The Bristol Borough Water & Sewer Authority has contracted with Portnoff Law Associates to collect delinquent accounts. The announcement in June comes five months after the authority experienced public backlash for doubling its rates.
However, there is concern from people across the state about how the firm can affect municipalities and their residents.
“They’ve developed a methodology that, to say the least, is over the top,” said Bernard Rubb, an Allegheny County attorney. He was involved with one of many multi-million-dollar class action lawsuits levied against the firm over the last decade for charging exorbitant fees, and was co-counsel on a similar case in Philadelphia.
His own suit earned a guilty verdict for Portnoff and a large payoff for the plaintiffs, but was overturned by the state Supreme Court. Rubb claims Portnoff successfully lobbied to have new laws enacted retroactively that made their actions legal.
The firm collects delinquent municipal claims and real estate taxes for more than 130 municipal clients in Pennsylvania. It assesses a schedule of legal and collection fees against account holders who do not respond or pay. It can eventually have a delinquent property put up for sheriff sale.
By passing along the administrative costs to the account holders and threatening property sales, Portnoff boasts a high success rate without charging a municipality or taking a commission on money collected. That makes it attractive in a place like Bristol Borough: In January, the authority noted there were 595 accounts with delinquency, some of them nearly two decades old and 21 of them owing more than $10,000.
The authority also had 555 liens against properties at the time, for a total of nearly $1.5 million, and said generally no action is taken unless a property goes up for sale.
Representatives of the Bristol Borough Water & Sewer Authority did not respond to multiple requests to answer questions regarding its current delinquent accounts, expectations for Portnoff, or how they chose this firm.
In June, the authority authorized a resolution allowing Portnoff to charge more than $5,000 in fees by the time a house goes up for sale. The firm charges $160 to send an initial demand letter and $250 to file a lien, the first two actions it takes when they don’t receive a response to their first letter.
Those quickly-mounting fees become a problem for the many delinquent account holders who cannot pay their bills already, even if they’re able to get on a payment plan, according to Rubb. In his research and experience, most of the people who haven’t been paying their bills don’t have the money, often due to life-changing events like divorce, job loss or illness.
“They’ll tell you about (payment) programs, but a $50 bill can cost $600,” said Rubb. “If a guy doesn’t have $50, he sure as hell doesn’t have $600.”
That’s a concern residents of Penn Hills in Allegheny County experienced recently. According to articles in the Tribune Times, Portnoff was tasked with collecting delinquent accounts following problems with the previous collector, Central Taxes. There appeared to be nearly 700 delinquent accounts in a town of 4,900 people, due in part to shoddy record-keeping by Central Taxes and confusion regarding an initial quarterly bill from Portnoff that appeared to many as a duplicate of the previous bill.
“I don’t think they did anything wrong per se, but it was a unique situation,” said Samson Horne, who followed the story for the Tribune Review.
Last month, he wrote about a woman whose bill escalated as she tried for months to prove that she had paid her bills from years ago. Her initial delinquent amount of $940 ballooned to more than $4,000 and she was threatened with a sheriff’s sale.
“She was an anomaly. She had receipts going back ten or 15 years. Most people don’t keep them that long,” noted Horne. Eventually, she settled for $469.
“I don’t know if it was a coincidence, but it seemed like they didn’t take the woman seriously until the press got involved,” noted Horne.
As the cases go on, noted Rubb, it often takes months or years for a municipality to get their money, especially on a sheriff’s sale, as Portnoff pays itself back before releasing money to its clients. During that time, towns may see more blighted properties — already a problem Bristol Borough is addressing — as people lose their homes. It could also cost the municipality, county or state more money when those dislocated become eligible for public assistance or housing.
“In the long run, it could cost a municipality even more” than what is was owed, said Rubb.
In a statement to the Midweek Wire, a Portnoff representative noted that their strategy of shifting fees and costs to property owners, which follows the procedures of the Municipal Claims and Tax Liens Act of Pennsylvania, “creates immediate incentive … to make payment quickly and future incentive to pay bills on time.”
Property owners will not be charged any extra fees if they pay their obligation or enter a payment plan within thirty days of receiving an initial notice from the firm.
“Scheduled fees will be assessed only if the corresponding action is actually performed,” the statement continued.
Additionally, Portnoff makes payment plans available when a delinquent bill is more than $500, and a formal hardship program may be offered to property owners who reside at the property, as opposed to commercial accounts or investment properties.
“It is rare that properties are sold at sheriff’s sale, as most property owners take advantage of the opportunity to pay on the earlier side of the collection process to avoid paying additional fees and costs,” the statement read.