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R2004-059 06-28-04 RESOLUTION NO. R2004-59 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS, AUTHORIZING THE CITY MANAGER OR HIS DESIGNEE TO ENTER INTO A CONTRACT WITH LINEBARGER, GOGGAN, BLAIR, & SAMPSON, LLP FOR TAX COLLECTION SERVICES. BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS: Section 1. That certain contract by and between the City of Pearland and Linebarger, Goggan, Blair& Sampson, LLP, a copy of which is attached hereto as Exhibit "A" and made a part hereof for all purposes, is hereby authorized and approved. Section 2. That the City Manager or his designee is hereby authorized to execute and the City Secretary to attest a contract for tax collection services. PASSED,APPROVED and ADOPTED this the 28th day of June A.D., 2004. TOM REID MAYOR ATTEST: Y NG Y SE ETARY APPROVED AS TO FORM: 0-rL DARRIN M. COKER CITY ATTORNEY EXHIBIT fp " a 9 I►/'i" ,ice ®I i _�� Agreement for Tax Collection Services This Agreement is made between Linebarger, Goggan, Blair & Sampson, LLP (hereinafter referred to as the "Firm") and City of Pearland (hereinafter referred to as the "Client"). Article 1 - Nature of Relationship 1 .01 The parties hereto acknowledge that this Agreement creates an attorney-client relationship. 1 .02 The Client hereby employs the Firm to provide the services hereinafter described for compensation hereinafter provided. Article 2-Scope of Services 2.01 The Firm shall take reasonable and necessary actions to collect property taxes that are owed to the Client and that are subject to this agreement, as hereinafter provided. 2.02 The Client may from time-to-time specify in writing additional actions to be taken by the Firm in connection with the collection of taxes that are owed to the Client. Client further constitutes and appoints the Firm as Client's attorneys to sign all legal instruments, pleadings, drafts, authorizations and papers as shall be reasonably necessary to prosecute the Client's claim for taxes. 2.03 Taxes owed to the Client shall become subject to this agreement upon the following dates, whichever occurs first: (a) On February 1 of the year in which the taxes become delinquent if a previously filed tax suit is then pending against the property subject to the tax; (b) On the date any lawsuit is filed with respect to the recovery of the tax if the tax is delinquent and is required to be included in the suit pursuant to TEX. TAX CODE § 33.42(a); (c) On the date of filing any application for tax warrant where recovery of the tax or estimated tax is sought and where the filing of an application for tax warrant by the Firm is at the request of Client's Tax Assessor-Collector; (d) On the date of filing any claim in bankruptcy where recovery of the tax is sought; or (e) On July 1 of the year in which the taxes become delinquent. Article 3 - Compensation 3.01 Client agrees to pay to the Firm, as compensation for the services required herein, the following amounts: (a) fifteen (15%) percent of the amount of all 2002 and prior year taxes, penalty and interest subject to the terms of this contract as set forth in Paragraph 2.03 above, collected and paid to the collector of taxes during the term of this contract, as and when collected; and (b) twenty (20%) percent of the amount of all 2003 and subsequent year taxes, penalty and interest subject to the terms of this contract as set forth in Paragraph 2.03 above, collected and paid to the collector of taxes during the term of this contract, as and when collected. • 3.02 The Client shall pay the Firm by the twentieth day of each month, all compensation earned by the Firm for the previous month as provided in this. Article 3. All compensation above provided for shall become the property of the Firm at the time payment of the taxes, penalty and interest is made to the collector. Article 4 - Intellectual Property Rights 4.01 The Client recognizes and acknowledges that the Firm owns all right, title and interest in certain proprietary software that the Firm may utilize in conjunction with performing the services provided in this Agreement. The Client agrees and hereby grants to the Firm the right to use and incorporate any information provided by the Client ("Client Information") to update the databases in this proprietary software, and, notwithstanding that Client Information has been or shall be used to update the databases in this proprietary software, further stipulates and agrees that the Client shall have no rights or ownership whatsoever in and to the software or the data contained therein, except that the Client shall be entitled to obtain a copy of such data that directly relates to the Client's accounts at any time. 2 4.02 The Firm agrees that it will not share or disclose any specific confidential Client Information with any other company, individual, organization or agency, without the prior written consent of the Client, except as may be required by law or where such information is otherwise publicly