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Item 7BA.Iiy ui auutniaxe, t exas MEMORANDUM March 1, 2006 TO: Shana Yelverton, City Manager FROM: Sharen Jackson, Finance Director SUBJECT: Authorize the Mayor to enter into an amended contract with Taylor, Olson, Adkins, Sralla & Elam, L.L.P., for the collection of delinquent taxes. Action Requested: Approval of amended contract with Taylor, Olson, Adkins, Sralla & Elam, L.L.P., for the collection of delinquent taxes, Background Information: Currently, we have a contact with Taylor, Olson, Adkins, Sralla & Elam, L.L.P. for the collection of delinquent taxes. Approval of the contract amendment would only be re aired if City Council approves Ordinance No. 891 The amendment would increase the attorney fees from 15% to 20% as permitted by HB 490. This amendment would not have any financial impact on the City, as the additional penalty is paid by the delinquent taxpayer. 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 firm 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.P. 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 borne 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 1, 2006 Financial Considerations: None -there is not a cost to the city for this amendment. Citizen Input/ Board Review: None required Legal Review: The city attorney prepared the contract. Alternatives: Approve or deny. Supporting Documents: Contract for collection of Delinquent Taxes. Staff Recommendation: Approve amendment to contract. "EXHIBIT A" CONTRACT FOR THE COLLECTION OF DELINQUENT TAXES THE STATE OF TEXAS § COUNTY OF TARRANT § THIS CONTRACT is made and entered into by and between the CITY OF SOUTHLAKE, a political subdivision of the State of Texas, acting by and through its governing body, hereinafter called Taxing Authority, and TAYLOR, OLSON, ADKINS, SRALLA & ELAM, L.L.P., Fort Worth, Texas, or their duly authorized representatives, hereinafter called the Firm. Taxing Authority agrees to employ and does hereby employ the Firm to enforce by suit or otherwise the collection of all delinquent taxes, penalty and interest owing to the Taxing Authority, which the Taxing Authority's Tax Collector refers to the Firm, provided current year taxes becoming delinquent within the period of this Contract shall become subject to its terms upon the following conditions: A. Taxes that become delinquent during the term of this Contract that are not delinquent for any prior year become subject to the terms of this Contract on the 1 st day of July, of the year in which they become delinquent or for personal property taxes, the earliest date permitted by Section 33.11 of the Tax Code, if that date occurs before July 1 and B. Taxes that become delinquent during the term of this Contract on property that is delinquent for prior years shall become subject to its terms on the first day of delinquency. C. Taxing Authority reserves the right to make the final decision as to whether or not to enforce by suit any delinquent tax account turned over to the Firm for collection. The Firm is to call to the attention of the collector or other officials any errors, double assessments or other discrepancies coming Linder their observation during progress of the work and is to intervene on behalf of the Taxing Authority in all suits for taxes hereafter filed by any taxing unit on property located within its taxing jurisdiction. The Firm agrees to make progress reports to the Taxing Authority on request, and to advise the Taxing Authority of all cases where investigation reveals taxpayers to be financially unable to pay their delinquent taxes. W:1 Southlake\AgreementslDeffnquent taxes wpd (02103/06) Page 1 IV. Taxing Authority agrees to pay the Firm as compensation for services required Hereunder twenty (20 %) percent of the total amount of all delinquent taxes, penalty and interest as authorized by Section 33.01 of the Texas Property Tax Code, of the years covered by this Contract which shall be paid to the Firm in the following manner: Personal Pro ert : Twenty (20 %) percent of the total amount of all delinquent taxes, penalty and interest as authorized by Sections 33.01 and 33.11 of the Texas Property Tax Code, which are actually collected and paid to the Taxing Authority's Collector of Taxes; such compensation shall become the property of the Firm at the time such delinquent taxes, penalty and interest are actually paid to Taxing Authority's Collector of Taxes. Real Propert Twenty (20 %) percent of the total amount of all delinquent taxes, penalty and interest as authorized by Section 33.01 of the Texas Property Tax Code, which are actually collected and paid to the Taxing Authority's Collector of Taxes by the taxpayer or the result of e forced sale of such real estate; such compensation shall become the property of the Firm's at the time such delinquent taxes, penalty and interest are actually paid to the Taxing Authority's Collector of Taxes whether voluntarily by the taxpayer or from proceeds of a forced sale, whichever occurs first. Othertaxes, including current taxes, which are turned overto the Firm by the Taxing Authority's Tax Assessor - Collector because of the necessity of filing claims in Bankruptcy or for any other reason become subject to the terms of this Contract at the time they are turned over to the Firm and the Firm is entitled to twenty (20 %) percent of any amounts actually received by the Taxing Authority. Said Collector of Taxes shall pay over said compensation to the Firm monthly by check. In the event suit is necessary to collect any of the delinquent taxes, penalty and interest as authorized by Section 33.01 of the Texas Property Tax Code, covered by this Contract, the Firm agrees to recover as attorney's fees (Section 33.48 of the State Property Tax Code) on behalf of the Taxing Authority twenty (20 %) percent of all such delinquent taxes, penalty and interest not covered by Section 33.07 and 33.08 of the Texas Property Tax Code. V. Taxing Authority agrees to furnish to the Firm all data and information as to the name and address of the taxpayer, the legal description of the property, years and amount of taxes due. Taxing Authority further agrees to update said information by furnishing a list of paid accounts and adjustments to the Tax Roll as necessary. W Notwithstanding any other provisions in the Contract, all delinquent personal property taxes are to be turned over to the Firm for collection 60 days after the delinquency date for said taxes. A penalty shall be assessed to defray the cost of collecting those taxes in the same percentage as previously provided for by Contract as provided for by Section W:1 South[akelAgreementsl©elinquent taxes wpd (02103106) Page 2 33.11, Texas Tax Code. All collection penalties or attorney fees collected on those taxes are the property of the Firm and shall be paid as provided for other taxes in the Contract. Vil. This Contract shall commence on _ _ 2006 and thereafter the contract shall end when both parties mutually agree: provided, however, that either party of this agreement shall have the right to terminate this agreement by giving the other party thirty (30) days written notice of their desire and intention to terminate this agreement, and further provided that the Firm shall have an additional six (6) months to reduce to judgment all tax suits and bankruptcies filed prior to the date this agreement becomes terminated; and all payment agreements entered into prior to the date this agreement becomes terminated. All collection fees as a result of judgments and bankruptcies becoming final prior to the expiration of the six month period shall be the property of and payable to the Firm at the time they are collected. In consideration of the terms and compensation here stated, the Flrm hereby accepts said employment and undertakes the performance of this Contract above written. This Contract is executed on behalf of the Taxing Authority by the presiding officer of its governing body who is authorized to execute this instrument by Order heretofore passed and duly recorded in its minutes. WITNESS the signatures of all parties hereto in duplicate originals this the day of , XD., 2006, Tarrant County, Texas. TAYLOR, OLSON, ADKINS, SRALLA & ELAM, L.L.P. 6000 Western Place Suite 200 Fort Worth, Texas 76107 (817) 3322580 Elizabeth Elam, Partner CITY OF SOUTHLAKE City of Southlake 1400 Main Street Suite 270 Southlake, Texas 76092 (817) 748 -8409 Andy Wambsganss, Mayor ATTEST: Lori Farwell, City Secretary W:1 SouthlakelAgreernen ts\Delinquent taxes.wpd (02103106) Page 3