2018-016S:\Legal\Our Documents\Ordinances\18\Credit and Collection Policies Ordinance Final.docx
ORDINANCE NO. 2018-016
AN ORDINANCE OF THE CITY OF DENTON, TEXAS AMENDING SECTIONS 26-3, 26-4,
26-8 AND ADDING SECTION 26-12 TO CHAPTER 26 — UTILITIES OF THE DENTON
CODE OF ORDINANCES; PROVIDING AN OPEN MEETINGS CLAUSE; PROVIDING A
CUMULATIVE CLAUSE; PROVIDING A REPEALER; PROVIDING A SEVERABILITY;
AND PROVIDING AN EFFECTIVE DATE.
WHEREAS, after recent policy discussions by both the Public Utilities Board and the City
Council and subsequent direction to staff by the City Council, changes have been made to Chapter
26 — Utilities of the Denton related to residential utility deposits, internal credit scoring, and timing
of utility service disconnection;
WHEREAS, Section 26-3 — Service deposits and alternatives, Section 26-4 — Additional
deposit required, and Section 26-8 — Grounds for Disconnection of Service have been amended
and Section 26-12 — Internal Point Based Scoring has been added;
WHEREAS, the City Council of the City of Denton deems it to be in the public interest to
adopt these amendments and addition to the Code of Ordinances as set forth herein; NOW,
THEREFORE,
THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS:
SECTION ml . The findings contained in the preamble of this ordinance are incorporated
herein as if fully set forth within the body of this ordinance.
SECTION 2. The following sections of the City of Denton Code of Ordinances, Chapter
26, "Utilities" are amended to read as follows:
Refer to Exhibit "A" incorporated herewith and attached hereto, which sets forth the
amendments to Sections 26-3, 26-4, and 26-8.
SECTION 3. Section 26-12 is added to the City of Denton Code of Ordinances and is as
follows:
Refer to Exhibit "A" incorporated herewith and attached hereto, which sets forth the new
Section 26-12.
SECTION 4. It is officially found and determined that the meeting at which this ordinance
was passed was open to the public as required by law, and that public notice of the time, place and
purpose of this meeting was given as required by law.
SECTION 5. This ordinance shall be cumulative of all other ordinances of the City of
Denton and shall not repeal any of the provisions of said ordinances except for the sections
specifically repealed by this ordinance and in those instances where the provisions of those
ordinances are in direct conflict with the provisions of this ordinance.
1
SECTION 6. If any section, subsection, paragraph, sentence, clause, phrase, or word in
this ordinance, or the application thereof to any person or under any circumstances is held invalid
by any court of competent jurisdiction, such holding shall not affect the validity of the remaining
portions of this ordinance, and the City Council of the City of Denton, Texas, hereby declares it
would have enacted such remaining portions despite any such invalidity.
SECTION 7. Save and except as amended hereby, all of the provisions, sections,
subsections, paragraphs, sentences, clauses, and phrases in the City Code of Ordinances shall
remain in full force and effect.
SECTION 8. This ordinance and the rates herein adopted shall become effective, charged,
and applied to all utility services rendered by the City, and shall become effective with the first
billing issued on and after January 23, 2018, and a copy of said rates and charges shall be
maintained on file in the Office of the City Secretary of the City of Denton, Texas.
PASSED AND APPROVED this ` day of � , 2018. `
C1S - `I , N4AYOR -
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
VED AP TO LEGAL FORM:
4 LEAL, CITY ATTORNEY
BY:
EXHIBIT "A"
ARTICLE I. IN GENERAL
Sec. 26-3. Service deposits and alternatives.
Employees of the utilities customer service department will determine the appropriate
service deposit requirement based on the customer's credit rating with the city utility system or by
a reliable external credit source available to the city.
(a) Residential customers. If a customer receiving residential service is required to make
a deposit, the deposit may be as much as an amount equal to one-sixth of the last twelve
(12) months billing at the service location or a similar location as determined by the utility
representative.