available. It is agreed that the Firm shall have the right to use Client Information for internal analysis, purposes of improving the proprietary software and database, and to generate aggregate data and statistics that may inherently contain Client Information. These aggregate statistics are owned solely by the Firm and will generally be used internally, but may be shared with the Firm's affiliates, partners or other third parties for purposes of improving the Firm's software and services. Article 5 - Costs 5.01 The Firm and Client recognize that publication costs for citations and notices of sale and title abstract costs will be incurred in the process of providing the litigation services contemplated in this Agreement. All such costs shall be billed to the Client, in care of the Firm, and the Firm will advance the payment of such costs on behalf of the Client. Upon recovery of such costs from the defendants or from the tax sale of defendants' property, the Firm shall be reimbursed for the advance payment. Alternatively, the Firm may arrange with the vendor or agency providing the service that actual payment of the costs of services is wholly contingent upon recovery of such costs by the Client or the Firm from the defendants or from the tax sale of defendants' property. In such contingent arrangements, the Client has no responsibility or liability for payment or advancement of any costs, other than forwarding to the vendor or service provider any cost amounts received from defendants or from the tax sale of defendants' property. 5.02 The Client acknowledges that the Firm may provide services, such as title research, with its own employees or with other entities or individuals who may be affiliated with the Firm, but the Firm agrees that any charges for such services will be reasonable and consistent with what the same services would cost if obtained from a third party. The Client agrees that upon the recovery of such costs, the Client will: (I) pay the Firm for any such costs which have been advanced by the Firm or performed by the Firm, and (ii) pay any third party agency or vendor owed for performing such services. Article 6 - Term and Termination 6.01 This Agreement shall be effective on the 1st day of June, 2004 (the "Effective Date") and shall expire on the 31st day of May, 2006 (the "Expiration Date") unless extended as hereinafter provided. 3 . 6.02 If at any time during the initial term of this Agreement or any extension hereof, the Client determines that the Firm's performance under this Agreement is unsatisfactory, the Client shall notify the Firm in writing of the Client's determination. The notice from the Client shall specify the particular deficiencies that the Client has observed in the Firm's performance. The Firm shall have sixty (60) days from the date of the notice to cure any such deficiencies. If at the conclusion of ;that sixty-day remedial period, the Client remains unsatisfied with the Firm's performance, the Client may terminate this Agreement effective upon the expiration of thirty days following the date of written notice to the Firm of such termination ("Termination Date"). 6.03 Whether this Agreement expires or is terminated, the Firm shall be entitled to continue to prosecute any tax suits, applications for tax warrants or bankruptcy claims pending on the Termination Date or Expiration Date for an additional six months following termination or expiration. The Client agrees that the Firm shall be compensated as provided by Article 3 for any base tax, penalties and interest collected in the pending matters during the six-month period. 6.04 The Client agrees that the Firm shall be reimbursed for any costs advanced and shall be paid for any services performed pursuant to Article 5 when such costs are recovered by or on behalf of the Client, regardless of the date recovered. It is expressly agreed that neither the expiration nor the termination of this Agreement constitutes a waiver by the Firm of its entitlement to be reimbursed for such costs and to be paid for such services. It is further expressly agreed that the expiration of any six-month period under Section 6.04 does not constitute any such waiver by the Firm. Article 7 - Miscellaneous 7.01 Integration. This Agreement contains the entire agreement between the parties hereto and may only be modified in a written amendment, executed by both parties. 7.02 Representation of Other Taxing Entities. The Client acknowledges and consents to the representation by the Firm of other taxing entities that may be owed taxes or other claims and be secured by the same property as the Client's claim. 