Last night, during Lansdale Borough Council’s Business Meeting, council entertained the possibility of ending a long-standing ordinance that renters in Lansdale must pay a $200 electric deposit to the borough to open their electric account. That deposit is then returned to renters when they leave their rental unit (if they leave in good standing) or kept by the borough to help pay off any existing unpaid electric bills. Should there be any unpaid expenses over $200, the landlord is then responsible for paying the remaining bill as directed by state law — which is unique to municipal electric authorities.
The motion, that was ultimately tabled by council, would eliminate the deposit altogether and instead hire a collection agency to find renters who owed back the unpaid bills. This approach was being considered because borough staff are spending 20 to 30 hours a month just managing the deposits process. Hiring a collection agency seemed like the more prudent and efficient way of managing outstanding bills. Especially after finding out that the preferred collection agency has, according to them, a 97% success rate with back payment.
As you can imagine, there are a multitude of angles and challenges with this whole system. It is true that some renters leave huge electric bills unpaid when their lease is up, skip town, and are never seen again, leaving the landlord to pay the difference because they would not be able to rent the unit again without that bill being paid. That is, by all accounts, unfair. It is also true that the deposit is a hinderance to accessing housing/renting in our community. Some people are already trying to scrape together one month’s rent — or more — as a deposit to secure their lease. The additional $200 on top of that can and does keep people from being able to rent in Lansdale.
Fair is fair, and this issue is tough on all sides of the coin.
In the business meeting, many local landlords showed up to express their frustration with the potential elimination of the electric deposit. Many of them were advocating that our deposit amount is not high enough and should be increased to recognize that there is a risk of someone leaving their rental with unpaid electric bills, and $200 rarely covers the full bill due.
As this is being reconsidered, one dimension of this is a clearer understanding of what the collection agency could deliver. It is proposed that the collection agency will be able to get 97% of unpaid bills back for the borough and have the fees associated with the collection agency paid for by the former resident in a timely manner. If that is the case and can be shown to be true by the agency, then it would make sense to engage in a contract with the collection agency and remove the deposit.
One of the potential challenges, just from a workload perspective, is that if the borough has an extended window for collection — plus one month — we will need to secure funds from the landlord as a deposit on that collection until it can be recovered — again, due to state law. This may be the same lost time that the borough has invested in securing deposits as it sits today. However, if more bills are being paid in full, and fewer landlords are on the hook for full repayment, than that is a net win for both parties while also allowing us to remove the burden of the deposit to begin with.
There is more to uncover with this issue, but it feels like there is a way to make a new process work for most renters and landlords in our community. Obviously, most renters are in good standing with Lansdale Electric and pay their bills on time. This is trying to find a way to modernize our approach to this challenge and be more effective in the process.
(Mayoral Musings is a weekly op-ed column submitted to North Penn Now, courtesy of Lansdale Borough Mayor Garry Herbert. The views expressed are his own.)
See also:
Mayoral Musings: Willow Street Solar Project
Mayoral Musings: North Penn Black History Oratorical Competition
Mayoral Musings: Annual Lansdale Police Report Preview
Mayoral Musings: Opening of Classic Game Junkie and Retroware Arcade
Mayoral Musings: Preliminary Lansdale Police Community Survey Results
