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Itasca board adopts collection fee ordinance and approves contract with Municipal Collection Services LLC
Summary
Trustees approved an ordinance creating Chapter 37 (collection services and fees), permitting a 35% surcharge for accounts sent to collections, and approved a resolution to contract with Municipal Collection Services LLC; staff said the agency typically charges about 26% and the agreement term is under review
The Village of Itasca Board on Sept. 2 adopted a new municipal code chapter to permit assessment of a collection fee for accounts turned over to third‑party collectors and approved a contract with Municipal Collection Services LLC to perform collections for the village.
Trustee Powers presented two linked items: an ordinance to add Chapter 37 to the Itasca Municipal Code allowing assessment of a surcharge of up to 35% on accounts placed with a third‑party collector, and a resolution to execute a contract with Municipal Collection Services LLC. Powers told the board the collection agency typically retains just under 26% of amounts collected; the ordinance’s 35% surcharge is intended to allow the village to pass collection costs to the debtor while covering agency fees and administrative costs.
Powers and staff described the village’s prior experience with a collection agency roughly four to five years ago that ended contentiously, after which the village brought collections in‑house. Staff said outstanding collectible debt at any given time may be in the tens of thousands of dollars and that there is growth potential once additional adjudication and final water bills are referred. Staff told trustees the contract includes options and limitations: the village will control which debts are referred, can decline settlements below a threshold (staff noted a floor for settlements at 50% or more for collections), and that the contract’s initial term in the draft is 36 months but village counsel recommended attempting to reduce that initial term before final execution.
Board members asked about the agency’s collection tactics, success rate and client base. Powers said the village evaluated multiple vendors and chose Municipal Collection Services LLC based on client reviews and longevity; staff agreed to obtain additional collection‑rate statistics for trustees. The board passed both the ordinance and the resolution by roll call vote.
Why it matters: Authorizing a collection fee and outsourcing collections changes how outstanding municipal debts (water bills, parking citations, administrative fees) are pursued and how costs may be allocated to debtors. The change may affect nonresidents in particular, for whom municipal leverage options (like utility shutoffs) are limited.
Next steps: Staff will attempt to negotiate a shorter initial contract term and will decide which debts to refer to the vendor; the village retains discretion over referrals and settlement acceptance.