4 IN CONSIDERATION OF THE TERMS AND COMPENSATION HEREIN STATED, the Firm hereby accepts said employment and undertakes the performance of this Agreement as above written. This Agreement is executed on behalf of the Firm and of the Client by the duly authorized persons whose signatures appear below. CITY OF PEARLAND LINEBARGER GOGGAN BLAIR & SAMPSON, LLP BY: BY: Michael J. Siwierka, Partner Date: Date: ATTEST: 5 LINEBARGER GOGGAN BLAIR&SAMPSON,LLP • MichaeI J.Siwierka ATTORNEYS AT LAW Partner P.O.BOX 3064 HOUSTON,TEXAS 77282-3064 Writer's Direct Dial(713)844-3466 Fax Number(713)844-3511 April 20,2004 Mr. Bill Eisen, City Manager Mr. Darrin Coker, City Attorney City Of Pearland Delivery by E-Mail Only RE: Collection Contract Between City of Pearland and Linebarger, et al. Gentlemen: It has been a pleasure being your delinquent tax attorney for the past ten (10) years. I am looking forward to continuing as the Partner in charge of our collection efforts on behalf of the City of Pearland. Our contract with the City expires on May 31, 2004. I am asking that the City renew our contract in advance so we can continue providing the City of Pearland with the quality legal representation and collection services that has established the City of Pearland as the best collected taxing entity in Brazoria County. Upon renewal, I will remain as the lead attorney for Pearland, and Ms. Teri Zema will continue as your overall delinquent tax collection manager. Teri is primarily responsible for developing our collection plan for the City of Pearland. She is the person your delinquent taxpayers interact with, as does your Tax Assessor-Collector. The proposed form of the contract has changed, and I have included our last contract for comparative purposes. The term remains at two years, and the fees remain the same except for delinquent 2003 taxes that will be turned over to us for collection on July 1, 2004. The penalty we are asking the City to adopt is 20%. This penalty is an add-on penalty that is borne by the delinquent taxpayers. The penalty we have been working under has been 15%, and will remain at 15% for all existing delinquent taxes my firm is currently charged to collect (taxes turned over to us for collection prior to July 1, 2004). We are seeking this change from 15% to 20% to harmonize the penalty charged to your delinquent taxpayers with that of Brazoria, Harris and Fort Bend Counties, which are all at 20%. Further, we believe this fee increase will lead to better current collections since the delinquent taxpayers will receive notice of this additional penalty in May. I'would be happy to meet with you to answer any questions you may have, and look forward to appearing at the next available City of Pearland Council Meeting to address any questions Council may have. Thank you for your consideration. Michael J . Siwierka / - Michael J. Siwierka Partner - - - - _ - ' MJS/mjs r • LINEBARGER GOGGAN BLAIR&SAMPSON,LLP • Michael J.Siwierka ATTORNEYS AT LAW Partner P.O.BOX 3064 HOUSTON,TEXAS 77282-3064 Writer's Direct Dial(713)844-3466 Fax Number(713)844-3511 April 20,2004 Mr. Bill Eisen, City Manager Mr. Darrin Coker, City Attorney City of Pearland Delivery by E-Mail Only RE: Request for Contract Amendment. Dear Gentlemen: My law firm is requesting that the City of Pearland alter the add-on fee structure paid to us by the delinquent taxpayers from 15%to 20%. The penalty is not retroactive, and therefore,would only apply on 2003 delinquencies forward. I am including information regarding this request in the following bullet • point summary: ■ Seventy-Seventh Legislative Session passed H.B. 490 on May 15, 2001, allowing the additional collection penalty(attorney fees)for delinquent tax collections to be increased from 15%to 20%. • The additional penalty has been 15% for the past 24 years, and the increase to 20% serves as a "cost of living" increase. • Costs of personnel, postage, telephone, rent and computer support have increased dramatically in the past 24 years. Postage alone, has increased by 147%, with the-cost of a stamp increasing from $0.15 in 1980, when legislation was first enacted allowing the collection penalty, to the current rate of$0.37 in 2004. • Taxpayers have multiple opportunities to pay their tax bill without incurring any additional penalty. While our collection program emphasizes full payment, we work with the elderly, hardship cases and taxpayers that require payment arrangements to pay off their debt over time. ■ This amendment will have no negative financial impact on your jurisdiction, as the delinquent taxpayer pays the additional penalty. All costs for delinquent tax collections are borne by the law firm,resulting in a"cost free"collection program for the City. • Our clients that have adopted the increased collection penalty include Brazoria County, Fort Bend County, and Harris County as well as hundreds of appraisal districts, cities and school districts throughout Texas. Thank you for your consideration. Michael J . Siwierka Michael J. Siwierka Partner MJS/mjs AGENDA REQUEST BUSINESS OF THE CITY COUNCIL CITY OF. PEARLAND, TEXAS AGENDA OF: June 28,2004 ITEM NO. R2004-59 DATE SUBMITTED: June 23,2004 DEPARTMENT OF ORIGIN: Administration PREPARED BY: Bill Eisen PRESENTOR: Bill Eisen SUBJECT: Contract For Delinquent Tax Collection EXHIBITS: Contract EXPENDITURE REQUIRED: N/A AMOUNT BUDGETED: N/A ACCOUNT NO. ADDITIONAL