A fight is brewing at Detroit City Hall over the mayor’s proposal to hire a California firm to collect $160 million in overdue taxes — including property, income and school taxes, plus other unpaid bills. City Council President Maryann Mahaffey’s office is raising concerns about the company, MBIA MuniServices. The company was formed in 1997 when MBIA, a mammoth municipal insurance company, bought out smaller city-tax collection agencies. Later, two of the companies were accused of highly unsavory business practices, attracting federal and local investigations into their contracting policies, donations to politicians and nonpayment of collected taxes, according to news reports. But it’s not clear whether any problems continued after MBIA purchased the companies or whether their execs survived the transition. MBIA spokespeople are working on our questions, saying they couldn’t get the info by press time and that they haven’t had such queries recently. On top of these concerns, Detroit’s own municipal lawyers are livid that the administration wants to hire an outside firm for work they feel they should be doing.
“It’s so very frustrating,” says Phil Brown, president of UAW 2211, the public attorneys’ local. He says city attorneys feel they’ve never gotten the opportunity to aggressively pursue collections. The proposed contract will allow MBIA to go after high-profile, high-dollar scofflaws, leaving the harder-to-get accounts for the city to handle. In addition, the company will keep one-third of whatever it collects. City attorneys, who’ve collected $31 million during the last four years, claim they can double or triple their collection rate if only they could have eight additional support staff, including paralegals and legal secretaries. It would save the city millions of dollars, Brown says.
Regardless, we presume it’s the quick promise of highly increased collections that is luring Mayor Kwame Kilpatrick as he stares into a glaring and growing city deficit. Mayoral reps weren’t available for comment.Send comments to [email protected]