1995-127A: \TAX.O
ORDINANCE NO. ~
AN ORDINANCE AUTHORIZING THE MAYOR TO EXECUTE A CONTP~ACT FOR THE
COLLECTION OF DELINQUENT TAXES; PROVIDING FOR THE EXPENDITURE OF
FUNDS THEREFOR; AND PROVIDING FOR AN EFFECTIVE DATE.
THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS:
SECTION I. That the Mayor is authorized to execute a
professional services contract for the collection of delinquent
taxes with McCreary, Veselka, Bragg and Allen, P.C. and Hayes,
Coffey and Berry, P.C., a copy of which is attached hereto and
incorporated with reference herein.
SECTION II. That the Mayor is authorized to expend funds for
the above referenced professional services to the firm of McCreary,
Veselka, Bragg and Allen, P.C. and Hayes, Coffey and Berry, P.C.
SECTION III. That this ordinance shall become effective immed-
iately upon its passage and approval.K ~/% ~---
PASSED AND APPROVED this the __~'~day of , 1995.
BOB CASTLEBERRY, MA/ ~
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
BY:~
APPROVED AS TO LEGAL FORM:
HERBERT L. PROUTY, CITY ATTORNEY
TABLE OF CONTENTS
Section Paqe
I. EMPLOYMENT OF FIRM 1
II. PROVISION OF INFORMATION 1
III. INVESTIGATION AND ASSISTANCE 1
IV. PROCEDURES FOR COLLECTION 2
V. REVIEW AND AUTHORIZATION TO SUE 2
VI. LITIGATION RESPONSIBILITIES 2
VII. TAXPAYER SERVICES 3
VIII. PROGRESS REPORTS 3
IX. COMPENSATION 4
X. COLLECTION OF OTHER DELINQUENT ACCOUNTS 4
XI. CONFLICTS OF INTEREST 4
XII. USE OF MUNICIPAL FACILITIES 5
XIII. TERM 5
XIV. ATTORNEY'S FEES 5
XV. TAX WARRA_NTS 5
XVI. SETTLEMENTS 6
XVII. NOTICE 6
XVIII. COLLECTION REQUIREMENTS 6
XIX. VENUE 6
XX. ACCEPTANCE OF EMPLOYMENT 7
XXI. DIRECTIVES 7
XXII. COVENANT NOT TO SUE 7
XXIII. AMBIGUITY 7
XXIV. ASSIGNMENT 7
XXV. INDEMNITY AND INSURANCE 7
XXVI. EXHIBITS 8
XXVII. TIME OF THE ESSENCE 8
XXVIII. CAPTIONS 8
CONTRACT FOR THE COLLECTION OF
DELINQUENT PROPERTY TAXES
THE STATE OF TEXAS §
COUNTY OF DENTON
THIS CONTRACT is made and entered into by and between the City
of Denton, 215 E. McKinney, Denton, Texas 76201 ("CITY"), acting
herein by and through its governing body, and McCreary, Veselka,
Bragg and Allen, P.C. and Hayes, Coffey and Berry, P.C. ("FIRM").
I. EMPLOYMENT OF FIRM
CITY agrees to employ and does hereby employ FIRM to enforce
by suit or otherwise the collection of all delinquent taxes, pen-
alty and interest owing to CITY. Current year taxes which become
delinquent within the period of this Contract shall become subject
to the terms of the Contract upon the following conditions:
A. Taxes that become delinquent during the term of this Con-
tract, that are not delinquent for any prior years, become subject
to the terms of this Contract on July 1st of the year in which they
become delinquent.
B. Taxes that become delinquent during the term of this Con-
tract on property that is delinquent for prior years shall become
subject to its terms on the first day of delinquency as defined by
the Texas Property Tax Code.
C. FIRM shall begin collecting current year personal property
taxes on March 1st of the year in which they become delinquent.
CITY shall not owe FIRM a fee on the current year delinquent per-
sonal property taxes collected between March 1st and June 30th
unless attorney's fees are collected pursuant to Section 33.48 of
the Texas Property Tax Code.
II. PROVISION OF INFORMATION
CITY agrees to furnish all necessary delinquent tax informa-
tion to FIRM on all property within the boundaries of CITY.
