Lake County OKs outside collection contract for $6.8 million in unsecured property tax debt

The Lake County Board of Supervisors voted to waive formal bidding and approve an agreement with American Financial Credit Services Incorporated, authorizing the treasurer–tax collector to sign a contract to collect unsecured delinquent property taxes.

County Treasurer–Tax Collector Patrick Sullivan told the board the county’s unsecured delinquency rate is about 15 percent and the current uncollected unsecured roll is roughly $6.8 million. “There’s about $300,000 a year that goes uncollected and unsecured right now,” Sullivan said, adding the county has not previously used this type of outside vendor for unsecured property-tax collections.

Sullivan said the county will first attempt in-house collection and refer cases to the vendor after internal benchmarks are met. He told the board recent staffing changes will leave the treasurer’s office with an effective 30 percent vacancy next month, limiting the office’s ability to work the existing backlog. “I don’t think we have the ability in house to work this backlog,” Sullivan said.

Under the contract structure discussed, the county does not pay the vendor a direct fee; instead, the vendor adds a collection fee to debts and collects that from delinquent taxpayers. “There’s a 25% fee added onto it that the vendor is then gonna collect along with what’s owed to us,” Sullivan said. He said the county would still receive the full amount of taxes owed.

Supervisors asked how far back the debt goes and how aggressively the county will pursue older accounts. Sullivan said some debts date to the county’s earliest electronic system, around February 2002 or 2003, and that recoverability declines with age. “Generally, anything less than 10 years old is what’s considered viable,” he said, and added that “anything over 10 is very difficult, expensive and time consuming to pursue.”

Board members also discussed flexibility for businesses facing large retroactive bills. Supervisor Sabatier urged staff to use discretion and offer payment plans where possible. “Times are hard for many of us,” Sabatier said. Sullivan and other staff described available flexibility: the county can prioritize higher-value cases for in-house review, authorize payment plans, and control whether the vendor pursues liens, bank levies or other aggressive remedies.

One supervisor argued the vendor should be allowed to collect its fee for the work it performs. The board held a public comment period for the item; no public speakers were recorded on the transcript for this item.

The board first voted to waive the formal bidding process under Lake County Code section 38.2, then voted to approve the contract with American Financial Credit Services Incorporated and authorize the treasurer–tax collector to sign. Both motions carried on voice votes. The contract will allow the treasurer’s office and the vendor to prioritize accounts, pursue payment plans, and refer accounts for stronger enforcement where necessary.

County staff said the arrangement is intended both to recover older unpaid unsecured taxes where feasible and to improve timeliness of future collections so less debt ages into probable uncollectibility.