Uncollected €14.8m rates ‘frightening’

The 64% jump in outstanding commercial rates due to Clare County Council, up from €9 million at the end of last year to €14.8m in September, has been described as “frightening” by a local county councillor.

 

Councillor PJ Kelly has sounded alarm bells about the overall extent of commercial rates and other bills owed to the county council ahead of the annual Budget Estimates meeting next month.

Councillor Kelly warned the local authority had to get to grips with the large amount of outstanding commercial rates in the county to prevent this from becoming “a very serious problem”.

However, a council spokesperson pointed out an accurate assessment and comparison of the commercial rates arrears for 2011 and 2012 couldn’t be made until such time as the final relevant figure for 2012 is available.

The overall level of payments owed by customers under a number of categories, including commercial rates, housing rents, housing loans, commercial water, legal costs, fire charges and development levies, increased from €33.363m at the end of 2011 to almost €36m last September.

The latest figures for the amount of money owed to the council includes housing rents €900,000, housing loans €657,000, commercial rates €14.8 million, commercial water €9.9m, legal costs €388,000, fire charges €200,000, development contributions €6.867m and €98,227 for remedial works to the roof at corporate headquarters.

These works are deemed irrecoverable arising from the fact that the building contractors are in receivership.

Councillor Kelly’s warning came after the Local Government Auditor, Thomas O’Callaghan, highlighted the continuing rise in council arrears and the level of unpaid commercial rates.

“The collection yield decreased by 1% resulting in year-end debtors at December 31, 2011 of €9.04m. The continuing rise in these arrears is a cause for concern. All legal resources available to the council must be applied in order to secure payments of the sums due.

“The collection performance for commercial water at 41% showed an increase of 8% on the 2010 yield. This collection yield is far from satisfactory and well below the national collection levels. The debtors at year-end amounted to €10.509m.”

“It was noted that invoices issued in 2011 included charges for 2009 and 2010. Clearly, procedural control with regard to the timely issue of such invoices is needed and, where necessary, additional staffing resources must be assigned to the collection of this debt,” the auditor commented.

County manager Tom Coughlan has stated that €2.5 million was collected on these arrears up to August 31, 2012.

“The arrears total includes €2 million relating to amounts owed by companies in receivership, examinership or liquidation. A total of €3.5 million was owed by 90 customers, about 4% of the total customer base, and these balances are being actively pursued through engagement in the agreeing of payment plans or through legal action where necessary,” he stated.

“The increased collection percentage on commercial water in 2011 is reflective of the €7.2m collected in 2011 compared to €4.8m in 2010. While there is an improved collection performance in this area over the previous year, management is committed to ensuring that this area remains a priority and all collection measures are being utilised to maximise revenue,” he added.

Councillor Johnny Flynn expressed concerns at Monday’s council meeting about the fact that raising loans to cover €15m on overdraft for a number of years to loans over an expected 20 year period will add in the region of €1.5m on to the revenue account by the end of the year, which may have to be picked up by ratepayers.

Head of finance Niall Barrett told the meeting the council hoped to secure better terms than this estimate.

The auditor stated council management should ensure that, in future years, transfers to reserves including loan charges, which were €3.51 million in 2011, should be financed solely from surpluses on the revenue account.