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debt collections

Speeding tickets and vehicle registration

I confess, I’m puzzled by this.

Municipal Court Presiding Judge Barbara Hartle has a proposal on Wednesday’s City Council agenda to sign an agreement with the Texas Department of Motor Vehicles that would have the state refuse to issue vehicle registrations to people who have outstanding traffic fines.

As proposed by Hartle, by investing about $20,000 a year into compiling lists of scofflaws and coordinating with the state, the city could reap a windfall of $432,000 a year in higher collections.

Two years ago, a similar proposal involving red-light camera runners was rebuffed by the county. City officials had proposed registration holds on red-light runners caught on camera. It required the buy-in of the county tax assessor-collector, who issues license plates and stickers. Leo Vasquez, then the tax collector, agreed to the deal and made the pitch to Commissioners Court. Because the county gets a cut of the fee when it issues a registration and would, essentially, be forfeiting revenue for cracking down on city scofflaws, Commissioners Court rejected the deal.

This time, the tax collector who would be in charge of placing the holds sits on the council, and he does not like Hartle’s plan. District E Councilman Mike Sullivan was elected tax assessor-collector this month and will leave the council in January when he is sworn in at the county.

“In my mind, it’s nothing more than an attempt to have the county collect fees and fines that the city should collect on their own,” Sullivan said. “It looks like the mayor wants to push this over to the county as another layer of enforcement to collect money for the city.”

Sullivan said he opposes the arrangement as he intends to fulfill campaign promises to shorten the lines at the tax office windows. In addition, he said he is worried that holds could mistakenly be placed on people who do not owe fines.

I understood the county not wanting to help with enforcing the collection of red light camera fines. This I have a harder time with. There’s no policy dispute about the legitimacy of the fines being imposed as there was with red light cameras. I appreciate Sullivan’s concerns about possibly ensnaring someone who doesn’t owe a fine, but surely this is a less intrusive approach than involving a collection agency or filing a lawsuit, which would be the options left to the city. This would also be by far the least expensive way to collect outstanding fines, which makes it the most efficient use of taxpayer money. I don’t get the reluctance to get involved. I note that the last time this issue came up, the ultimate decision rested with Commissioners Court, who overruled then-Tax Assessor Leo Vasquez on red light camera fine enforcement. Tax Assessor-Elect Sullivan’s disapproval may therefore not be the final word on this.

UPDATE: Today’s story, from after Council approved the plan on a 14-1 vote, adds some more detail and shows a possible path forward.

Council’s action essentially means scofflaws will not be able to renew their registrations on the DMV website. Instead, they will have to go to the window at the tax office, where tax assessor Don Sumners said he will continue to issue registrations even if the state prints the word “scofflaw” on their renewal forms.

“I don’t think they (the city) could pay us enough for the services it would cause.We don’t have enough people as it is,” Sumners said.


Sullivan said he also believes the city should not offload its collections operations onto county government. He left the door open to a deal after he is sworn in as tax assessor in January, though, if City Attorney David Feldman is the city’s broker.

“He’s apolitical,” Sullivan said. “This administration is nothing but political and has not been honest and direct and transparent with me as a council member. However, Mr. Feldman has always been fair with me in all of my dealings.”

So there you have it.

Debt collection is harder than it looks

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.

A city analysis of delinquent bills revealed that nearly 70 percent of the debt is more than 2 years old. The older a debt gets, industry experts say, the less likely it is that it will be collected. People die, move or even forget about bills past due as time goes on.

“There’s no write-off of these older debts,” Bruce Haupt, the city’s deputy assistant finance director, told the City Council’s Budget and Fiscal Affairs Committee. “It’s just in terms of setting realistic expectations of what is potentially out there to really pursue, it’s really the last two years’ worth of debt.”

According to the Finance Department, that represents about $210 million.


[T]he $295 million the city is owed in unpaid ambulance rides alone will be difficult to collect because many of the debtors are uninsured, indigent people. The city’s leverage to collect $25 million in red-light camera fines has been limited in part by the county tax assessor’s refusal to deny vehicle registration renewals to red-light scofflaws.

Finance director Kelly Dowe said he expects collections to increase as the city changes the way it evaluates its debt collectors. Currently, the city evaluates its collectors largely on how many contacts they make with debtors. Several of those collections contracts are up for renewal this year, and Dowe said the city intends to shift toward evaluating its debt collectors on how much money they brought in. The city also intends to improve its data management, Dowe said.

The city uses at least five different firms to collect bills for 13 departments. The departments’ databases are not integrated. Currently, there is no way of knowing, for example, if a delinquent property owner also has applied for a restaurant permit. The city also has stopped short of reporting many kinds of debt to credit bureaus to increase pressure on debtors.

Kind of a different tone this time around. Still, even with the reduced numbers, it’s worth the effort. If $210 million is the new target, that’s still a lot of money, and collecting even ten percent of it would make a big difference. If you look at this detailed presentation given to the city’s Budget & Fiscal Affairs Committee, you’ll see this on the Executive Summary page:

The project team is now moving into the implementation phase of the project focused on building sustainable processes to more
effectively manage collection efforts including:
1. Implementing specific activities to collect against outstanding debt
2. Implementing citywide practices that will improve the collection processes going forward including:

  1. Collection enforcement mechanisms such as Credit Bureau Reporting, Scofflaw, and Legal Action
  2. Citywide skip tracing capabilities to obtain correct contact information on City debtors
  3. Metrics for reporting on internal collections’ operations and external vendors
  4. Developing the infrastructure to support the reporting process, customer master data, and skip tracing

Implementing the above recommendations is expected to yield an incremental FY13 Budget impact of $9.3 MM
($8.6MM to General Fund).

Not too shabby. The Fiscal Responsibility page has other presentations from August through January, and I can tell you because I was looking on that page early yesterday morning for this kind of information that it was all (except for the presentation from August ) added during the day yesterday. Because none of that was there when I looked, and because the Chron story didn’t address the issue, I sent an inquiry to Finance Director Dowe to ask for a total on debt collection since this initiative was announced. Now we can see what they project, but I still can’t tell how much they’ve already taken in. I will let you know when I hear back from him.

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.