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Council seeks more data before extending collections contract after $13.7M reported recovered
Summary
The Department of Appeals and Hearings reported its collections contractor has recovered about $13.7 million since contract placements in March 2022. Council members asked for a detailed breakdown of collections, fees paid to the vendor, and the program’s impact on residential owners and seniors and voted to bring the contract back in one week.
Detroit — The City of Detroit’s Department of Appeals and Hearings told the council that a collections vendor placed on the department’s files has recovered roughly $13,700,000 since placements began in March 2022, but council members asked for a line-by-line accounting of what was collected, what the vendor was paid and how funds are returned to the city’s general fund.
"Over the course of this contract ... since the placements were made in March of 2022, this vendor has collected over $13,700,000 on behalf of the city," Director Julianne Pastrill told the Committee of the Whole, urging the council to extend the contract for another year while staff compiles a detailed report.
Committee members pressed for transparency on where recovered funds are held and how much of the recovered principal the vendor retains under the contract. Pastrill described the agreement as contingency-based and gave the contract's fee tiers on the record: the vendor retains 10% for files placed within six months of judgment, 25% for files placed more than six months after judgment, and 30% for amounts resulting from Third Circuit garnishments, because the vendor files garnishments on behalf of the city.
Council member Angela Whitfield Callaway asked specifically where the $13.7 million was recorded in city accounts; Pastrill said recovered funds are returned to the general fund and that the department would provide an itemized breakdown in writing. Callaway also asked for a residential/commercial split and the share of collections that were retained by the vendor. She said she wanted an accounting of outstanding balances in 2021 through 2025 and details of vendor payments; the committee voted to bring the item back in one week to receive that report.
Members raised constituent-focused concerns about garnishments affecting seniors and low-income residents. Pastrill said DAH can waive fines in limited circumstances for owner-occupied, low-income properties but that state-imposed assessment fees (the remittance to Michigan) are not waivable by DAH. She also described process protections: a default judgment may be set aside within 21 days and there are opportunities to adjourn a hearing before adjudication.
Why it matters: The collections vendor handles monies tied to blight, demolition and other municipal judgments. Council members sought data to evaluate whether the contingency-fee arrangement is producing net benefit to the city and to check potential negative effects on vulnerable residents.
What happens next: The department will provide a written, itemized report showing amounts placed, amounts collected, vendor payments, and a residential/commercial breakdown; the committee will revisit the contract in one week.
