MN - More unpaid utility bills reflect stress

More unpaid utility bills reflect stress

• Article by: MARY JANE SMETANKA , Star Tribune
• Updated: October 22, 2011 - 7:12 PM

Many western suburbs see more residents falling behind.

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Each fall, cities in the west metro collect lists of all the properties that haven't paid their water and sewer bills. This fall, that routine procedure has become a mirror for the increasing desperation of residents who are stuck in an economic tailspin.
The amount owed by property owners for delinquent utilities rose in St. Louis Park, Richfield, Hopkins and Golden Valley. Property owners receive a warning and have a grace period to pay up. If they don't, the debt will be added to their property taxes, along with a penalty. The exception was Edina, which saw fewer delinquencies.
In St. Louis Park, 1,631 letters were sent out to people who owed a total of nearly $835,000.
"I think it's a difficult time for residents in St. Louis Park and the state and in the whole country," said Steven Heintz, the city's finance supervisor.
"We get calls from people who lost their jobs. I just spoke to a resident who had been in a car accident many years ago and the medical bills are piling up."
Why the amounts are going up -- or down -- is unique to each city. John Wallin, finance director for the city of Edina, said he isn't sure why the city sent out fewer notices this year. In 2010, 704 properties were cited for owing nearly $504,000 in utility fees; this year that fell to 676 properties owing $315,000.
"Maybe some of the stresses have been working themselves out over the last couple of years," Wallin said.

Foreclosures may play role

Though the number of warning letters sent by St. Louis Park has dropped since 2008, the amount owed has gone up by nearly $160,000. That could be linked to increased utility rates, Heintz said.
But it may also be linked to foreclosures.
"Most people who are foreclosing on a home would not be too concerned about a utility bill if they can't pay their mortgage," Heintz said. Richfield's finance manager Chris Regis agreed.
"For two or three years, Richfield has had a high number of foreclosures.," he said. "And the economy plays a part, with lost jobs, pay cuts and pay freezes."
Richfield sent letters to 981 properties that owe nearly $420,000 in water and sewer costs. In 2009, the city sent 959 letters to try to recoup nearly $322,000.
"Everybody is hoping the economy gets better," Regis said. "It's no fun to do this to people."
In Hopkins, possible delinquent utility assessments increased from about $73,000 in 2007 to nearly $112,000 this year. City Finance Director Christine Harkess said the amounts owed by individual property owners are significant, with many more than $1,000 and one over $8,000.
While Harkess doesn't take most of the pleading calls that come into the office, she said the reasons for nonpayment are basic. "People are having a hard time just meeting their daily expenses."
Hopkins tries to work with people who want to pay off their debt in nontraditional ways. Some residents have asked if they can pay a little bit each week or with each paycheck.
"We say, 'Absolutely,'" Harkess said. "We try to be compassionate about this."

Some wait to pay in bulk

The unpaid utility charges seen by city councils this fall will shrink by November, as some people hurry to pay and beat city deadlines before the charges and penalties are added to property taxes. Harkess and Wallin said a few property owners actually choose to let their utilities go delinquent, preferring to pay utility fees all at once at the end of the year or as part of their property taxes.
Very few cities cut off water service to occupied properties even if residents haven't paid their bills. Doing so could create a health hazard and damage a property. Besides, cities know that they will eventually be paid because the cost can be tacked on to the property tax.
"It's difficult, because you certainly empathize with them," St. Louis Park's Heintz said. "Our job is to try to balance their needs with what the city needs. ... We have to make sure we have the resources to keep our rates reasonable for everyone."