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City halts $9.80-a-day interest; $1,500 unpaid bill could still result in foreclosure

City of The Dalles staffers have corrected the interest rate of almost $10 per day that 12th Street residents were erroneously being billed for unpaid sewer system development charges.

Attorney Gene Parker said Wednesday that the interest rate on the couple’s unpaid balance of $1,490.83 should have been 41 cents per day instead of $9.80. With the original interest charges added in, the delinquent amount had risen to $2,319.91.

The $829 of interest accrued over a few months drew criticism from Councilor Dan Spatz at the May 12 meeting where the issue was discussed.

“I think it’s outrageous,” he said before council directed Parker and Kate Mast, finance director, to revisit the charge.

The names of the husband and wife who reside on 12th Street have been withheld to protect their financial privacy. They were unable to be reached for comments about recent activity in their case.

Parker said a letter was sent May 19 to the couple with the adjusted $1,557 charge that will be payable over a 12 month period instead of the six in their original contract.

“We haven’t gotten a response yet, but we thought this was a fair proposal and we’ll see if they agree,” he said.

He said the error could have been remedied without council intervention if the residents had brought it to staff’s attention prior to the public hearing over a lien being attached to their property.

“We’re trying to work with them, we’re trying not to be heavy-handed,” said Parker.

Councilor Bill Dick expressed little empathy for the situation the residents were facing.

“You agreed to pay and you haven’t paid,” he said.

Dick then asked the man for an explanation of the financial crisis that he referred to as the basis of delinquency in paying the sewer line installation cost.

“I would be happy to provide that information but not in a public forum,” the man replied.

A few minutes later, Dick told the man that the city had $20 million in capital improvement projects that would be paid by development charges.

“Join the club my friend, we all pay,” he said.

After telling the council that he had lost a job and incurred other unexpected expenses, which he did not explain, the man said it had become impossible to keep up with the $298.17 monthly payments. The couple had agreed to pay that amount, starting on Aug. 27, 2013, and ending January 27, 2014, but was able to cover only one month.

The man said that his wife had lived in the home for 30 years and he had been there for 12 so they did not have a history of economic instability.

He questioned why they weren’t initially given a year to pay the debt as allowed by the ordinance that regulates system development charge payments. He said that would have lowered the total of monthly payments and the option should have been offered when they got behind.

“We don’t ask for anything special, we intend to pay,” he said.

City staff had been unhelpful at finding a remedy for the situation, he said, and had even “chastised” him for nonpayment. He said that attitude continued even after he began working again but was unable to deal with the growing debt as interest piled up.

He was also unhappy with the size of the fee that he believed was too high because the sewer was already to his property and he had provided the plumbing for its installation.

“It is my understanding the law is supposed to be fair and equitable and I can’t see any way to apply that to this ordinance,” he told the council.

System development charges are intended to pay for expansion of infrastructure, in this case sewer, needed to address growth and to recoup the cost of public lines already installed over time as property owners hook up to them.

Parker told the council May 12 that repeated attempts to resolve the issue with the residents had been unsuccessful because they had not responded to multiple letters.

In March, the city initiated the process to collect the delinquent amount.

“When we don’t have payments we don’t have much of an option,” said Parker, who recommended the city impose a lien against the residents’ property if the bill remains unpaid.

He said the system development charge ordinance is being reworked and, with council approval, could allow staff to impose a lien in the future without a public hearing taking place. Payment plans would also be limited to situations involving an emergency or other event that is not attributable to any action taken by the property owner or developer but results in undue financial hardship.

If a lien is imposed on the 12th Street property, he said the owners can avoid further interest and a possible foreclosure by paying off the past due balance.

“A foreclosure would be our absolute last resort,” said Parker in a follow-up comment. “We can either choose to do nothing or we foreclose. Obviously our preference for this small amount is not to make people lose their property.”

He said the city is currently involved with seven foreclosures concerning unpaid liens, some involving more than one charge.

In each case where a property is being foreclosed on, Parker said numerous attempts have been made to work with the landowner to address the situation. One of the properties headed for the auction block last year was on Eighth Street and the city had imposed a $2,501.37 lien for having to clean up the lot three different times.

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