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Archive for Wednesday, June 20, 2012

City says it underbilled two Lawrence golf courses by $325,000, seeks settlement

June 20, 2012

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Here’s betting you haven’t lost this much money on a local golf course.

City of Lawrence officials are contending a multi-year, meter-reading mix-up resulted in Alvamar Country Club and the Lawrence Country Club being underbilled for water usage to the tune of $325,000.

City Manager David Corliss confirmed Wednesday the city has begun working to collect the amounts that the city did not properly bill to the golf courses. Corliss also confirmed the two country clubs disagree with the city’s new figures and the matter is in dispute.

“We’re trying to get all the facts and be fair to everyone involved,” Corliss said.

Attempts to reach representatives with the Alvamar Country Club and the Lawrence Country Club weren’t successful on Wednesday afternoon.

Corliss said city officials late last year began investigating what seemed like odd numbers being billed to the Alvamar Country Club. The club in some cases was using water at a rate that was only half of its historical average, said Ed Mullins, the city’s director of finance who oversees utility billing.

City crews began checking the meter at Alvamar and discovered there had been a breakdown in the technology that transfers the information from the digital meter to the city’s billing software. Mullins said city officials determined the proper number of digits was not being transferred into the billing system.

At that point, Corliss said he ordered a review of the meter data for the city’s largest water customers, such as Kansas University, industrial users and wholesale customers such as Baldwin City and various rural water districts.

During the course of that review, the city found a similar breakdown had occurred with the meter at the Lawrence Country Club. The city now contends Alvamar was underbilled by about $240,000 from September 2008 to October 2011. The Lawrence Country Club, the city contends, was underbilled by about $85,000 from January 2009 to September 2011.

The meters in question were special digital meters that were read using radio frequencies. City employees could drive by the meter and have the data downloaded into the city system through a radio frequency. Of the 30,000 meters operated by the city, about 2,000 are of the radio variety, Mullins said.

Mullins, though, said the two meters at the country club shared a similarity in that the meter and the transmitter were made by two different companies. That’s not the case with most of the city’s radio-operated meters. The city didn’t have an estimate of how many meters fall into that category.

Corliss said the city did not find any other meter discrepancies when it reviewed the readings from its largest customers. Mullins said the nature of the problem makes it unlikely meters of smaller users were read improperly.

Corliss said the city would work with any customer who has a concern about the accuracy of a water meter, although the technological problem hasn’t been linked to any customers being overcharged for water.

“We are more than happy to go out and talk to customers individually and show them how we can test the accuracy of their meters,” Corliss said.

Corliss said the city investigated the matter to determine if there was any sign of fraud related to the string of incorrect meter readings.

“We didn’t see anything other than it was just a technical error in the reading,” Corliss said.

Corliss said the city will continue to engage the two country clubs in discussions and try to reach a negotiated settlement. He said he likely will refer the matter to the City Commission for a decision on what type of settlement commissioners believe would be appropriate.

Comments

Currahee 2 years, 6 months ago

The city sure loves its taxes and "unpaid fees". Remember when the city was billing late fees as "adjustment fees" for the water? Seriously. Where is all this pork going to exactly?

kufan1146 2 years, 6 months ago

Sounds like the city's problem... they can't seriously say "Oh, we messed up..for four years..so you owe us hundreds of thousands of dollars!" It's not like the CC's knew and weren't reporting it. If that was the case, it would be a different story, but I think the city should have to learn from their mistakes and eat it, just like any business would.

ksjayhawk74 2 years, 6 months ago

The City should deal with Alvamar and the Lawrence Country Club the same way they deal with me; have a guy knock on their door at 9am saying that if they don't pay their past due balance, their water will get turned off.

friendlyjhawk 2 years, 6 months ago

Nice to know the city had to admit this mess up. Not a fan of ACC and LCC but if they aren't at fault and the city is, the city should take it out of the commissioners hides.

George_Braziller 2 years, 6 months ago

The commissioners don't monitor individual water bills. They only see totals provided by the city manager.

JackMcKee 2 years, 6 months ago

That's probably enough to bankrupt Alvamar. I don't think LAC is doing much better these days. The era of the country club is over.

JackMcKee 2 years, 6 months ago

maybe you missed this part, I can understand how you could have, it was the second sentence.

"The Trump Organization said it is buying Doral, which has been in bankruptcy for about a year, from Paulson & Winthrop Realty."

