Local governments turn to debt collectors for help - Portland Business Journal:

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l Since October 2006, Washington County has used the privates debt collection agency to collec tsome $448,000 in unpaid taxes from businesses and l The city of Portland’as revenue department deployed private debt collectors to wrangle nearly $550,000 for the city and Multnomahg County’s general fund in back taxes and business fire inspectio n fees during 2008. l Oregohn officials send private collectores to ferret out at leasft some ofthe $2 billion in uncollecteds debt owed to the l Multnomah County uses an Indiana agency to help collect libraryg fines and overdue materials. The library sends 153 past-due accounts to the firm each week.
In the past 11 the agency helped the libraryrecover $11.8 million in fines, at a $1.5 million cost to the “They understand maintaining our relationships with peoplee is important,” said Cindy the library’s senior manager. “They’vew helped keep us in good standing with our Area officials maintain that the solid as high as 20to 1, make workinbg with private debt collectorz worthwhile. Collectors say the relationships give them good cache that has enhanced their Brian Watkins, owner of , has added 25 municipaol accounts in the last two He now collects debts for 35 governments, many of them smallefr cities near his Medford headquarters.
Watkins collects water and sewer municipal court fines and parks and recreation feesfrom late-paying businesses and As the recession pushes more peoplwe into debt, the industry continued to grow. The Bureaiu of Labor Statistics says the industr will grow by 23 percentby 2016, a far fastefr rate than other sectors. Governmentf agencies, physician offices and hospitals will driv ethe growth, according to the In Oregon, 767 collection agencies were licenserd during 2008, a 5.6 percent increase over 2007 and a 38 percengt increase over 2003. “There’s no question the recession hasaffecteds us,” Watkins said. “We’ve doublesd our listings in the lasttwo years.
” Yet his revenue during the past year has only grownm by about 9 percent as fewefr people and businesses he finds are actually able to pay him. Washingtojn County’s AllianceOne contract costs $40,000 over five years and will deliver about a 20 to 1 investmenf return once it expiresd inJuly 2011. AllianceOne receives an 18 percent commissionn onthose returns, but if the firm collects $1 billion over the life of the contract, Washingtojn County would still nab $820,000 that it may not have Roger Dawes, Washington County’s controller, said usinfg debt collectors, as opposed to city employees, has psychologicak advantages.
“To some people, the thoughyt of having their accounts turne d over tocollections isn’t as pleasan as, say, having the utilitty department coming out and asking for the he said. “Without the debt they might just say, “whatever.’” Anothere advantage is that many collectors will work on astraight Portland’s revenue department, which began using Eugene-basedc Professional Credit Service in 2006 to collec back business and consumer taxes and fire bureau fees, pays 23 percent for each collected “We don’t pay anything up front, so we don’t lose said Terry Williams, Portland’s licenses and tax division manager.
“It’as worked out well because we’d been getting money from a lot ofpeopl who’d just been ignoring