"Caught in the Back--Tax Trap".

• Author: Schwarz, Brennan L.
• Position: Brief Article - Abstract

Kemmet, Lynndee

Governing, January 2001, pp. 44-46.

For cities struggling to make ends meet, a public-private partnership for the collection of delinquent debt may sound like an enticing arrangement. However, before local officials sign on the dotted line to get their tax-collecting woes taken care of through some form of privatization, they should read about the experiences of Waterbury and South Windsor, two cities in Connecticut that entered into a public/private partnership for the collection of delinquent debt. In this article, the author writes about the pitfalls of privatizing delinquent debt. While privatizing delinquent debt is not unusual, some localities are moving toward more sophisticated approaches that have the potential for greater rewards but expose the jurisdiction to greater risk. Sometimes, big cities bundle up their liens and have the debts sold as securities. The risk inherent in such an approach is if collections fall below...