Every time the city has managed to get a property owner to pay late taxes, Schenectady has written a check to Tower Capital Management.
The company was guaranteed a commission on all delinquent taxes when it agreed to chase down delinquent taxpayers and try to get them to pay. But the contract was written in such a way that if the city intensified its efforts, Tower would still benefit.
This year, the company will get $600,000 from Schenectady, mostly because the city managed to collect so much more in taxes through the threat of foreclosure.
As a result, Finance Commissioner Ismat Alam asked the City Council to terminate the contract with Tower.
According to the contract, the earliest the city can stop paying Tower will be Jan. 31.
Councilman Carl Erikson said he wasn’t happy with the way the contract was written.
“We pay them for anything that’s collected, even if we did the work,” he said. “The way it was set up maybe wasn’t ideal.”
And he’s sure the city can duplicate Tower’s work for much less.
“They weren’t doing the hardcore collections. They’re sending out letters,” he said. “I think that anybody could do that. If that’s 99 percent of the work, I think it’s very likely we’ll be able to do it more efficiently.”
But he wants city workers to stay within the bounds of decency when they try to collect.
“Normal debt collectors can engage in practices I don’t think are right for the city,” he said.
Instead of harassment, he said, the message should be: “If you don’t pay, we foreclose.
“Simple, clean and professional,” he said.
City staffers are trying to develop a profile of the average late-payer so they can develop techniques to “motivate” that person to pay, Mayor Gary McCarthy said.
“The problem the city has is revenue collection. We don’t need to raise taxes. We’ve got to get people to pay what they owe us,” he said.
While foreclosure has eliminated many nonpaying owners, McCarthy thinks other techniques would get late-payers to pay on time.
“There’s a difference between the late-payers and the nonpayers,” he said. “How do we change our message to get people to take the payment of taxes more seriously?”
In particular, he wants to get owner-occupants to pay regularly so they do not face foreclosure.
“We want to work with them the most because they create the most value,” he said, referring to the stability that owner-occupants are believed to bring to a neighborhood.
As for those who only pay every two years, after they get a foreclosure notice, McCarthy said, it would be useful to at least know that’s when they will pay.
“At least then you can make some budgetary decisions,” he said.
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