs associated with the filing of a municipal claim, the Municipal Claims and Tax Liens Act requires that a thirty Continued on page 40.