Sandra Kacharos got the board's approval to enter a contract with Gila Corp. – doing business as Municipal Services Bureau, based in Austin, Texas – for collecting court-ordered debt and other outstanding debts owed to the county.
Kacharos told the board that the receivables with the county's quarterly debt are “growing by leaps and and bounds.”
Currently, debts owed to the Lake County Superior Court – through fines, fees and others debts – total $26 million across 29,700 accounts as of the end of February. Kacharos said a significant amount of that debt is aged beyond three years.
She said her department doesn't have the resources on its own to go after the accounts, thus the contract with Municipal Services Bureau.
Supervisor Jeff Smith said that, based on those figures, it seems worth it to put her department's resources into pursuing collections.
“We're talking a lot of money here,” he said.
Kacharos suggested they could have that discussion, but explained that her department has limitations that make pursuing debt collection on its own very difficult.
Municipal Services Bureau is profit-driven and therefore is motivated to generate the revenues, said Kacharos.
The company aggressively pursues accounts, looking for people beyond state boundaries, and using liens and credit reporting.
“There are a number of processes that they use routinely that would be new to us,” she said.
County Administrative Officer Kelly Cox said he supported Kacharos' plan to use the company.
“It's important to pursue alternatives like this at this time in particular,” he said.
He suggested that the company may be able to collect more revenue at less cost to the county. “If it's as successful as I think it's going to be, we'll pursue this even further,” he said.
Smith pointed out that there is a $3.8 million commission on that outstanding $26 million.
Cox cautioned that the company will never collect that entire amount, adding that Kacharos' department has done all it can to get the funds.
Unless they go with the company, “They're not going to be collected otherwise,” Cox said of the outstanding debt.
Kacharos said she wanted to move a sample set of 1,000 high dollar accounts to see how the company does.
One of her department's key functions is immediately interfacing with the courts to collect funds. She said they deal with the most current accounts now and after they are uncollected past four months they go to the Franchise Tax Board. But that agency doesn't go beyond state bounds, Kacharos said.
“I think this is a really good idea,” said Supervisor Jim Comstock.
Kacharos told the board during the discussion that the company has gotten high marks from other officials she's talked to, and is outcompeting other companies in offering similar services in Orange County.
Supervisor Denise Rushing asked Kacharos about the nature of the debts in question.
Kacharos said they include traffic fines and citations – mostly for misdemeanors – and aren't related to property tax.
She said her department does collect countywide debts, and about $300,000 is now outstanding, mostly for Special Districts.
Kacharos said she's trying to ascertain how much of the debt is uncollectable, which she'll find out through working with the company. She said she doesn't know how else to approach the situation other than “blitzing” it.
Supervisor Rob Brown asked if any local company offers such services. Kacharos said there is another big conglomerate with a Ukiah office, but it hasn't gotten good recommendations.
Kacharos said that once the company starts work, it has an immediate and thorough screening process, with a short duration of just a few days to get accounts set up and make a first pass at contacting those who owe debts.
“It sounds like it is the best way to go at this point, and see what comes out of it,” Smith said.
Kacharos explained that the county receives about 45 percent of what they collect, with portions going to the court, cities and the state.
The board approved the contract 5-0.
Following the meeting, Kacharos told Lake County News that there is a 15 percent commission for debt collected by the Franchise Tax Board, and a 20-percent commission for the more difficult older accounts that Municipal Services Bureau will pursue.
Of the local debts collected, 45 percent is distributed various county agencies, with 38 percent going to the state, 12 percent to the superior court, 2 percent to the city of Clearlake and less than 1 percent to the city of Lakeport, she said.
Kacharos said her department is averaging 280 new accounts a month from the court, for a value of about $200,000.
However, overall account numbers appear to be growing by far larger numbers. As of Feb. 28, the county had 29,700 accounts. By March 16, the number of accounts had grown to 31,678, with 21,768 of those from before July of 2007, Kacharos said.
Of those accounts, 8,893 have been sent to the Franchise Tax Board for collection – with a total value of $8.8 million – and 1,017 are in current status.
Board continues urgency ordinance for wastewater collection system
In other news from Tuesday's board meeting, Special Districts Administrator Mark Dellinger was ill and not present to give the board an update on the Southeast Regional Wastewater Collection System.
However, Smith reported that he and Comstock and Special Districts staff had been out to view parts of the system, which appears to be heavily impacted in inflow from wet weather.
“The systems handles everything without rain influx,” said Smith.
The board voted 5-0 to continue an urgency action establishing temporary connection restrictions to the system, which they initially passed March 2.
E-mail Elizabeth Larson at
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