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MEMORANDUM
March 14, 2006
TO: Shana Yelverton, City Manager
FROM: Sharen Jackson, Finance Director
SUBJECT: Ordinance No. 893, 2nd Reading, Establishing an additional penalty on Ad
Valorem personal property taxes which remain delinquent for more than 60 days
after February 1 of any year
Action Requested: Approval of Ordinance No. 893.
Background
Information: Approval of the ordinance does two things, First, it changes the date on which
a penalty is first imposed to compensate the collection attorney for delinquent
taxes on personal property as permitted by state law. Second, it increases the
penalty to compensate the collection attorney from 15% to 20 %, to bring
Southlake in line with other cities in Tarrant County and the state. This
increase is being requested by the attorney for the following reasons:
• Seventy - Seventh Legislatures passed HB 490 on May 15, 2001,
allowing the additional collection penalty (attorney fees) for
delinquent tax collection to be increased from 15% to 20 %.
• The additional penalty has been 15% for the past 23 years, and is
now being increased to 20% as a "cost of living" increase.
• Most of the other cities in Tarrant County have adopted this
increase, and the change will bring Southlake in line with other
cities using Tarrant County as their tax collector.
• if approved, the farm requests that the City of Southlake approve
and execute an amendment to the current delinquent tax contract
with Taylor, Olson, Adkins, Sralla & Elam, L.L.F. The required
Pass - Through Notice to notify delinquent taxpayers of the adopted
change will be sent by Tarrant County.
• This amendment would not have any financial impact on the City,
as the additional penalty is paid by the delinquent taxpayer. All
costs for delinquent tax collections are bonne by the law firm,
resulting in a "cost free" collection program for the City.
• Taxpayers have multiple opportunities to pay their tax bill without
incurring any additional penalty. While our collection program
emphasizes full payment, the attorneys work with the elderly,
hardship cases and taxpayers that require payment arrangements to
pay off debt over time,
Shana Yelverton, City Manager
March 14, 2006
Financial
Considerations: None -there is not a cost to the city for this amendment.
Citizen Input/
Board Review: Public hearing is scheduled for March 21, 2006,
Legal Review: The city attorney prepared the ordinance.
Alternatives: Approve or deny.
Supporting
Documents: Ordinance No. 893,
Staff
Recommendation: Approve Ordinance No. 893.
ORDINANCE NO.
AN ORDINANCE OF THE CITY OF SOUTHLAKE ESTABLISHING AN
ADDITIONAL PENALTY ON AD VALOREM PERSONAL PROPERTY
TAXES WHICH REMAIN DELINQUENT FOR MORE THAN 60 DAYS
AFTER FEBRUARY 1 OF ANY YEAR AND ESTABLISHING SUCH
PENALTY AND DATE OF IMPOSITION ON OTHER DELINQUENT AD
VALOREM TAXES; PROVIDING A REPEALER CLAUSE; PROVIDING
FOR PUBLICATION IN THE OFFICIAL NEWSPAPER; AND PROVIDING
AN EFFECTIVE DATE.
WHEREAS, the City of Southlake, Texas is a home rule city acting under its charter
adopted by the electorate pursuant to Article XI, Section 5 of the Texas Constitution and
Chapter 9 of the Local Government Code; and
WHEREAS, the 79" Legislature in 2005 added a new §33.11 to the Texas Tax
Code authorizing governing bodies of taxing units which have contracted with an attorney
under §6,30 of such code for the collection of delinquent personal property taxes before
July 1 of the year in which such taxes become delinquent and which remain delinquent for
60 days thereafter to impose a penalty to defray collection costs; and
WHEREAS, the 77" Legislature in 2001 passed H.B. 490 allowing the additional
penalty for delinquent tax collection to be increased from 15% to 20 %; and
WHEREAS, the City has contracted with an attorney for the collection of such
delinquent taxes.
NOW THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF
SOUTHLAKE, TEXAS:
SECTION 1.
To defray the cost of collection of delinquent ad valorem taxes pursuant to §6,30,
Texas Tax Code, such taxes which become delinquent on or after February 1 of a year
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shall incur a penalty of 20% of the amount of taxes, penalty and interest due on the dates
set forth below:
(1) For delinquent personal property ad valorem taxes for the years 2005 and
thereafter, such penalty is imposed as provided by §33.11 Texas Tax Code
after the tax remains delinquent on the 60" day after February 1 of such
year;
(2) For taxes which become delinquent under §§ 26.07(f), 26.15(e), 31.03.
31 031, 3 or 31,04, Texas Tax Code, such penalty is imposed on June
1 of the year such taxes become delinquent as provided by §33.08, Texas
Tax Code;
(3) For all other ad valorem taxes, such penalty is imposed on such taxes that
became delinquent before May 1 and remain delinquent on July 1 of the year
- they become delinquent as authorized by §33.07, Texas Tax Code.
SECTION 2.
This ordinance replaces earlier ordinances establishing penalties to offset the cast
of tax collection, but such ordinances shall remain in effect insofar as they establish such
penalties for tax years prior to the date of this ordinance,
SECTION 3.
The City Secretary of the City of Southlake is hereby directed to publish the
proposed ordinance or its caption and penalty together with a notice setting out the time
and place for a public hearing thereon at least ten (10) days before the second reading of
this ordinance, and if this ordinance provides for the imposition of any penalty, fine or
forfeiture for any violation of any of its provisions, then the City Secretary shall additionally
publish this ordinance in the official City newspaper one time within ten days after passage
WASouthlahelordlnances\Tax Ordinance\Tax collection penalty wpd (OV33106) page 2
of this ordinance, as required by Section 3.13 of the Charter of the City of Southlake.
SECTION 4.
This ordinance shall be in full force and effect from and after its passage and
publication as required by law, and it is so ordained.
PASSED AND APPROVED ON FIRST READING ON THIS DAY OF
_
' 2006.
MAYOR
ATTEST:
CITY SECRETARY
PASSED AND APPROVED ON SECOND READING ON THIS DAY OF
2006. THIS,—,—
MAYOR
ATTEST:
CITY SECRETARY
EFFECTIVE:
APPROVED AS TO FORM AND LEGALITY:
City Attorney
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