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Board authorizes outside collections contractor to pursue unsecured property-tax arrears; staff cite $6.8 million backlog
Summary
The board approved an agreement with American Financial Credit Services, Inc. to pursue unsecured delinquent property taxes after staff said unsecured delinquencies total about $6.8 million and the county lacks capacity to work the backlog in-house.
The Lake County Board of Supervisors on May 20 voted to hire American Financial Credit Services, Inc. (AFCS) to pursue collection of unsecured delinquent property taxes. The board also voted to waive formal bidding under Lake County Code §38.2 on the grounds the services are specialized and time-sensitive.
Treasurer-Tax Collector Patrick Sullivan told the board the county’s unsecured delinquency rate is about 15 percent and the current backlog of unsecured delinquent accounts totals roughly $6.8 million. Sullivan said the county receives approximately $300,000 per year that goes uncollected on unsecured obligations and that current staffing shortages make it infeasible for the Treasurer’s Office to clear the backlog.
Sullivan said the AFCS contract is structured so the county does not pay a fee out of county funds; rather the vendor adds a collection fee (described in staff comments as roughly 25 percent) to the delinquent taxpayer’s balance and collects on the entire amount. "The county is not actually paying a fee on this," Sullivan said. "The county would still be receiving the full amount, but...there's a 25% fee added onto it that the vendor is then gonna collect along with what's owed to us."
Board members asked about the potential impact on businesses and the county’s ability to allow payment plans. Sullivan and county staff said there is discretion in how aggressively to pursue older debts and that for higher-value or older accounts staff will consider holding them for additional review rather than immediate referral. The board discussed balancing collection with flexibility and the practical aim of recovering revenue and putting delinquent accounts on a payment plan where appropriate.
Why it matters: Engaging an outside collector is intended to recover revenue for the county and to address a long-standing backlog of unsecured tax accounts. The vendor model shifts collection fees to the delinquent taxpayer rather than to county budgets, but board members raised concerns about the hardship of retroactive collection for businesses and the need for staff discretion in payment arrangements.
Action taken: The board approved both a waiver of the formal bidding process under Lake County Code §38.2 and the agreement with AFCS; the motions carried unanimously.
Next steps: The Treasurer’s Office will provide the unsecured list to AFCS and work with the vendor to prioritize recent and collectible accounts and to establish parameters for payment plans and collection tactics. Staff said they will coordinate with affected stakeholders and report back as collections proceed.
