Hundreds of millions in Houston city fees go unpaid

Report shows Houston owed more than half-billion dollars in unpaid fees

By Robert Arnold - Investigative Reporter

HOUSTON - From street corners, to neighborhoods, to courthouses, it takes a lot of work and money to keep Houston running.

However, Local 2 Investigates obtained a recently released report that shows Houston is owed more than half-a-billion dollars in unpaid fees the city will likely never collect.

The city supplements its revenue through a large schedule of fees. These fees include the cost of city permits, water bills, parking citations, code violations and other administrative costs.

These fees are what help pay for patching potholes, fixing sidewalks, getting our trash collected and making sure police officers and ambulances answer our calls for help.

"Property tax and sales tax alone do not cover the basic services that we provide as a city," said Kelly Dowe, Director of the city's Finance and Administration Department.

The report prepared by the Finance and Administration Department lists $302,483,464 in unpaid fees as "unrecoverable" and another $232,117,112 as "highly unlikely" to be recovered. The report also states another $173,175,398 as "potentially collectable."

Dowe said the city defines "unrecoverable" as fees owed to the city that are five years or older. "Highly unlikely" refers to those unpaid fees that are two to five years old.

"The older a debt gets the harder it is to collect," said Dowe. "You have people pass away, you have people move out of the city and you end up with very small amounts that get unprofitable to collect."

The problem of unpaid fees was inherited by Mayor Annise Parker's administration and wasn't discovered until two years ago.

At that time, the downturn in the economy caused a revenue crunch for the city and prompted Parker to examine all sources of city revenue and debt.

"With that $700,000,000 number sitting out there, it stuck out," said Dowe.

Dowe said in the past, each city department was responsible for collecting its own fees and managing the contracts of third party debt collectors hired by the city to chase down unpaid fees.

There was no one overseeing the city's entire fee collection efforts, nor were policies in place to hold third-party debt collectors to expected performance levels.

In fact, Dowe said just trying to figure out how much the city was owed was a monumental task.

"It took a good six to nine months really just to get our arms around the problem," said Dowe. "There was no single place to go to get the total amount owed to the city."

Under Parker, the Finance and Administration Department was tasked with being in charge all of the city's fee collection efforts going forward, as well as overseeing efforts to try to track down some of the old debt.

"There was no effective process in place before the changes we made," Parker wrote in a statement to Local 2. "We are doing a much better job now of managing both our internal and external collections efforts. When dollars owed the city are not paid, there is a direct impact on our ability to maintain the level of services residents have come to expect. We all wind up paying the price for those who do not meet their responsibilities."

Dowe said the city has now become more aggressive in reporting unpaid debt to credit bureaus and making sure businesses have all up-to-date permits. The City Attorney's Office is also now preparing lawsuits against those individuals and businesses with the largest amount of unpaid fees.

If you owe money to the city, you can call 311 to find out the amount and how to settle the account.

Click to view the city's entire fee schedule.

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