By Vernon Robison
Moapa Valley Progress
The compounding of late fees on an account with an inactive water meter was the topic of, at times, heated discussion at the Moapa Valley Water District (MVWD) board meeting on Thursday afternoon, October 14 in Overton.
Logandale resident Tony Terry had requested that the item be placed on the agenda. Terry explained that, some time ago, he had sold a piece of Logandale property to the now defunct Kodiak Construction Company. The company had made a downpayment on the property and Terry held the note. But Kodiak, which became a casualty of the economic downturn, had stopped making payments on the property. Terry explained that he was now in the process of foreclosing on the property and taking ownership back.
He then became aware of the status of Kodiak’s account with the MVWD. Terry had purchased and installed a meter on the property prior to selling it. After purchasing the property, Kodiak had paid the $28.50 monthly maintenance fee for an inactive water meter at the property for some time. Then in December of 2008, the payments stopped. Bills were sent to an address for Kodiak on file at the district. Nearly two years went by with Terry knowing nothing about the account status.
When Terry recently learned that the MVWD policy was to remove the meter in such situations after two years of non-payment, he went to the MVWD office to resolve the outstanding bill and avoid removal of the meter. He was expecting to pay a bill of around $700 which would have covered the maintenance fee for 22 months plus penalties. But he said that he was shocked to be told that the bill had grown to $2,139.
It was explained to him that if a bill is not paid, a 10% late fee is charged to the account. That late fee is then added to the balance and 10% is compounded each month on the new outstanding balance.
“The balance had compounded to three and a half times the cost of the bill!” Terry said. “And they told me that, next month, the interest would have added another $200 to the bill, just in that month; all on a meter that has never had a drop of water run through it.”
Terry said that he had paid the balance under protest. But he felt that the policy was unreasonable, excessive and exhorbitant. He suggested that such a policy certainly opened the district up to possible litigation.
“I can’t imagine that this was the intent of this board when this policy was enacted,” Terry said.
“I will accept the $2.85 late fee every month on an overdue balance,” Terry said. “But I do not accept the compounding of that balance each month. I would ask that you take the $627 payment and the $2.87 per month penalty and give me back the balance of funds that I paid under protest.”
MVWD Board member James Robison summed up the history of the policy and its intention. He explained that several years ago the district had some big industrial accounts that had purchased water meters but had not activated them into use.
“This required us to tie up a large amount of water resources and keep it in reserve in case the meters ever went active,” Robison said. “But you can imagine that such a thing would be a good investment for these customers. They could hold on to those resources at very low cost and eventually sell them at a profit.”
Robison explained that the district tried to get the meters cleaned off of its books in various ways. “We even offered to buy the meters back from them, but we got no response,” he said.
So the board enacted this very austere policy and it brought swift action, Robison said.
“It cleaned up a lot of big problems for us rather quickly,” he said.
“But a lot has changed since that time,” Robison concluded. “Maybe we need to review that policy and consider making some changes.”
“I foresee that, whatever we do here will result in a policy change,” said MVWD attorney Byron Mills. “I’d recommend that we hold this request for some time to allow a discussion on this policy. Then we can apply whatever credit is appropriate to any policy changes made retro-actively to this account.”
Board members instructed MVWD staff to prepare a number of recommendations that might address problems that have arisen in the policy and present them at the next board meeting for discussion and action.
