Iowa City resumes standard utility bill collections

IOWA CITY — The city of Iowa City has returned to standard utility bill collections, with water shut-offs resuming later this month for overdue accounts for the first time since the start of the pandemic.

Iowa City relaxed billing and collections for delinquent utility accounts in March 2020. The city stopped charging late fees, carding fees, reconnection fees, shutting off water, filing liens or using collection services.

The adjustments were made to avoid water shut-offs and provide relief for households experiencing financial problems during the pandemic. Utility bills cover the costs of water, wastewater, stormwater and curbside collection services.

The City Council this week agreed to use $676,146 in federal American Rescue Plan Act dollars to replace utility revenue lost through May of this year and enable a “clean return” to normal utility billing.

“Although this shift in protocol provided critical, needed relief to households during the worst of the pandemic, it has resulted in growing revenue loss in the city’s utility enterprise funds, particularly the water fund,” according to the documents in the Sept. 6 Iowa City Council agenda packet.

Notifying residents

The city resumed standard collections in late August and will resume water shut-offs for delinquent bills Sept. 20, according to a news release.

Water department staffers are contacting customers with past-due amounts, City Manager Geoff Fruin told The Gazette.

The city’s Water Division will leave notices on doors notifying residents with unpaid bills that their water is subject to shut-off. A letter also will be mailed.

“As many account holders pay late in their billing cycle, it is difficult to say how many could be scheduled for shut-off later this month,” Fruin said.

Fruin said the city expects numbers to be higher initially since households realize the city was not collecting late fees or assessing penalties in the past two years. The city expects the numbers to reduce after the first billing cycle.

If residents are unable to pay their water bill in full, the city will work with them to arrange a payment plan. Shut-offs will begin if the bill isn’t paid or if there’s not a payment plan in place.

Unpaid bills

In March 2021, a year after the pandemic’s onset, the city reported 1,661 delinquent accounts, including 521 inactive accounts. The city resumed a “soft” collections procedure but did not return to normal collection procedures at the direction of council.

Connecting households to relief programs and the soft collections procedure “have not resulted in significant improvements in unpaid balances of delinquent inactive accounts,” city documents stated.

Collection services and water shut-offs are “two of the only tools the city has to incentivize households to pay on overdue balances,” noting “sustained revenue loss will lead to more pressure for rate increases, which are borne by all utility users, not just those with past-due balances.”

Help available

Fruin said the earlier residents can contact city utility staff about past-due bills, the better. Utility staff can set up a payment plan, give details about the city’s discount program and explore other assistance, including a discount program for eligible residents.

Under the discount program, utility customers can receive a discount of 60 percent of the minimum water and sewer charges; 60 percent of the monthly stormwater charge; and 75 percent of the refuse, recycling and organics charges each month.

More information about eligibility and how to apply can be found at icgov.org/utilitydiscountprogram.

Households needing help with disconnection notices, reconnections and past utility bills also might be eligible for HACAP’s Crisis Utility and Water Assistance.

Anyone with questions can contact the city’s Revenue Division at revutilityonline@iowa-city.org or (319) 356-5066.

Comments: (319) 339-3155; izabela.zaluska@thegazette.com