Sunday, June 07, 2015

Turns out there's a lot of money to be made in tax farming

Who knew?
In total, Archon’s billings from June 2014 through January — eight months — came to about $3.15 million.

By comparison, the city paid the previous contractor, Strategic Alliance Partners, about $3.3 million for the same service over a period of 19 months.

Over that time, SAP charged an average of $175,000 to collect $1.8 million each month, The Lens determined. On a monthly basis, Archon’s total charges, including the additional, unexplained items, are more than double SAP’s charges: about $394,000 per month.

While Archon’s base fee works out to 7 percent of its total tax collections, the figure shoots up to 25 percent when everything charged by the company each month is included. The city’s contract with SAP, which Quatrevaux said was a bad deal, called for fees of 9.5 percent.

In his 2013 report, Quatrevaux concluded that the work for which the city paid SAP $3.3 million was worth less than $300,000.

SAP was closely connected to Archon. SAP used Archon as a subcontractor, and Archon’s CEO was a founder of SAP.
Don't like the collections contract? Fine we'll just draw up a more expensive one with pretty much the same company. At least, that's what that looks like.  It's hard to get a grip on any of this. Especially when the city doesn't provide records when the reporters ask for them.
It’s unclear precisely what services are covered by the fees on Archon’s invoices. The firm has a separate contract with the city to conduct a large auction of delinquent properties that the city has been unable to offload at tax sales. But the fees do not appear to be related to the auction. The auction process began in March, and the invoices for tax-collection records the city provided to The Lens run only through February.

Each invoice is just a few lines long and lists three charges, including a “collection fee.” The two other charges are labeled “tax code 51”and “tax code 66.” Those two charges make up more than two-thirds of Archon’s billings.

City officials did not respond to a request to explain those charges.

Archon is required to submit detailed monthly activity reports to the city. The Lens requested them on May 20; the city has not provided them.
And the judge says they don't really have to

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