Department of Watershed Management Water Billing and Collections Follow-Up - August 2026

Department of Watershed Management Water Bill and Collections Follow-Up
Released: AUGUST 2026

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We undertook this audit to follow up on our 2023 Watershed Billing and Collections audit to evaluate changes in the city’s water and sewer delinquent account balance and the department’s collection activities. Since June 2023, the city’s delinquent balance for water and sewer services has grown from $198 million to $236 million with the number of delinquent accounts growing from over 54,000 accounts to 60,168 accounts as of April 2026. Watershed Management has improved the frequency of write-offs since our last audit; however, an earlier and more robust collections process could lessen the department’s reliance on the write-off process. We did not make any new recommendations to Watershed Management in
this report and encouraged the department to fully implement the previous open recommendations and develop a collections strategy that aligns with its collectability analysis.

We found:

In our 2023 audit Water Billing and Collections, we found that Watershed Management had not consistently enforced collections, written off uncollectible debt, or shut off water for non-payment. At that time, over 54,000 accounts had delinquent balances totaling $198 million. Over a 12-year period, the department terminated 737 accounts for non-payment.
Since then, the delinquent balance has grown 19% to $236 million on 60,168 accounts, as of April 2026, despite nearly $62 million in write-offs. Almost a quarter of active accounts are delinquent, shifting the financial burden to customers who do pay. Most of the delinquent accounts are residential, likely because most accounts are residential. Although the department has increased
shutoffs, more strenuous efforts are needed to improve collections.
Watershed Management has improved the frequency of write-offs since our last audit. Although writing off uncollectible amounts clarifies how much the department expects to collect, an earlier and more robust collections process could lessen the department’s reliance on the write-off process. Only inactive accounts can be written off and 30% of accounts with a delinquent balance were
inactive, as of April 2026. The department considers any delinquency 90 days or older to be 95% unrecoverable, which as of March 2026, was nearly $200 million. Earlier and more aggressive collection efforts could improve recovery.
We also found that only a small number of the department’s delinquent customers are on payment plans, and more than half of these customers did not comply with the agreed-upon payment terms.