Topple 2 years, 6 months ago

I can't see the city demanding payment in one lump sum. If the CCs do end up paying, I'd guess they'll have a long-term payment plan set up.

JackMcKee 2 years, 6 months ago

then why do I keep getting emails begging me to join at reduced rates?

JackMcKee 2 years, 6 months ago

Alvamar has practically been giving away memberships for about 5 years.

irvan moore 2 years, 6 months ago

it seems like it will be easy for the city to make up the lost revenues, they will just raise our residential rates

James Minor 2 years, 6 months ago

Why "are Lawrence residents complaining. $365k goes toward the new CC called the police station.

gphawk89 2 years, 6 months ago

Who? That's easy. Does anyone have Westar's smart meter? Basically the same technology.

bad_dog 2 years, 6 months ago

This was a "technology" failure issue, Falsie.

Jayhawk1958 2 years, 6 months ago

Should not even have govt. Let everyone fiend for themselves!

Brandi Simpson-Glover 2 years, 6 months ago

city's problem-they messed up. they should not be able to "go back" and try to collect for their screw up. they are always coming up with bogus crap to get more money......

Scott Morgan 2 years, 6 months ago

Quarter million mistake, ummmmm wake up folks. Like the feller said, a big man would be knocking on his door for an unpaid bill 75 buck bill, yet 250K is an over-site.

vermont 2 years, 6 months ago

Wow, this is pretty incredible. What does Eagle Bend pay for their water? Do they pay at all? Snuffing out competition? Seriously, businesses unlike the city have annual budgets and and mistakes like this could be detrimental to their operations. They don't work with Taxpayer dollars! Also, I'm pretty sure these country clubs are doing okay before this HUGE mistake. The city should forgive these business that have been supporting Lawrencians for a combined 120 years.

JackMcKee 2 years, 6 months ago

Eagle Bend doesn't compete with Alvamar and LCC anymore than Mrs. E's competes with Pachamamas. Similar products, totally different experiences.

JackMcKee 2 years, 6 months ago

And Alvamar and LCC, like most country and golf clubs around the country are really struggling. The peak of the golf boom was about 10 years ago. There were a LOT of gold courses built. Golf participation was rising so there was plenty of game to go around, so to speak. Fast forward to today, after the bank crisis, layoffs, a poor economy and waning interest in the sport and the country club lifestyle in general and you have the current crisis hitting most golf clubs. Don't think Eagle Bend has been immune to the downturn, it has seem it's share of laggin rounds as well. It's a national problem. Think about it, when money is tight, what's the first thing to go? Recreation. Which is all the more reason to keep Eagle Bend going so people have an affordable place to go get some exercise and fresh air. It sure beats the heck out of riding around on an empty bus for 4 hours.

matahari 2 years, 6 months ago

ha ha hah ha! funniest thing I've read all week

softsun 2 years, 6 months ago

So they found the revenue missing from water services - When is the City and County going to begin collecting property tax on the other half of the condos in the Oread Hotel? We pay ours but some tenants do not. As the City and County seek revenue, look at the property taxes on the condos in the Oread Hotel. No, they are not under construction. Several have been lived in for over 2 years and no record of paying property tax. How ling are they going to be allowed to do this? BTW does anyone bother to pay road tax on the vehicles using compressed natural gas? What is the City saving converting vehicles to compressed natural gas when the real motive is to defeat paying road tax on this fuel. How does that scheme fill pot holes and repair roads and streets? The City is gaming the road tax loop holes just like the big business Black Hills utility company while small folks just pay the tax load and go on.

Flap Doodle 2 years, 6 months ago

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LadyJ 2 years, 6 months ago

So the companies that manufactured the meters cannot be held responsible?

racerx 2 years, 6 months ago

The story says the transmitter and receiver were made by two different companies in the case of the country clubs---not so with the other radio meters in town. The companies will say their equipment isn't guaranteed to work with equipment from another manufacturer....it's probably even noted in the purchase agreement the city signed with the companies.

gphawk89 2 years, 6 months ago

...so it's the city's responsibility because they knowingly bought incompatible equipment.

boxers_or_briefs 2 years, 6 months ago

Country Clubs. Where people who can't find friends on their own pay big money to help them find some.

boxers_or_briefs 2 years, 6 months ago

False. As a former member of LCC I have witnessed the most phony, look at how much money I have, how many friends I have, I'm better than non-members, our golf course is so much better...

