Borough turns 34 delinquent accounts over to collection agency

The borough assembly unanimously approved a motion to write off delinquent harbor and utilities accounts and forward them to a collection agency.

The write-off includes a combined $8,197 in utilities fees from 30 different accounts and $50,048 in harbor fees from four different accounts, for a total of $58,246.

At the assembly meeting Sept. 27, Finance Director Mason Villarma acknowledged that the amount appeared significant, but assured the assembly that the sum was a small percentage of total billing. Writing off “bad debts” like these — debts that will likely never be collected — is common practice in the business world, he explained.

Sending the accounts to collections will not affect the borough’s budget in the current fiscal year and is not a form a debt forgiveness. Instead, writing off the accounts is an effort by the borough to “clean up our books,” said Villarma.

While the borough will still own the debt, the agency will take 25% to 40% of whatever money it collects on the borough’s behalf. The typical return on delinquent accounts is “pretty low overall,” Villarma said. “We’d be lucky to get more than $4,000 out of this batch.”

The harbor and finance departments “have been diligently trying to collect payment for several years” in the form of phone calls, mailers and door hangs, according to borough documents. They have also taken money from debtors’ Permanent Fund dividends and put liens on certain assets, but “for the (accounts) that are listed here, there’s not a whole lot to collect from them,” said Villarma.

“A lot of these delinquent accounts are pretty old,” added Borough Manager Jeff Good. “We’d like to get these to a collection agency before the timeline lapses for us to be able to do that.” The statute of limitations on delinquent accounts is six years.