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City Councilors criticized a new state law that requires the city to change the timeframe for shutting off a resident’s water service due to an inability to pay.

Under State Senate Bill 998, the Water Shutoff Protection Act, water providers cannot discontinue a residential customer’s service until 61 days after their bill becomes delinquent, Crescent City Finance Director Linda Leaver told the City Council on Monday.

Signed into law in September 2018, SB 998 is intended to reduce the number of Californians who lose access to their water service due to an inability to pay. But Councilors called the law ridiculous after Leaver explained that a customer will continue to be billed for their service even if their account is delinquent. The customer must also pay their entire past-due balance before the city reconnects their service, Leaver told the Council.

“What a zoo!” Crescent City Mayor Blake Inscore exclaimed.

“This is going to be a challenge,” Leaver told the Council. “We’ve been struggling with this for a few months trying to figure out how it would work and how it would work with our software. Our software is not even set up.”

Despite their misgivings, the City Council unanimously approved amending the municipal code to require its shutoff policy for residential water service be adopted by resolution. The city must rewrite its water policy and change the municipal code by Feb. 1 to comply with SB 998, according to Leaver.

Crescent City provides water to roughly 4,600 homes within its boundaries and to homes in the Meadowbrook, Church Tree and Bertsch-Ocean View community services districts, according to the city’s staff report.

According to its municipal code, the date water bills are issued are the date it’s due. It becomes delinquent if it’s not paid 21 days after it is issued, Leaver said. Service can be shut off 10 days after the bill becomes delinquent, she told the City Council.

However, the city’s current practice is different. Using the month of July as an example, Leaver said if a bill is sent out on July 1 for water used in June, the due date would be July 22.

On Aug. 1, the customer will receive a bill for water service they used in July, which would be due on Aug. 22, Leaver said. The city will send a notice on Aug. 12 — 10 days before the August bill is due — that their water will be shut off for non-payment, she said.

“By the time the second month is due, if you haven’t paid (for) the first month, it works out to about 52 days,” Leaver said.

The city issues hundreds of shut off notices a month, the finance director told the City Council. Nearly all are paid within the 10 days, she said.

“As far as how people will respond once that happens at a much later point, I don’t know yet,” she said.

Under SB 998, residential water service can’t be disconnected for nonpayment until the bill has been delinquent for at least 61 days, Leaver said. This means if a bill for July 1 hasn’t been paid, the water service can’t be disconnected until Sept. 19. Leaver said the city must provide a shut off notice seven business days before discontinuing water service.

The new law also requires Crescent City to provide payment options for customers that have a medical necessity confirmed in writing by their primary care provider; can show a financial need; and are willing to enter into a payment plan, according to Leaver.

These payment options include amortization of the unpaid balance; adopting an alternative payment schedule; partial or full forgiveness of the unpaid balance; and temporary deferral of payment, according to the staff report.

If a customer has an unpaid bill that becomes delinquent and is at risk of having their water shut off, they can request an alternative payment schedule or a deferred payment, Leaver said. The city can choose which payment option to offer, she said.

However, each option presents a challenge, one of which is under Proposition 218, the city cannot pass the cost of forgiving delinquent bills onto other ratepayers, Leaver said.

“The customer who is ultimately disconnected for nonpayment, if they want to be reconnected they have to pay the entire past-due balance before we will reconnect them,” she said, adding that the customer could owe the city for more than three months of water service before the city discontinues it. “The longer that customer continues (using) the service without paying for it, the higher the bill is going to be and they can’t get service again until they pay the entire amount.”

Under the current policy, new residential water customers must pay a $250 deposit, which is about two and a-half months of bills, Leaver told the City Council.

Though the new law seeks to make sure no one’s water is shut off, Inscore said SB 998 potentially creates a bigger problem by delaying the requirement for people to bring their bill back up to date.

“If they don’t get it until day 71, they’re three bills in now,” Inscore said. “They may be in a situation where it’s just become bigger than they can possibly manage.”

When taking a closer look at the payment options for delinquent bills, Leaver noted that SB 998 recommends to not allow a customer to amortize their bill beyond 12 months. For a water and sewer bill, which are connected for most customers, of $100, Crescent City Attorney Martha Rice recommends setting a minimum $20 per month, Leaver said.

Though city staff wouldn’t want to amortize a delinquent water bill longer than five months, Leaver said. For an account that’s two months past due, this could mean amortizing $200, she said.
In that case, Inscore said, an amortized bill of $20 a month wouldn’t work because “you’re talking about 10 months.”

“As soon as they become delinquent again, all of that is due in full or are they immediately shut off?” Inscore asked Leaver.

Leaver said the city would have to look at the current bill.

“If you become 60 days behind on the payment plan, with five days notice, you can be shut off,” she said. “Again, you were already delinquent by 60 days if you enter a payment plan.”
This statement elicited groans from Inscore and his colleagues Mayor Pro Tem Heidi Kime and Councilor Jason Greenough.

“This is ridiculous,” Greenough said. “I hate to be Captain Obvious!”

As staff continue to develop a policy to reflect the new water law, one payment option that could work may be introducing different billing cycles based on the customer, Leaver said. For example, she said, a bill’s due date could coincide with the date the customer is paid. A person could also be given extra time to pay a delinquent bill, Leaver said.

When Leaver explained why the city can’t offer a partial or full forgiveness of a customer’s bill, Inscore noted that the issue came up when the City Council was discussing changing the rate structure for its sewer service. He noted that major utilities such as Pacific Power and Pacific Gas & Electric are able to offer special programs for its low income customers, but the dollars that pay for those programs don’t come from ratepayers.

Though, he said he wasn’t interested in supplementing residents’ water bills out of the city’s general fund, Inscore proposed approaching an organization like Building Healthy Communities that could set up a fund to help someone in crisis.

“My biggest concern is it needs to be sustainable,” he said. “I don’t know what those numbers would look like for us.”

Under the Water Shutoff Protection Act, the city’s written policy must be available in English, Spanish, Chinese, Tagalog, Vietnamese and Korean. Staff recommended adding Hmong to the languages in the written policy.

There are additional notification requirements for tenants whose landlord or property manager pays for water service, according to the staff report. The city is also required to post the number of residential accounts that are shut off for nonpayment, according to the report.

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