Waterford council criticised for high arrears

Waterford City and County Council has been criticised by the Local Government Audit Service (LGAS) over its finances including its high level of arrears on rates, rents, and housing loans.

A statutory annual report on the council’s finances by the local government financial watchdog revealed 211 council tenants have amassed arrears of €900,000 — an average of almost €4,300 each.

Records showed all these tenants had arrears in excess of €1,000 each at a time when they had net income of over €500 per week per household.

The LGAS also noted that no effective action had been taken by the council to address the fact that over 390 tenants had not returned any details on their income.

Waterford City and County Council has one of the lowest minimum rent charges of any of the 31 local authorities at €16-€18 per household per week. Only just over three-quarters of housing rent due was collected in 2017, with arrears rising by €400,000 to almost €3.6m.

The audit established that three separate rent schemes are operated by the council, although some had not been reviewed since 2012, while annual rent assessments had not been conducted before 2017.

The LGAS urged the council to review its operational effectiveness on rent collection as it noted payment plans to recover arrears were extending over prolonged periods. On housing loans, auditors found the top 50 borrowers had arrears of almost €1.8m — an average of €35,800.

The LGAS said €300,000 was written off by the council as uncollectable loans in 2017 which was one of the highest of any local authority. It said the council should consider an effective, centrally-managed income collection system to improve the collection of arrears which stood at €13.8m at the end of 2017, of which €8.3m related to commercial rates.

Improvement is required across all income streams,” the LGAS said. It told the council its income collection rates were “at the lower end range of the scale compared with other local authorities”.

It found the council’s net current liabilities had deteriorated during 2017 by €2.6m to almost €10.4m — a continuation of a trend which the LGAS said had been evident over recent years.

Auditors said the council had been in a permanently overdrawn position with its bank for over two years and its continued reliance on a “permanent” overdraft facility together with bridging and financing loans was “a matter for concern”.

The council’s chief executive, Michael Walsh, said 80% of tenants in arrears on their rent were in payments plans which were being proactively pushed by council officials.

“No housing services are provided to households not returning income details,” he said. “These will be reviewed and followed up.”

Mr Walsh claimed initiatives were being undertaken to address arrears on housing loans with some being restructured while other customers were being moved to the mortgage-to-rent scheme. he claimed the amount of State grant income realised on major projects such as the Waterford Greenway was “below the levels anticipated”.

Mr Walsh said the council’s investment in long-term capital projects to develop the city and county was “significant” but it aimed to manage these over an extended period and by also limiting the extent of the council’s contribution.

The LGAS said the reduction of its deficit of €7.1m must remain a key objective for the council which should consider cutting it “over a shorter time frame” than its current proposal of 30 years.