With Santa Monica potentially facing a budget deficit from July 2015 onward, City Hall wants to make sure no stone is left unturned to ensure all funds owed to the City are paid.
Accordingly, the Santa Monica City Council approved July 9 the hiring of Pennsylvania-based NCO Financial Systems, Inc., a collections firm, to pursue unpaid invoices.
City Hall will pay NCO Financial a $200,000 fee as part of the two-year agreement.
“In order to ensure that the City is realizing the full revenue for fees, taxes, and fines that are due but not paid, the Finance Department [require] the use of collection agency services to assist with the collection of these delinquent debts,” City staff stated.
According to City staff, Santa Monica only contracted with a collection agency to collect unpaid parking citations and library fees; no collection agencies were retained by the City to collect other fees prior to July 9.
Vendor accounts – whether the vendor is an individual or business – are considered delinquent.
Some of the fees that would be marked for collection of delinquent: permits, police services for special events, utilities, fire inspections, contracted services, levied taxes “that benefit the community at large and are deposited into the General Fund,” and fines based upon zoning violations.
“The City is owed monies by individuals and businesses for services rendered, taxes, citations, including water, sanitation, fire and police services, recreational facilities, and business license taxes,” City staff stated. “Entering into an agreement with a collection agency would establish a consistent, citywide resource for the collection of delinquent monies due.
“Implementing collection agency services is part of a broader effort by staff to establish a uniform citywide approach for recovering delinquent debts owed to the City,” staff continued.
As it were, Santa Monica had one person on the City payroll dedicated to following up on delinquent accounts; that employee worked in the Finance Dept.
“The Finance Department does not currently have the resources to collect on the volume of various types of delinquent debt or the expertise to ensure full compliance with the various Federal and State laws governing collections,” City staff stated.
According to City staff, NCO Financial would collect a 22 percent fee of the actual revenue recovered for accounts less than six months delinquent.
For delinquent accounts referred to the courts for legal action, NCO Financial could collect as much as 30 percent of actual revenue recovered.
Even with the hiring of NCO Financial, the City employee in charge of following-up on delinquent accounts would maintain his or her position.
NCO Financial was selected in a bidding process. According to City staff, NCO Financial has worked with several municipalities across California and delivers “a high degree of customer service.”
The firm has more than 86 years of collection experience and has worked with government entities for about 40 years, according to City Staff. Though based in Pennsylvania, NCO Financial maintains an office in Sacramento, Calif.
Delinquent debt collection is “heavily regulated by State and Federal laws,” according to City staff, and must comply with several legislative acts and consumer protection laws.
The two-year contract was approved as part of the city council’s consent calendar.
One consent calendar item – the disposition of City-owned property at 1731-1733 20th Street – was tabled to a future meeting. The disposition requires five votes for approval; only four council members were in attendance.
Three council members did not attend the July 9 meeting: Gleam Davis, Bob Holbrook, and Kevin McKeown.