There is so much back stabbing going on there that I thought I was back in high school. My 12 month membership couldn't get over fast enough.

middlemgmt 2 years, 6 months ago

I disagree. I use my membership to have a pool to take my kids too. The Lawrence public pool is disgusting. Way too many people and they close it all the time for kids pooping in the pool. So gross!

racerx 2 years, 6 months ago

Why did it take the city 4 years to notice that something was wrong? Seems to me they should be auditing the utility bills of the largest customers on an annual basis looking for just such discrepancies.

beebo 2 years, 6 months ago

In other news, Dillons has recently discovered a glitch in their scanning software that has resulted in under-charging customers for milk beginning in early 2009. Customers that have used their Dillons card and can therefore be traced for buying milk during the time period affected can expect to receive an invoice in the mail. If not paid within 30 days, Dillons will begin to deny affected customers the ability to purchase milk at their stores.

Bwahahaha

Topple 2 years, 6 months ago

Why should the city not get the money for the water?

When you participate in a transaction, you are agreeing to trade what you have for what the other party has.
If you found out that the city had been charging too much for their water and after 3 years had charged you $500 too much, I suspect you'd want that money back.
Why is it that because the city (everyone in Lawrence) who suffered, that we should just forget the whole thing? Mistakes are OK as long as they stick it to the man, otherwise GIMME MY MONEY BACK!

Richard Payton 2 years, 6 months ago

Lawrence Country Club should be using less water after the renovations in the sprinkler system installed a few years ago. The Country Club must have thought why didn't we install these earlier. Fix the mistake and move on! To request money for a reading error should be the City of Lawrence's lost for not testing the equipment or maintaining it properly.

Cant_have_it_both_ways 2 years, 6 months ago

Someone in the water department needs to be fired. There is no reason that this large of a billing error could go on for so long without someone in billing knowing about it. To bad the costs are going to be absorbed by the taxpayer. Thanks City of Lawrence. Fire someone and hire some competent people.

absolutelyridiculous 2 years, 6 months ago

Hmmm. Guess they should have kept those two meter readers on staff. Technology is a great thing but can't think for you. I hope Alvamar and LCC fight this.

Intelligent Design? Not.

Let's sit right back...

wdl 2 years, 6 months ago

As long as the CC's didn't do anything illegal in regard to this situation, the city has to eat the cost. It is completely the cities responsibilty. Their purchased technology, their equipment, their administration policies, their oversite, etc. In private industry, a company making this kind of mistake will usually have to bear the cost of their mistake.

If the meter system was incompatable with its componet's who's responsibility is it? Why didn't the city recognize the error sooner than it did either in the gallons being used or the billing amount charged to the CC's. Poor or no software to monitor these situations and/or poorly trained or incompetent personel including managment right up to the city managers office door. $325,000.00 is a lot of money, but as we all know education costs are constantly going up.

Based on past performance on the city's behalf. Why would anyone believe the new numbers that have surfaced. Where did they come from? Why are they better than the old ones. What facts went in to generate those numbers. Why do they need the money now? The city has been operating just fine for the last few years with out this revenue.

The city always has the ace in the hole. The wrench to the meter. Some one should file something legal to stop city government from shutting off the water as a means choking the bucks out the CC's. This needs to be settled in court. I have no affilation with either of the CC's and never have had and don't care if the float or sink, but I don't think it is fair to go after them and hold them hostage for something they had nothing to do with.

Did the CC's recognize they were getting a deal on the water. Who knows. The city made the abitrary decision to switch to a new bigger, smarter technology. Who wants to second guess that. What good would it have done. My vote is the city gets to eat the whole nut.

ravenjayhawk 2 years, 6 months ago

same story as Lew Perkins. No one knew about the ticket problem, either ? ?? Whoever was in charge should be somewhat responsible Maybe some government cut backs would help.

tomatogrower 2 years, 6 months ago

So would you say this if it was a private company who made the mistake?

curmudgeon 2 years, 6 months ago

I'm sure the golf courses can afford it but since it's the city's mistake, they should just have to eat those losses. I wouldn't want them to make similar mistakes on my bill and then make me suffer for it later.

camper 2 years, 6 months ago

It looks like a electronic transmitter using radio frequencies is used to download the data to the billing system.......and it failed.