III. INVESTIGATION AND ASSISTANCE
FIRM agrees to conduct investigations as to the address of
each taxpayer and the location of the property where such informa-
tion may be incorrect on the delinquent tax record. FIRM shall
bring to the attention of the appropriate tax official of CITY any
errors, double assessments, discrepancies, or inaccuracies in the
information provided on the delinquent tax record detected by FIRM.
FIRM further agrees to provide CITY with any advice or assistance
in connection with updating the tax rolls. CITY shall make avail-
able to FIRM information which CITY may have with regard to the
name, identity, location of necessary parties and descriptions of
property in connection with each delinquent tax account upon
request by FIRM.
iV. PROCEDURES FOR COLLECTION
Upon initial receipt of the delinquent tax records by FIRM in
computer readable form, FIRM agrees to initiate procedures for the
collection of the full amount due from each taxpayer. Within a
reasonable time frame but not more than sixty (60) days from FIRM's
receipt of the delinquent tax records, FIRM hereby agrees to send,
by first class mail, a notice of delinquency to each and every
delinquent taxpayer where the taxes have not been deferred nor
involved in a lawsuit against the appraisal district to determine
value, requesting said taxpayer to remit the full amount due and
owing to CITY.
V. REVIEW AND AUTHORIZATION TO SUE
Following transmittal of the notice of delinquency as
specified hereinabove, FIRM will commence procedures in anticipa-
tion of litigation for aggressive pursuit of collection. CITY
shall have absolute discretion over those accounts on which suit
should be filed. The transmittal of the delinquent tax information
to FIRM from CITY shall constitute authorization to file suit
following the mailing of the initial notice of delinquency. Upon
written notice, CITY may at any time withdraw authorization to file
suit. CITY may at any time withdraw authorization to foreclose and
sell the property and said withdrawal shall be in writing.
VI. LITIGATION RESPONSIBILITIES
A. FIRM agrees to commence litigation, prosecute, and reduce
to judgment all delinquent accounts including all pending lawsuits
that FIRM deems to warrant or on which CITY has specifically
requested action in writing. Each suit filed shall seek: personal
judgment against the individual taxpayer(s) for all taxes for which
the taxpayer can be held personally liable, penalty and interest;
foreclosure of any tax lien which may exist by operation of law;
and any and all court costs incurred in prosecuting the lawsuit,
and any collection fees or attorney's fees which the taxpayer is
obligated to pay. FIRM shall perform litigation responsibilities
and protect CITY's legal remedies including appeals, preparation of
any documents required, post-judgment activities, and any other
actions necessary in order to collect the delinquent taxes.
B. FIRM will assume the representation of CITY in all law-
suits, including all pending lawsuits, involving the collection of
delinquent taxes and enforcement of the tax lien including, but not
limited to bankruptcy litigation, claims and actions required to be
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filed with federal agencies such as FDIC, FSLIC and RTC, interven-
tions in suits filed on behalf of any other taxing unit's current
suits, and any other suit or litigation which may involve or relate
to the collection of delinquent taxes. FIRM will inform CITY of
any counterclaims or cross-actions filed against CITY.
VII. TAXPAYER SERVICES
In addition to litigation, FIRM further agrees to provide tax-
payer service without charge. As such, FIRM agrees (1) to provide
CITY tax collector legal advice and written opinions regarding tax
matters upon request; (2) to respond to taxpayer inquiries and to
advise CITY, in writing, or, and make any recommendations con-
cerning installment payment agreements and settlement agreements
proposed by the taxpayer. CITY shall have final determination in
acceptance of all installment payments or settlement agreements
within parameters established by CITY. FIRM shall have discretion
to enter into installment agreements subject to CITY's prerogative
of final determination. In all demand letters and all communica-
tions with taxpayers, FIRM shall inform and instruct the taxpayer
to remit its payment to CITY. If remittance is received by FIRM,
it must be transmitted in its entirety to CITY and received for
processing by 11:30 a.m. of the following business day. Checks
made payable to FIRM shall be endorsed by FIRM to CITY. No check,
cash or money order for payment of delinquent taxes shall be
deposited in any FIRM account.
