September 25, 2020

Utility Hardship Grant Program

Recommended Application.

Cities are encouraged to request their CARES Act allocation using first responder salaries. This recommendation is based upon the treasury guidelines, FAQs, and direction from the Department for Local Government. Once cities receive CARES Act funds, there will be unallocated revenue available. For claims made for salaries in FY 2019/2020, the sum will be reflected in the current FY as a carry forward amount that the legislative body must then allocate. Any monies received for salaries in FY 2020/2021 will be new unallocated revenue. Expenditures from this new revenue stream must follow allocation by the city legislative body.

Any city operating a municipal utility currently experiences significant to catastrophic revenue declines as a result of the governor’s order suspending utility cut-offs to fight the spread of the COVID-19 virus. KLC has received countless calls and emails asking for any relief to the crisis faced by municipal utilities. One mechanism to provide relief is a hardship grant program for utility customers with unpaid balances and landlords that are accountable for their tenants’ unpaid balances. A program of this type will provide for the health, safety, and welfare of citizens by paying down substantial accrued balances to afford customers a better opportunity to continue utility services when the prohibition on cut-offs lifts. Additionally, this program enables municipal utilities to reduce the amount of bad debt carried on the books to continue operations. Terms and conditions of the program must be adopted by council, but a few simple criteria can ease administration and protect the city from unintended consequences.

Any grant program must be applied to each applicant equally without consideration of factors outside of the basic grant qualifications. Capping the program at a specific budgeted amount assures that it will not linger out there on the books and cause problems for the city at a later date. Approving applicants on a first come, first serve basis removes the need for forming a committee or having an administrator tasked with determining whether applications fit a given criteria. Municipal utilities are encouraged to identify customers 90-days or more in arrears and provide notice of the program to those customers. Encouraging customers with the largest balances to apply will assist the city in reaching the most significant bills that are in arrears. It also prevents claims of unequal treatment and discrimination. Finally, requiring the applicant to provide a copy of the recent utility bill, or for a landlord notice of the overdue balances in a rental unit, and sign an acknowledgement that the city will make a direct payment to the utility will ensure that the funds are paid directly to the utility to pay down unpaid balances instead of being diverted to another source. Applicants should be limited to one application per household or per rental unit to ensure that as many people as possible are eligible to participate.

While a hardship grant program is far from a silver bullet solution to municipal utilities experiencing catastrophic revenue declines, it can provide a revenue. Particularly in cities in which landlords are responsible for tenant past due bills because the landlords have additional incentive to apply for the grant. Until cut-offs during the state of emergency lifts, municipal utilities will continue to struggle. KLC continues to work on solutions for your city.