City looks at new system for collections

In an effort to collect more revenue that is owed to the city, the Richmond Finance Committee will recommend to enter a contract with Collect-Tek for service.
City Collector Marilyn O’Dell said she had no plans on seeking an agreement with any kind of collection agency based on her past experiences with another collector.
She said the difference between Collect-Tek and the other company is the fee structure. THe old system took 35 percent of the debt right off the top whether the city collected the money or not. In addition, she said the other company might have collected six debts out of about 150 that were collected over a two-year period. The city collected the remaining balance.
Last year the City Council passed an ordinance that attached city debt to water services. In order to get water services turned on, the resident has to pay the past due debt. O’Dell said the ordinance so far has proven to be effective for people who live inside Richmond but not for many of the debts outside of the city, including renters who run off and stick the landlords with the bill.
“That only grabs the ones that live in town. It does nothing for those we know live right outside of town,” O’Dell said.
Collect-Tek works for a flat fee up front. The city would pay the company $3,375 to collect 250 debts or $13.50 a collection. The company guarantees the city four times the return on their money. If they fail to collect four times the investment, the company will pay Richmond $15,000.
O’Dell said she checked references and got high remarks from Lexington and Kearney.
“Both of them sang their praises,” O’Dell said.
In addition, O’Dell said the company can collect demo leans, which the city currently has at least eight, according to her.
“If they collected one of those, it would more than pay for itself,” she added.
The council will consider the contract next Wednesday, Feb. 25.
City Finance Director Melanie Allwood said the funds would have to come from contract services. She said the fund is more than 33 percent depleted to this point in the year, but any returns from collections would alleviate any concerns.

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