APPROPRIATION REQUIRED: ACCOUNT NO. : FUNDS AVAILABLE_ (Finance Department Approval) EXECUTIVE SUMMARY On April 26,the City Council considered extending the contract of Linebarger, Goggan, Blair, and Sampson for delinquent tax collection. During the meeting, a representative of a competing law firm requested that the City Council table the matter and allow his firm to compete for the business. The Council agreed to do this and instructed the staff to review proposals from both firms and make a recommendation to the City Council. As a result,the staff requested formal proposals from both firms. Information regarding key personnel to be assigned to the Pearland account, other clients in the Houston area, methods of collection, and reporting to clients was requested. As a result of reviewing this information and interviewing representatives of both firms,the following conclusions can be reached. 1. Both firms have a number of clients in the Houston area. For the most part, relationships with clients have been long term. Both firms reported losing fewer than 10 clients in the Houston area over the past 10 years. 2. Both firms report taking over specific clients from the other firm and increasing collections after doing so. • Agenda Request Contract For Delinquent Tax Collection June 23,2004 3. Both specialize in delinquencies due to governmental entities and have well established methods and procedures that have proven successful. The Perdue firm relies much more heavily on filing lawsuits to pursue collection. The Linebarger firm is more likely to pursue collection through other means such as repeated contacts. Both methods have proven successful for the firm that employs them. 4. Linebarger collects for the larger municipalities in the area including Houston, Sugarland, and Missouri City(as of last week). 5. A random check of 6 to 7 clients selected by the City from the list of the two firms Houston area clients indicates that these clients are satisfied with the work of both firms. A copy of notes from these checks is attached. 6. Perdue has most of the taxing entities in Brazoria County as clients. This is likely due to a partnership with the Angleton firm of Stephens and Rau. Use of local firms to partner with the collection firm is a method used by both Perdue and Linebarger. 7. Both firms propose to charge 15% of collections for all delinquencies prior to the current year and 20%for taxes that will go delinquent this year. Both have agreed to forego 20% for taxes going delinquent this year and charge 15% on all collections. In either case,the City pays no fees to the firms. Fees are added to the delinquent taxpayers bill and paid by them. 8. Both firms have experienced, capable people that will be assigned to the Pearland account. 9. Both provide additional services such as collection of Court fines and fees. RECOMMENDATION Both of the firms are capable of performing the City's tax collections in an effective manner. Perhaps the greatest distinction between the two is that there is already a satisfactory working relationship between the City and the Linebarger firm. This relationship includes collection of both delinquent taxes and court fines and fees. As a result of this ongoing relationship, it is recommended that the City enter into a two-year delinquent tax collection contract, with Linebarger, Goggan, Blair, and Sampson. 2 PURDUE,BRANDON,FIELDER,COLLINS,AND MOTT DOING A COMMUNICATION COLLECTION RATE ANY WHO DOES THE WORK? OTHER CITY GOOD JOB? SATISFACTORY? SATISFACTORY? PROBLEMS? (IS IT ANOTHER ATTY?) NOTES Alvin YES YES YES NO JERRY SHIEVER N/A Friendswood YES . YES YES NO MIKE DARLOW Really good(contact said this several times). La Porte YES YES YES NO JASON BAILEY Client since 1998,just renewed for another 3 years. Liverpool YES YES,but could be bet YES NO MIKE DARLOW Contact has not looked closely at collection rate,but is satisfied.City has been a client for several years. Taylor Lake Village YES YES YES NO MIKE DARLOW When staff requested an appearance before City Council,the firm brought a great presentation and answered all questions. LINEBARGER,GOGGAN,BLAIR AND SAMPSON DOING A COMMUNICATION COLLECTION RATE ANY WHO DOES THE WORK? OTHER CITY GOOD JOB? SATISFACTORY? SATISFACTORY? PROBLEMS? (IS IT ANOTHER ATTY?) NOTES Clute YES YES YES NO N/A The firm provides quick results and answers all questions. Jersey Village YES YES YES NO GIL ARRIAGA City has minimal collections problem,but firm has achieved some large settlements.Just renewed contract. Staff would prefer an attorney for primary contact. Morgans Point YES YES YES NO BARRY COLBERT The firm has never filed a lawsuit on behalf of this city. Sugar Land YES YES YES NO MIKE SWIERKA Just now completing 1st year.Excellent bankruptcy program(big collection on Kmart bankruptcy). Guaranteed 5%increase and met goal. West University Place YES OK YES NO PANKAJ PARMAR City just renewed contract.Part of rationale was:firm is also used by ISD and County.The firm is really helpful.