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City to get tough on debt collections

This is a no-brainer.

The city is getting tough on users of its services who have racked up nearly $1 billion in unpaid fines and fees, unveiling an aggressive collection program that is expected to make frequent use of litigation.

Parking ticket scofflaws, building code violators, and anyone who has ridden in a city ambulance and not paid should expect to get a testy letter demanding payment within the next month, and perhaps even a lawsuit, city officials said Wednesday. A driver who has not paid parking tickets may find his vehicle booted at the airport. Applicants for a permit may be rejected if they have a long overdue water bill. Unpaid debts will be referred to collection agencies and credit bureaus will be contacted, Mayor Annise Parker said.

“We cannot afford to leave any money out on the table, so we’re going to go out and collect it,” Parker said.

The only question I have is why haven’t we done this before now?

City Attorney David Feldman, who spearheaded the city’s Collections Task Force, said the key to increasing the city’s collections is filing suit.

“It’s all about leverage,” he said. “The leverage we have to put into the system that hasn’t been there before is the threat of litigation.”

Feldman said Houston is the only major city in America that does not have a centralized collection system. Six contractors collect fines, fees and overdue bills issued by 13 different city departments. In many cases, one department is not aware of the collections efforts of another, Feldman said.

“We are all over the map,” he said. “If we could bring this together, we can do a much, much better job.”

You can see a presentation of Feldman’s report to the city here. This is exactly the sort of project that I expected from the Parker administration. I look forward to seeing what kind of result they get from it.

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  1. Al Clarke says:

    The City has no centralized system to identify debtors and has 6 different contractors involved in collection efforts for 13 departments. Sure sounds like an opportunity to reduce costs and cancel some contracts with providers. I would expect the City to be able to get a better deal with a collections firm if all the debt were packaged together for collection. This is an excellent example of the City needing to consolidate this function into a single entity and eliminate duplicity. Kudos for Mayor Parker and her administration for going after the $1 billion owed.

  2. JJ says:

    The $1 billion apparently includes brand new receivables, 30 day old stuff. You collect a high percentage of that. Bad number to use when the Mayor only promises to collect 30% of the $1b. Please give the 360-day old number and then go collect that and report on June 30. The comment “look forward to seeing result” is meaningless without parameters at the start about what you are going to measure. I heard nothing on that from the Mayor — but would love to hear from Off the Kuff if I am wrong on that.

  3. JJ – The presentation I linked to breaks them down by department and age. Here are the one year and older totals for the big three:

    Municipal courts – $242,498,397
    Administration and Regulatory Affairs – $282,926,668
    PWE – $89,590,716

    That’s quite a bit to aim for. Even getting ten percent of it would be a lot, over $60 million. So let’s use that as a baseline and see how they fare.

  4. JJMB says:

    Excellent. Do we agree to look at the June 30 report of 360-day-and-older receivables? (I don’t think we could get a report on 18 months old, which would focus on just this $613mm, which I believe is the December 31 number.)

    I am puzzled that Mayor White didn’t make any progress in this area in 6 years. And that it took the Parker Administration 13 months to notice. You don’t really have to spend more than 2 hours to pull up the 360-day accounts receivable list and see that it is a big number. I suspect the non-payment is a deeply ingrained problem relating to a socio-economic class that (1) just doesn’t interact with the government like me and you and our friends, (2) runs businesses off the books (a shoe repair place just told me this week that cash payment would mean they wouldn’t add 8.25% to my bill…), etc. Would any of us let even 2 parking tickets just sit there? I am guessing that once you clear out Hertz and the Houston Symphony and people with a River Oaks address, getting maybe 1% off the books, this problem will prove just as intractable as the White Administration found it. Those collection firms work on contingency — I find it hard to believe they just leave money on the table that is even “medium hard’ (let alone easy) to collect.

    But I’d love to see June 30 A/R over 360 for these 3 departments be down from $613mm to $429mm, the Mayor’s 30% estimate. And I’ll take your 10%, of course.

    Let’s chat again in, I think, early August, when June 30 numbers are available.

  5. I’m game. Remind me in six months and we’ll have a look.

  6. And for what it’s worth, the following hit my inbox this morning, from the Municipal Courts:

    “The City of Houston’s Police Department will be among more than 300 law enforcement jurisdictions across Texas, and 75 in the Gulf Coast region alone, that will be participating in the “2011 Great Texas Warrant Round-Up.” HPD and the Harris County Constables will join other regional participants in this statewide annual event, which officially begins Saturday, March 5, 2011, to look for individuals with outstanding warrants.”

  7. […] This post was mentioned on Twitter by George Hutchings, Bob Wiley. Bob Wiley said: City to get tough on debt collections – Off the Kuff: The city is getting tough on users of its services who hav… […]

  8. […] Last year around this time, the city announced it was “getting tough on users of its services who have racked up nearly $1 billion in unpaid fines and fees, unveiling an aggressive collection program that is expected to make frequent use of litigation.” The Chron has an update on how that is going. […]