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HomeMy WebLinkAboutIR 7582 ' �^ INFORMAL REPORT TO CITY COUNCIL MEMBERS No 7582 February 11, 1992 to*,* To the Mayor and Members of the City Council X Subject: Contracting for Delinquent Tax Collections The City first contracted with the law firm of Heard, Goggan, Blair & Williams to assist in the collection of delinquent property taxes in January 1985. Subsequently two one-year renewal options were exercised extending the contract through 1987. In January 1988, a new contract (No. 16174) was negotiated and approved by M&C C-10725. A two-year renewal option was exercised by M&C C-12046 in December 1989. Under the contract, the firm maintains computer software accessible to the City staff for account maintenance, address research, prosecution, judgement collections, and foreclosure s/sei zures. The firm's delinquent collection efforts have been well-coordinated with and supportive of the City staff efforts to collect delinquent taxes. All costs of the firm's delinquent collection operations are borne by the firm, and the firm is paid on a percent of collection basis as set out in the Texas Property Tax Code. The City collects a 15% attorney's fee at the time the delinquent taxpayers pay their taxes, with interest and penalties. It is expected that $800,000 in attorney's fees will be collected and paid to Heard, Goggan, Blair & 00w Williams in FY 1992. On December 10, 1991, the City Council elected to renew the delinquent collection contract with Heard, Goggan, Blair & Williams for one-year. The staff was instructed to prepare a Request for Proposal (RFP) for delinquent tax collections and report back to the Council in 60 days as to the status of that effort. An outline of an RFP has been completed, but before proceeding with drafting an RFP for delinquent collections, the staff recommends that a decision be made as to how the City plans to continue collecting "current" property taxes. There are four alternative approaches to collecting current 1 . Continu'e handling current collections through the City's Revenue Office. The Revenue Office presently collects well over 30 different revenues, in addition to current and delinquent taxes. The collection of many of these miscellaneous revenues has been absorbed by the Revenue Office in recent years as operating departments have experienced staff cutbacks. Even if the collection of current taxes is contracted out, the Revenue Office will need to be adequately staffed to collect these miscellaneous revenues and monitor the tax collection LISSUED 13Y THE CITY MANAGER FORT WORTH, TEXAS ' INFORMAL REPORT TO CITY COUNCIL MEMBERS No.- 7582 February 11, 1992 1001, To the Mayor and Members of the City Council Page 2 of 4 Subject: Contracting for Delinquent Tax Collections (continued) Isis 2. Contract with Tarrant County to handle the City's current collections. The County has a new computerized collection system, and presently collects taxes for several municipalities and school districts within the county. The FWISD's current experience with the County needs to be studied. There are several issues, other than the cost per account, that need to be considered (e.g. timely deposits in the City's bank account, partial payments accepted by the County, etc.). 3. Contract with a private firm to handle current collections. The City's present delinquent collection contractor handles current collections for some other taxing entities and might be interested in handling the City's current collections. Again, the cost per account would be only one issue. The capability and experience of the private firm, timeliness of deposits, and the actual budgetary impact on the City would have to be considered. 4. Contract with Tarrant Appraisal District. While TAD has the legal authority under the Texas Property Tax Code to collect taxes for entities within the District, it has no present capability to do so and has indicated no interest in so doing. Due to the coordination complexities involved in the legal pursuit of a massive number of delinquent tax accounts, it is much more efficient for a single delinquent collection firm to handle the delinquent collections for all of the major overlapping taxing entities in the county. If the City should elect to contract with Tarrant County for current collections, it would probably be more effective to use the same delinquent tax collection firm as the County uses. The following activities and schedule will enable the staff to evaluate the alternatives for current collections with plenty of time before year-end to request proposals for delinquent collections: 1 . February - March • Estimate Revenue Office's cost of current/delinquent collections (i.e., personnel staff hours, cost of benefits, printing and postage, lockbox, etc.) • Determine potential budgetary savings from contracting out. L ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 7582 February 11, 1992 f op To the Mayor and Members of the City Council Page 3 of 4 Subject: Contracting for Delinquent Tax Collections (continued) • Contact School District and other taxing entities in the county to evaluate experience with County collections effort (e.g. timeliness of deposits, percent of current collection on January 31, etc.) • Contact Tarrant County for cost estimate. Assess County capability. Determine cost of County acceptance of partial payments. • Contact Heard, Goggan, Blair & Williams for cost estimate. Assess capability and experience. 2. March 31 • Staff recommendation to Council as to current collections. 3. By April 30 • Council decision on current collections. (Continue with internal collections, negotiate contract with County, negotiate contract with private firm, or send out RFP to private firms.) • If decision is to contract out current collections, begin contract negotiation with selected organization or prepare RFP for current collections. • If current collections are contracted out to County, a contract for delinquent collection should probably be negotiated with the firm doing the County's delinquent collection. • If decision is to continue with the City's Revenue Office collecting current taxes, an RFP can then be developed for delinquent collections. 4. By May 30 • Send out RFP for assistance in the collection of delinquent taxes (if Revenue Office continues to handle current collections). 5. June 30 • Receive proposals from interested firms 6. By August 30 • Evaluate proposals • Staff recommendation to Council • Council decision L ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 7582 February 11, 1992 0%f 0*r" To the Mayor and Members of the City Council Page 4 of 4 *P 140, 4, a Contracting for Delinquent Tax Collections (continued) Subject: • If a firm other than Heard, Goggan, Blair & Williams is selected, negotiate contract to begin delinquent collections with 1992 tax year. Delinquent collections from 1991 and before would continue to be handled by Heard. • If Heard, Goggan, Blair & Williams is selected to continue, renegotiate contract to reflect new proposal. Unless the Council directs otherwise, the staff will proceed to evaluate the costs/benefits of contracting out current collections and present a recommendation on or about March 31. "n I 12 . &4a-Lk David Ivory City Manager Dl:jrk:tm el -ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS