After Searching for Those Who Owe, City of Sammamish Removes $113,309 of Debt From Books

Editor's note:  In either April or May, Peter Fung paid the $4,180 that he owed to the city of Sammamish. That amount should be subtracted from the $113,309.

It's another reminder that the aftermath of the Great Recession still lingers. It is an unpaid bill for a combined total of $113,309.

The service provider: The city of Sammamish.

The people who owe: About 30 parties, including developers, who faced financial hardship before the end of 2009 and never fully paid their fees for inspections and public reviews associated with construction. 

The City Council approved a resolution April 18 to remove $113,309 of debt from the city's financial books, following continued efforts by staff and a collection agency to contact those parties and recover the dollars.

The unpaid accounts are more than a year old and collection efforts date to around 2008.

"I would not equate this with an emergency," Lyman Howard, the city's finance director, wrote in an email. "Many businesses would consider this a cost of doing business."

While the uncollected money, he added, is a "considerable sum," it will not affect the city's budget or bond ratings. Fees will not increase because of this debt.

Compared to the city's overall two-year budget of $86 million and what developers have paid Sammamish in the past, officials said, it is a small amount.

But should those dollars never make it into a city account, Sammamish residents will be the group paying those costs. In fact, that is the case to date, Howard said.

“Our cost of providing those services to the debtors, was in fact borne by the taxpayers,” he wrote.

The largest amount of money owed to the city, out of about 30 accounts, is $67,300. City documents show that the account belongs to Cedar Cove and lists Jim Tosti as the contact person.

Sammamish Patch left a voice message for a man who goes by that name but never heard back as to whether it was the same Jim Tosti as in city records.

Sammamish resident Jim Andrews had a straightforward answer earlier this week when asked about the issue of the unpaid debt.

"It's still their responsibility to pay," he said.

One issue for the city is that some of the parties who owe money were limited liability companies - or LLCs. The owners of this type of business actually have limited personal liability when it comes to debt, according to the Internal Revenue Service. 

"With a LLC, you might be pounding sand," Andrews said. "Maybe they can make it up elsewhere in the budget."

All of the city services that still need to be paid were provided before Dec. 31, 2009. Since early last year, Sammamish has changed its rules to require larger deposits to pay for city services.

No unpaid debt has occurred since the new rules started, Howard said, adding that the city budget has contingencies to cover unexpected events.

Originally, the unpaid account balance was a total of $376,614.18, according to a city document. As of March 21, the city had collected or adjusted $214,681.31 of that amount.

The city also has a payment plan and "account under review" category, which totaled $48,623.32.

That leaves $113,309.55 in the unpaid side of the ledger.

Accounting principles say that debt needs to be removed from the financial books after the party that is owed money determines that those dollars cannot be collected, Howard said.

While the resolution passed by the Council uses the words "write off" of debts, the city still wants to be paid and is continuing to work with a collection agency. No account has been forgiven.

"The city can't 'forgive' a debt," Howard wrote. "That would be considered a gift of public funds."

The approved resolution also gives the City Manager authority to "write off" unpaid debts of $10,000 or less after "reasonable steps" have been employed to retrieve the money. 

For Sammamish resident Frank Hamm, news that people owe the city money for development-related fees did not sit well. It is the principle of the matter, he said.

"Basically, if you or I couldn’t pay our bills, they would take it away from you," he said. "It's like a vehicle payment. If you don't pay, they take your vehicle."

Pat Hamm, his mother and also a Sammamish resident, had sharp words for those who have yet to pay.

"Why should we be supporting these guys?" she said. "If they can't pay their bills, why are they doing this?"

If each Sammamish resident, as counted in 2010, had to share paying for the combined $113,309.55, it would only be about $2.48 per person.

Pat Hamm did not care about the math.

"Keep hounding the people who owe it," she said. "Don't expect the little people to pay for the big people. They should have capital."

Editor's note: This story was updated on May 18 to reflect the fact that Peter Fung has paid the money he owed the city. There was no explanation in the city document as to why some account names that are tied to businesses that exist owe money. Sammamish Patch also attempted to contact many parties on this list. There were no responses.