Sarnia City Council has raised interest rates on unpaid municipal debts from 15 per cent to 24 per cent. At its budget meeting November 2, they approved the 2025 Fees for Service, which included this measure, without discussion. The adjustment in the interest rate is designed to address revenue losses incurred through the use of collection agencies.
Communications Manager, Steve Henschel, told the Journal that the use of collection agencies for outstanding payments is not new for the City of Sarnia. He notes that it is extremely rare for outstanding debts to advance to collections. A total of eight accounts were sent to collections in 2023, and only eight so far in 2024.
Fees related to essential or mandatory services offered by the City or overdue charges related to taxes and water bills are not sent to collections.
There are specific overdue fees or fines covered under the Other Accounts Receivable category that could be sent to collections. They represent instances where an individual has voluntarily purchased a service from the City, damaged property, or violated a by-law. They include fees for charter rentals and shelter advertising; berthage and wharfage fees; sanitary discharge fees; fire investigation fees and permits; cost recovery for damage to City property; monthly lease agreements and food concession agreements; water hydrant connections; oversized load permits; facility rental fees; business licenses; and by-law infractions. By-law infractions do not include things like parking tickets, however, which are handled through the court system.
Collection agencies are used as a last resort when a customer is unwilling to work with the City and the debt has aged more than 180 days. Staff monitor aging accounts monthly, and regularly reach out to customers to make mutually agreed upon payment arrangements. As well, City staff have some discretion. Unrecoverable debts may simply be written off if they are too small to justify the collection fees.
The City retains responsibility for the debt until it is recovered, including when it is sent to collections. Debts are not sold to the collection agency, but they retain a portion of any debt recovered. The increase to the interest rate means more money can be recovered through collections, and the shortfall does not fall on taxpayers to cover.
Section 304 of Ontario’s Municipal Act (2001) allows a municipality to use a registered collection agency to recover debts payable to the municipality, which can also recover its reasonable costs of collecting the debt. The City of Sarnia uses collection agencies as a contracted service, with the terms and conditions providing limitations and oversight on the agency’s actions. Steve Henschel tells us that the City routinely monitors contract performance. He declined to disclose the name of the agency currently contracted by the City, however.