Nearly $1 million owed in delinquent fees in Phoenixville

Chart of top 15 delinquents in Phoenixville for water, sewer and trash fees.

PHOENIXVILLE — The borough’s water, sewer and trash budget began the year with nearly $1 million in unpaid bills and the balance has now grown so large that officials have decided to bring in an outside collection agency to get as much of the money as possible.

A recommendation for hiring a collection agency may come as soon as June, borough officials said.

“From a staffing perspective, we just don’t have the manpower to follow every delinquency every month,” Phoenixville Borough Manager Jean Krack said. “The sad part is many of the delinquents know that.”

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At the end of 2013, the borough was owed $942,242,89 in water, sewer and trash fees that were deemed “delinquent,” according to a document obtained by 21st Century Media last month.

At the March 11 borough council meeting, Krack said he was putting together a request for proposal to bring in a collection agency, something he said he’s done elsewhere to deal with delinquencies.

“It really had a significant impact,” Krack said of his previous efforts. “We have a large number of delinquencies, a large amount of money that needs to be recovered.”

Although some payments in 2014 were listed in borough documents, and it’s possible some accounts have been paid off since, it appeared that the vast majority of the delinquent accounts had not made a payment through the month of February. The list was generated on Feb. 28.

Further, just 15 of those on the delinquent list — which account for only 58 of the 866 total accounts — are responsible for more than half the unpaid bills.

Those 15 debtors collectively owe the borough $512,238.44, a 21st Century Media review of Phoenixville’s delinquent list showed.

Eliminating delinquency accounts not only makes the borough’s financial picture a lot clearer, it also improves its credit rating, Krack explained.

The borough’s credit rating affects the cost of borrowing money for large projects. If the rating is lower due to delinquencies, it can result in more of a tax burden on all residents who have to pay higher interest rates on the bonds or loans.

“It obviously helps the audit,” Krack said of bills being paid on time. “At the end of the day, we want hard cash.”

HIGHEST DELINQUENTS

National Properties Inc. is the highest single delinquent listed on the borough document, owing the borough $120,858.85 between two accounts.

The borough’s delinquency list does not document one single payment ever being made by National Properties Inc.

According to a spokesperson who answered the phone number attributed to National Properties and did not offer her name, National Properties sold its holdings to Madison Property Management in Philadelphia.

Madison currently oversees Madison Westridge Gardens on the north side of the borough.

Phoenixville Finance Director Stephen Nease said that the borough has been in litigation over the accounts tied to National Properties Inc. for at least nine years. He also said a “significant portion” of those fees may have to be written off.

Many of those on the delinquency list appear multiple times in different combinations, sometimes as partner in holdings, other times as sole proprietors.

For example, Craig Atkins appears on the list three times and is connected to accounts that owe a total of $130,266.99.

He partly owns the Pennsylvania House Hotel, number two on the delinquent list, with a man named Joel E. Davenport, according to Chester County property records.

Andrew Duren Jr. is connected to four different accounts on the delinquent list, and three of those accounts also list Atkins as a debtor.

By Monday, he had not returned a message left by 21st Century Media, and attempts to ascertain contact information for Duren and Davenport were unsuccessful.

Neil Phelan, owner of Phoenix Karate, is the principal on four accounts which owe a total of $55,192.58.

Three of his accounts are joint-listed with a D. Daugherty. Those accounts total $51,138.57, all but approximately $4,000 of Phelan’s total.

Borough documents indicate that no payments have been made on two of the accounts which list Daugherty as a debtor since 2006 and another since 2007.

On another account Phelan appears listed with his wife Maureen.

A $100 payment on that account was made in January, borough documents showed, and Nease said Phelan made another $250 payment since the list was generated in February.

Phelan said he was unable to speak when 21st Century Media called Wednesday and did not answer Thursday night when 21st Century Media called again. He also had not called back by press time Monday.

‘NOT A TRUE DELINQUENCY’

The Phoenixville Area School District appears on the list of the top accounts listed in delinquency with $9,893.14 owed.

Normally, the district pays its fees in January but the district’s Executive Director of Operations Stan Johnson said the district had questions about meter readings and were working with the borough to resolve those questions.

Krack said the meter discrepancies result from the construction of the middle school and some estimates on water and sewer usage the borough had to make before the meters ran properly.

“That’s not a true delinquency,” Krack summed up.

All parties were confident that the correct payment would be made.

‘THE LANDLORDS KNOW THIS’

One of the biggest obstacles to reducing the amount of money owed to the borough has to do with rental properties.

Shutting off water to rental properties poses a unique problem for officials that single-occupant properties don’t.

“Most of the rental properties have one main meter for all the apartments in the building. Typically the landlord divides the bill by the number of apartments and comes up with an average usage,” Krack said. “They then factor that into the monthly rent. So they are collecting the money but not paying the borough.”

“We cannot simply turn off water to a resident because they have dutifully paid for it through their rent and it is not their fault that the borough has not been paid,” he said. “The landlords know this.”

As a result, Krack said a “new structure” for payment has been put into place by which residents can directly pay the borough their water, sewer and trash fees but “100 percent of the tenants” have to be in on it.

That’s not exactly a popular option, according to Krack.

“It is practically impossible to get 100 percent because they fear that if they go that route, the landlord will evict them,” he said.

Other options may become available once the new collection agency comes into play, Krack said.

WATER FEE RAISE

Borough Councilman Shai Perednik brought up water bill delinquencies during the March meeting, the same meeting at which council voted to raise the water fees.

As a result of the vote, the water fees were raised from $6.95 to $7.30 per 1,000 gallons.

It was the fourth time the matter had been raised before council, two of which occurred at the March 11 meeting.

Council Vice President Dana Dugan proposed raising the fees at meetings in both January and February, but her motions were not seconded and could not be brought to a vote.

Before the measure passed March 11, Krack said the $6.95-per-1,000-gallon rate does not even cover the cost-per-customer of producing the water they use. He said the rate increase will cover production costs.

However, Krack said the delinquencies and the water rate increase are two separate issues, and “two separate accounts.”

“Our accounting procedures account for these delinquencies,” Krack said. “They have nothing to do with operating costs.”

Follow Frank Otto on Twitter @fottojourno.