LEGISLATIVE ACTION ITEM
SPONSOR: Grover C. Robinson, IV, Mayor
SUBJECT:
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WRITE-OFF OF UNCOLLECTIBLE GOVERNMENTAL ACCOUNTS RECEIVABLE
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RECOMMENDATION:
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That City Council approve the write-off of $44,635.11 in unpaid ad valorem equivalent payments due from the late Gary Lowry and $5,345.00 in unpaid ad valorem equivalent payments due from Aberfeldy Home Construction LLC, retroactive to September 30, 2022.
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HEARING REQUIRED: No Hearing Required
SUMMARY:
The City’s Financial Planning and Administration Policy states that the write-off of any un-liened, non-utility uncollected accounts receivable in excess of $1,000 must be approved by City Council. The two accounts under consideration have been determined to be uncollectible. The write-off of these uncollectible accounts is for accounting purposes only and will not impact the FY22 revenues or expenditures of the City.
Both accounts concern vacant or previously vacant parcels at Port Royal Phase II subdivision. In May 1997, the City entered into a Master Lease with Port Royal Phase II Inc., which included a performance schedule requiring completion of residence construction on each of the residential lots by the sublessees by April 2004, which was later extended to August 2009. Several of the lots remained undeveloped after the extended date and those sublessees subsequently entered into a Construction Performance Agreement with the City for their non-compliant lots. The Construction Performance Agreement notes the expectant date of construction completion and details the ad valorem tax equivalent payment due to the City each year.
Gary Lowry passed away in a tragic boating accident in 2013. Finance records show timely payments of the ad valorem tax equivalent made by Mr. Lowry for tax years 2010 thru 2012 but not for years 2006 thru 2009. The write-off amount is the total of those unpaid years plus interest as of 2013, and this amount has been deemed unrecoverable. This lot is the last undeveloped lot in the subdivision.
Aberfeldy Home Construction acquired the sublessee leasehold interest in their (former) lot in late 2019 and paid the ad valorem tax equivalent payment for tax year 2020, the year that their Construction Performance Agreement indicated residence construction was expected to be completed. They sold their interest in the lot in January 2021. By the time staff was made aware of the sale in late 2021, the new owner had commenced but not completed construction. Upon contacting the new owner, staff was informed of the pandemic effects and supply chain issues resulting in the home not being completed prior to the end of 2021. The residence is now complete.
PRIOR ACTION:
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FUNDING:
N/A
FINANCIAL IMPACT:
The write-off of these two receivables totaling $49,980.11 will not have an impact on the FY22 revenues or expenditures of the City.
LEGAL REVIEW ONLY BY CITY ATTORNEY: Yes
10/11/2022
STAFF CONTACT:
Kerrith Fiddler, City Administrator
Amy Lovoy, Finance Director
ATTACHMENTS:
1) Write-off Report for Leases FY2022 - Port Royal Phase II
PRESENTATION: No end