Anaheim Considers Writing Off Bad Debts

Blaming a rise in personal bankruptcies for an increase in uncollectible municipal debts, city officials have proposed writing off about $2.2 million owed to the city this year.

More than half of the total--$1.4 million--was unpaid utility accounts, according to city reports. The Public Utility Board, in a recent report to the City Council, stated that the unpaid accounts represent a 91% increase in revenue lost to bankruptcy actions over last year.

“It’s a direct reflection of the economy,” Assistant Finance Director Ed Zacherl said Monday. “With the recession, we’re seeing people having a much more difficult time. There are a lot more people unemployed.”

The bad-debt reports couldn’t come at a worse time for the city, which recently balanced a $4-million shortfall by cutting municipal programs across the board. Anaheim also stands to lose $11 million more if the state elects to balance its deficit by raiding property tax revenue and vehicle license fee accounts in cities throughout the state.

Overall, the city’s proposed write-offs reflect an increase of nearly $500,000 from last year. The bills include a whopping $247,188 in unpaid damages to city property, more than five times the amount recorded the previous year.

Zacherl said the rise in debts due to damage reflect more “conservative reporting” methods recently instituted at City Hall. Among those unpaid bills, Zacherl said, are costs for such things as “telephone poles clipped” in traffic accidents.

Slightly more than $477,000 in services provided by city paramedics and left unpaid would also be wiped from city books under a proposal the City Council is expected to approve today.

The unpaid paramedic services, Zacherl said, reflect emergency ambulance services provided to transients or others who have either insufficient resources to pay or can no longer be located for billing.

“It’s the nature of the beast,” Zacherl said. “You just can’t stop providing emergency services to people who need it. We are limited in terms of how far we can go to track these people down.”

Some of the city’s prized tourist attractions, Anaheim Stadium and the city’s convention center, are also not immune from dead-beat users, according to city reports. Stadium General Manager Greg Smith said “all collection efforts have failed” to recover $2,381 from the California Youth Soccer Assn. and GRB Entertainment for security and other fees owed from the Truck Tractor Pull, Mud Bug Thrill Show and Supercross shows last January.

At the convention center, officials are still waiting for $10,252 from last May’s Business Buyer Expo event for space rental and personnel service fees.

But the most dramatic increases in unpaid services show up in the city’s utility department. Since the 1989-90 fiscal year, the number of account bankruptcies recorded has more than doubled, from 87 to 195 reported in 1991-92, with revenue losses growing from $124,000 to $331,000 during the same period.

Edward K. Aghjayan, utilities general manager, stated in a recent report to the council that $1.1 million of the bad debt would be referred to outside collection agencies for possible future recovery.

“This (debt) is not only the result of the economic recession that has affected all industries and personal lives,” Aghjayan stated in the report, “but is also due to a noticeable increase in the number of transient customers that move frequently in and out of our service territory.”

The general manager said about two-thirds of the written-off accounts this year, as in the previous four years, are residential customers who are not required to pay a deposit for new service. Commercial customers are required to pay a deposit, refundable after one year if payment history has been good.

Because of the disparity, utility officials said they will recommend to the city’s utilities board that residential users begin paying deposits of $125 for combined new electrical and water service.