See this all the time. Fancy software and computer applications that require a lot of cost to set up, a lot of maintenance and updates, and a distruption of operations. I gaurantee the cost of having a person step out of their car and manually take the reading (or even loading it into a hand-held device) would have been better in this case.....especially for such large accounts. I think there also might not have been enough analysis of billing. A regular review of top accounts should be reviewed frequently and if there are variances, they should be looked into in a timely manner.

JackMcKee 2 years, 6 months ago

Good to know, autie. Eagle Bend is a pretty decent golf course as well, but it's definitely not similar to the rounds of golf played at the clubs. A good course, just a different type of play.

Jonathan Kealing 2 years, 6 months ago

When I lived in Lawrence, Black Hills Energy failed to bill me for any actual gas usage one winter. But I kept getting a bill with customer charges and fees and whatnot, so I didn't notice at first. Probably should have realized it sooner, but I was a college kid at the time. When I did notice, I let them know and wound up getting a bill for about $300 in back gas bills. Black Hills was "gracious" enough to let me pay that over six months without penalty. That wasn't my fault, but Black Hills expected me to pay if I wanted to continue getting gas from them. I assure you — I did.

beebo 2 years, 6 months ago

Hey Alvamar/LCC: Just dig your own wells.....they're about $9000 each.

innerpeace 2 years, 6 months ago

This may be a silly question but now that the city has identified the meter problem, and realize some of their customers were being underbilled, will the city still need a proposed four percent water and sewage rate increase?

workinghard 2 years, 6 months ago

Guess what, the same kind of mistake happened with Westar's new meters, only they overcharged. They insist that is not possible but it happened to multiple households in the same area. They refuse to even check it out. It happened the month they were installed. Either the readings were entered in wrong from the old meter to the new ones or there was some other glitch. This involved a large area with a lot of apartments and homes so we're talking a lot of money.

JackMcKee 2 years, 6 months ago

They are both contractually obligated to pay the correct bills. They are charged $x per gallon of water used and they have used Y gallons of water. There is no dispute over the contractual terms for the club's water usage rates or amount of water used. The only dispute is over an incorrect bill, which has now been corrected. If the City had overcharged for water usage, the clubs would be entitled to a refund under the same analysis.

pace 2 years, 6 months ago

Golf is a sin. People shouldn't play golf, the city should not be in the business of encouraging sin.

Bob Forer 2 years, 6 months ago

The legal issues are cut and dry. If the golf courses were in fact undercharged, the city is entitled to payment under the legal theory of quantum meruit. However, if the city were forced to initiate suit, they could probably only recover the undercharged amounts for the preceding two years prior to the date of filing suit, unless the city had a written contract with the courses, in which case the statute of limitations period would be five years.

Before negotiations proceed further, the city should take immediate action and file a law suit, as every month of delay results in a month's worth of undercharges lost because of the statute of limitations. Once the law suit is filed, then in negotiations, the city should demand the same amount they would be expected to recover in the suit. Presuming the city has legal counsel on staff to handle the matter, they would have no lawyer fees but the courses would probably be paying an attorney around $175.00 per hour.

That will be five cents, please, Mr. Corliss.

JackMcKee 2 years, 6 months ago

This is actually a really interesting legal question. Quantum meruit doesn't apply here because there is an express agreement between the parties. The golf courses are contractually obligated to pay the City $x for Y gallons of water. I don't think the incorrect invoices can be construed as a modification to the original contract.

JackMcKee 2 years, 6 months ago

but I believe you are correct on the statute of limitations issue being a primary concern. I don't know if there is a special law in Kansas related to the SOL for debts to a government entity, like there are in some jurisdictions.

Katara 2 years, 6 months ago

From what I understand the statute of limitations is 5 years in regards to utility billing.

Patricia Davis 2 years, 6 months ago

Why Jack McKee and TheSychophant, I do believe your law degrees are showing or at least a loving bond with Black's Law Dictionary. I'm married to a lawyer. It's amazing how many times these Latin phrases pop up. Being an old English major, I'm charmed by words. Being a gardener who pays up the whazzooo in summer and am praying to get through this drought without rationing, I'm most curious to see how this legal flapdoodle plays out.

JackMcKee 2 years, 6 months ago

"I'm married to a lawyer."

My most sincere condolences.

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