8/5/2011Desperate Photo Enforcement Firms Sue Cities
Photo radar companies go after municipal clients in Arizona and California to bring in more revenue.
Companies that operate red light cameras and speed cameras are facing increasing opposition across the country. In response, the firms have adopted a strategy of suing cities that have second thoughts about continuing to use cameras in their community. They have also been going after their own customers to collect as much revenue as possible.
On December 1, Redflex filed suit against Tempe, Arizona in Maricopa county Superior Court claiming the city owed $1.3 million in per-ticket fees for each driver mailed a photo ticket who decided to go to traffic school. The city claims it only collected $1.8 million in revenue from the program, mostly because last year's payment rate was just 31 percent. Drivers realize in increasing numbers that tickets in the state can be ignored unless they are properly served.
City officials reacted angrily to the Redflex move. On July 19, the photo ticketing operation was shutdown after a 4-3 city council vote earlier that month refused to renew the contract with Redflex. The company explained its hardball tactics in a February 25 report to shareholders on the Australian Securities Exchange.
"As a result of the macro economic challenges facing the US market throughout 2010, and the current politically challenging times, new contract executions have declined," the Redflex report stated. "This financial year, Redflex has focused its efforts on strengthening its business model through tighter contract language, (and) more aggressive collection efforts in key markets."
The main competitor to Redflex, American Traffic Solutions (ATS), has likewise been feeling the marketplace squeeze. Most recently, Los Angeles, California just terminated its red light camera program, costing the company millions. ATS lashed out at San Bernardino after its city council voted unanimously in March to cancel its photo ticketing contract with ATS before the 2014 expiration date. In an April letter, Police Chief Keith L. Kilmer offered to pay ATS CEO James Tuton $175,000 in accordance with Section 4.4 of the contract governing cancellation fees. ATS insisted that it will not allow San Bernardino to get out of the contract.
"The termination/cancellation fee is inapplicable here because Section 4.4 specifically provides for a termination and cancellation fee only 'in the event of termination due to a breach by the municipality,'" ATS attorney Vanessa Soriano Power wrote in a May 4 letter to the city. "Thus, Section 4.4 applies only where ATS elects to terminate the agreement."
ATS insists that San Bernardino must pay $1,896,202.05 to end photo ticketing.