Last September, Manassas's personal property tax bills were late. Then the real estate tax bills were delayed in November. And last month, city officials learned that this year's personal property tax bills will be sent out two months late. Each time, Manassas officials have blamed HTE Inc.
What is HTE?
HTE, an Orlando-based computer software company, provides small cities with computer services to, among other things, consolidate tax systems. Manassas bought software from the company in 1997 to do just that and to make the system year-2000 ready.
The city has said in the past that the property tax problems are partly because of HTE sending vehicle decal software late. Vehicle decal fees are being sent out with personal property taxes this year.
Some city officials have commented that the software, even when it is working properly, is cumbersome. Finance Director Pat Weiler is writing a comprehensive review of the software conversion, while City Attorney Robert W. Bendall is reviewing Manassas's contract with HTE to see whether there are ways to recoup the money lost from this and previous delays.
The city is not commenting until both officials finish their reviews.
"Maybe a dozen or so other applications [HTE did for Manassas] have gone great. It just so happens that this one, which is attached to property tax, . . . has caused a problem," said Bob Gosselin, vice president of marketing at HTE.
HTE was founded in 1981 and has grown to serve about 1,600 customers nationwide. About 850 of those customers are independent cities or municipalities. The software and computer systems HTE provides are used by state and local governments, law enforcement agencies, schools and utilities. HTE advertises its services to local governments.
"We do a lot of direct marketing, mailers and go to over 100 trade shows a year," Gosselin said.
Once HTE is hired, the company sends people to train a few city employees who will be using the software and teaches those workers to train others. HTE also consults with its clients on everything from the size of the computer system they should have to the size of the space in which the system should be placed.
Sometimes, Gosselin said, HTE picks up clients because the government branch of a municipality will refer a city department to HTE for specific software.
HTE's Public Safety & Criminal Justice software handles, for example, computer-aided dispatching and mobile communications to jails, courts and emergency medical services. It also can track details in crimes and tie together the related information concerning the victim, suspect, property and evidence, according to the company.
"A lot of our customers will buy financial [software] and then a year later, we're selling on the public safety side in the same city," Gosselin said. "One side is satisfied with it and tells the other."
And most times, the customer is happy, he said. But, Gosselin said, "we have had a handful of Manassas-type situations."
He said different issues can factor in to cause a problem, including, among other things, customers who are not technologically savvy, conflicts between project managers with the city and project managers with HTE, and municipalities wanting more software than they can handle.
"A lot of times, their eyes are bigger than their stomach," Gosselin said. "They buy systems that they can't handle."
He said HTE would rather municipalities build up systems piece by piece. That way it won't overload on information and software. Continually upgrading is the key, he said.
In the Manassas case, Gosselin said, the city asked HTE to convert all of the previous tax information into the new software. That takes time, he said. And neither city nor company officials correctly estimated just how much time.
HTE was off in estimating how fast it could grow, too.
The company went public two years ago, trading on Nasdaq. Since then, and until the end of last year, HTE grew very rapidly, said Richard Jacobs, first vice president at the Philadelphia-based firm Janney, Montgomery, Scott, which took HTE public.
"They grew faster than the stated growth and expectation of 30 percent. But they kind of ran into a brick wall in December of 1998," he said.
The company reported a loss in the last quarter of 1998, mostly because it tried to grow too fast, according to Jacobs. "They saw that growth was happening and believe it would happen into the future," he said.
With that, he said, HTE hired many new employees and put them into the field, perhaps before they were ready.
The Y2K issue also has affected the company.
After the growth spurt stopped, HTE found it was stuck with "tremendous expense. The slowdown hit them between the eyes," said Jacobs. The company expected a profit at the end of last year and ended up with a pretax loss of $5.4 million, or 19 cents a share.
As a business, HTE is trying to work its way back to good standing on Wall Street, said Jacobs. "Once you have a significant problem like that, you lose credibility on Wall Street," he said.
HTE's stock closed Friday unchanged at $4.31 1/4, considerably off from its 52-week high of $17.62 1/2. The company had a profit in this year's quarter ended March 31. It reported 1998 revenue of $98.9 million and profit of $982,000, because of the $3.4 million loss in the fourth quarter.
The losses were not attributed to problems with clients, such as the ones HTE and Manassas have had.
"Any company with a lot of customers is going to have glitches. In a lot of cases, it's customer-related glitches," Jacobs said. "A lot of times, it's what that customer asks for that causes the vendor problems and therefore causes the customer problems."
When Weiler reports to the Manassas City Council in open session on Wednesday, HTE officials will be present.
"We want to get this thing done as efficiently as possible," Gosselin said. "If it takes the CEO to come up here, then . . . we'll do it."