The borough of Phoenixville, Pa. is reviewing whether to hire an outside collection agency to pursue the an estimated $1 million in unpaid water, sewer and trash bills.

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

Rental properties are one of the largest obstacles to reducing the amount of money owed. Shutting off water to rental properties poses a problem for borough officials that doing so to single-occupant properties does not. Most of the rental properties have one main meter for all of the apartments in the building.

The landlord commonly divides the bill by the number of apartments and comes up with an average usage and then factors that into the monthly rent. Thus, they tend to be collecting the money but not always paying the borough, according to Phoenixville Borough Manager Jean Krack. The residents, meanwhile, believe they have paid for the bills through their rent payments.

A new payment systems recently was added to give residents an option to directly pay the borough for water, sewer and trash fees. All tenants in a building must agree to be a part of such a plan, and many believe that will be difficult since some tenants may fear their landlord will evict them if they pay the bills directly, according to Phoenixville officials.

Other options may become available once a third-party collection agency is hired, said Krack, who is currently putting together a request for proposal to bring in an agency. Krack said the borough is committed to the effort.

Reducing delinquency accounts will improve the borough's credit rating, which affects the cost of borrowing money for large projects. If the rating is lower because of delinquencies, it can result in more of a tax burden on all residents who ultimately pay higher interest rates on the bonds or loans. 

Phoenixville has an estimated 17,000 residents and is located 30 miles northwest of Philadelphia.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.