(b) Residential exemption from deposit. No service deposit will be required of an
applicant for residential utility service if the applicant can provide and qualify for one (1)
of the following:
(1) The applicant has an acceptable credit rating for twelve (12) consecutive
months within the last two (2) years with the city utility system.
(2) The customer receives an acceptable credit rating from a credit source
available to the city. The customer must pay the cost of obtaining the credit rating.
This cost will be set annually within the utility rate ordinance, but will not exceed
one hundred dollars ($100.00).
(3) Customers with little credit history or a fair credit rating may be allowed to
provide one of the following alternatives in lieu of deposit:
a. A signed letter of good standing for utility services from a former utility
company for verification within twenty (20) days of applying for service;
or
b. The applicant provides a cosigner who accepts responsibility and is verified
to have an acceptable credit rating with the city utility system, and who is
willing to be listed on the applicant's account to guarantee payment of the
applicant's utility bills. This guarantee will be in effect until the applicant
develops an acceptable credit rating and the cosigner requests removal from
the account.
(4) Customer is participating in a verifiable permanent supportive or rapid
rehousing program and provides a dated and completed certification letter upon
applying for utility services.
(5) Customer has been qualified as a Victim of Family Violence and provides a
dated and completed certification letter upon application for utility services.
(6) Customer signs up for auto pay and maintains an acceptable credit rating for
twelve (12) consecutive months.
(c) Commercial customers. In the case of commercial or industrial service, if the
applicant for service is required to make a deposit, the amount of the deposit shall be an
amount up to one-sixth of the last twelve (12) months of billing at the location where
service is requested. If no previous history is available for the location, a representative
facility similar to the type where service is requested will be used to establish the amount
of the deposit.
(d) Commercial exemption from deposit. An applicant for utility service for a commercial
or industrial entity or business may not be required to make a deposit if the applicant:
(1) Provides the city an acceptable commercial/industrial credit rating for the last
twenty-four (24) months the customer received service from the city utility system;
or
(2) The customer receives an acceptable credit rating from a credit source available
to the city. The customer must pay the cost of obtaining the credit rating. This cost
will be set annually within the utility rate ordinance, but will not exceed one
hundred dollars ($100.00).
(3) If the credit of a commercial/industrial customer for service has not been
established satisfactorily to the city, the applicant may provide an irrevocable letter
of credit in lieu of a deposit within twenty (20) days of signing for service. The
irrevocable letter of credit must be executed by a Texas bank and must be approved
by the city manager and city attorney. The customer must maintain the irrevocable
letter of credit in effect at all times. If the customer allows the irrevocable letter of
credit to expire, the customer shall pay a deposit in the amount provided as listed
above, or the city may terminate utility service.
(e) For purposes of this chapter, "acceptable credit rating" shall mean a credit rating
which is based upon a commonly used formula or a formula approved by the city council.
See. 26-4. Additional deposit required.
(a) Additional deposits. The city may require a customer to make an additional deposit
in the event that a deposit made as specified in subsection (a), (b), (c), or (d) is subsequently
determined to no longer be sufficient. The city may disconnect service if the customer
does not remit the additional deposit within fourteen (14) days of the city's request,
provided a written disconnect notice has been issued. Such disconnect notice may be
issued concurrently with the written request for the additional deposit.
A customer may be required to pay a deposit or put down an additional deposit amount if:
(1) The customer has been terminated from the receipt of utility service due to
non-payment of a utility bill; or
(2) The city has determined there is evidence of a customer tampering with the
city's meter; or
(3) The customer has an unacceptable credit rating and the city does not have in
its files a current cosigner who meets the requirements of section 26-3(a) or (b); or
a. Customer credit rating and deposit amount would be determined by
internal point based scoring
A
<150 points
No Deposit
B
150-300 Points
No Deposit
C
301-750 Points
No Deposit
D
751-2000 Points
1 Month
E
>2001 Points
2 Month
(4) The customer has been required to pay or is paying off a utility account
balance previously deemed uncollectible or is past due; or
(5) .The customer's irrevocable letter of credit filed with the city in lieu of a
deposit has expired.
(b) Interest. The city shall pay interest on deposits at an annual rate established by city
council. If a refund of the deposit is made within thirty (30) days of receipt of the deposit,
no interest will be paid. If the deposit is retained more than thirty (30) days, payment of
interest shall be retroactive to the date the entire amount of deposit has been made. The
deposit shall cease to draw interest on the date it is returned or credited to the customer's
account. Payment of the interest to the customer shall be made at the time the deposit is
returned or credited to the customer's account. If the customer's account is active, the
deposit will automatically be applied to the customer's account to offset current billing.
(c) Credit checks. After making application for service, the customer service department
may at any time pursue a credit reference check. If the credit check shows the customer
does not have an acceptable credit rating, the customer will be required to -place a deposit
on the account. Failure to do so will result in the discontinuance of service with no less
than two (2) days of notification given verbally or in writing, to the prospective customer
by the customer service department.
Sec. 26-8. Grounds for discontinuance of service; Timing of Disconnection of Service.
(a) The assistant city manager -utilities, or his designee, shall discontinue service to any
person violating any provision of this chapter or any published rule or regulation of the
utilities department, or of the city, until such violation has been corrected.
(b) The assistant city manager -utilities, or his designee, shall discontinue service to any
person found defrauding the utilities department by tampering with any water or electric
line or meter. Service disconnected for any such reason shall not be restored until the
assistant city manager -utilities, or his designee, is satisfied that all loss to the utilities
department has either been repaid, or is financed for repayment, and that service may be
restored without undue risk of further loss through such acts or nonpayment.
(c) Subject to the approval of the city manager, the assistant city manager -utilities, or his
designee, shall discontinue service to any person found to be unreasonably wasting or
diverting electricity or water.
(d) Utility services may be terminated if payments become delinquent. The city may
terminate services at any time upon delinquent status of an account. Once services are
terminated, any deposit held by the city will be applied to the delinquent account when the
final bill is generated. If the customer wishes to reconnect services, the customer will be
required to pay a delinquent service charge or a reconnect charge and the remaining balance
of the delinquent amount or at least fifty (50) percent with an agreement to pay the
remainder with three (3) consecutive equal monthly installments. The city may refuse
service and require payment in full, based on the credit history of the customer. For
continued service, the city will require an additional deposit amount as described in 26-4.
(e) The time at which the disconnection of service shall be done will be at the discretion
of the City except as follows:
(i) Disconnection on holidays or weekends — Unless a dangerous condition exist
or the customer requests disconnection, service shall not be disconnected on City
observed holidays or weekends, or the day immediately preceding a holiday or
weekend. Services shall also not be disconnected during the weeks of Thanksgiving,
Christmas or New Year's.
(ii) Disconnection during extreme weather. Utility services will not be
disconnected for nonpayment when on the day of disconnection:
(a) The National Weather Service (NWS) has forecasted the day's temperatures
to fall below 32 degrees Fahrenheit
(b) The NWS has forecasted the day's high temperatures to be at or above 100
degrees Fahrenheit or a heat advisory has been issued for Denton County.
Sec 26-12 Internal Point Based Scoring
Utility accounts within the utility billing system receive points for each credit event that occurs on their
utility account. Each credit event and points associated will remain on the customer's account for a
period of no less than 365 days from the date of occurrence.
1) Late fee penalty — 50 points
2) Disconnect Notice — 200 Points
3) Disconnection for Non -Payment of Utilities — 500 points
4) Check returned for other reasons other than insufficient funds — 200 points
5) Insufficient Funds payment returned — 200 points
6) Collection Letter for closed utility account mailed —1000 points
7) Account referred to third party collection agency —1000 points
8) Write-off as uncollectable debt — 2000 points
9) Bankruptcy — 2000 points