VIII. PROGRESS REPORTS
FIRM agrees to make delinquent tax collection progress reports
to CITY monthly and quarterly, in a format containing information
as requested by CITY's Executive Director of Finance. Progress
reports may include, without limitation:
1. First demand letters mailed;
2. Number and value of suits filed;
3. Number and value of suits dismissed
a. due to collection,
b. other - specify reason;
4. Number and value of judgments entered;
5. Number and value of bankruptcies filed;
6. Copies of judgments;
7. Copies of proof of claims filed in bankruptcy
court;
8. Copies of Foreclosure Sale Deeds; and
9. Number and value of delinquent accounts not col-
lected as a percentage of total delinquent accounts
provided by CITY for collection.
Within parameters established at the initiation of the collection
program, FIRM shall advise CITY of any case in which FIRM's
investigation has revealed that the taxpayer cannot be found, the
enforcement of the tax lien cannot be accomplished, or further
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attempts at tax collection would be futile and FIRM's recommenda-
tion relative to the proper disposition of the case. In such
cases, the CITY shall advise FIRM as to the appropriate disposition
of the account.
IX. COMPENSATION
A. As compensation for the services rendered hereunder by
FIRM, CITY hereby agrees to pay FIRM fifteen percent (15%) of the
total amount of all delinquent taxes, penalty and interest for the
tax years covered by this contract. All compensation set forth
above shall become the property of FIRM at the time payment of
taxes, penalty and interest are received by CITY. The fifteen per-
cent (15%) collection fee will only be paid on taxes which remain
delinquent after July 1 of the year on which they became delin-
quent, pursuant to the Property Tax Code §33.07. Said collection
fee will only be paid to FIRM after it has been received by CITY
from taxpayer or from forced sales. FIRM shall not be entitled to
the aforesaid fifteen percent (15%) unless and until FIRM has taken
some action in connection with recovering delinquent taxes. The
transmittal of a notice of delinquency shall constitute sufficient
action in order to entitled FIRM to the fee aforesaid. As
compensation for the services rendered hereunder by FIRM for the
collection of taxes which are not eligible for the additional
penalty as authorized by Property Tax Code §33.07 and upon which
suit has been filed, the compensation shall be reasonable attorn-
ey's fees approved by the court and not exceeding fifteen percent
(15%) of the total amount of taxes, penalties and interest due
CITY. In no event shall FIRM be entitled to any fee unless and
until CITY actually collects the delinquent taxes, penalty,
interest, court costs or collection costs or attorney's fees from
the taxpayer or from the proceeds of a forced sale or foreclosure.
In no event shall FIRM be entitled to any fee unless said fee is
collected by CITY during the term of this Contract or fee is
collected by CITY on account(s) upon which FIRM is attorney of
record at the time of judgment. CITY shall pay said fees to FIRM
by check monthly. No interest shall be accrued on any late
payment.
B. The compensation hereinabove set forth and in paragraph XI
below shall be the total compensation due from CITY to FIRM for all
services provided pursuant to this contract and in no event shall
FIRM seek any additional compensation from CITY.
X. COLLECTION OF OTHER DELINQUENT ACCOUNTS
FIRM shall, upon written request of City, undertake the
collection of delinquent accounts for paving assessment liens,
substandard housing demolition liens, and weed liens. The
collection of these accounts shall be undertaken on the basis of
attorney's fees assessed to and collected from the debtors. CITY
agrees to pay FIRM, as compensation, all amounts received as
PAGE 4
attorney's fees on delinquent accounts for paving assessment liens,
substandard housing demolition liens, and weed liens which are
collected during the term of this Contract as a result of FIRM's
collection efforts.
XI. CONFLICTS OF INTEREST
FIRM agrees not to represent any client who has an adversary
position with the City of Denton, engage in any conflict of inter-
est to fully comply with the Texas Disciplinary Rules of Profes-
sional Conduct (Subtitle G - Texas Government Code) for the
duration of this Contract.
XII. USE OF MUNICIPAL FACILITIES
CITY agrees to allow FIRM to use a tax office computer
terminal, and to provide a working area for use by FIRM employees,
provided such use is reasonable and does not interfere with CITY's
use of other computer terminals and work areas. CITY also agrees
to provide FIRM with computer tapes and tax file access upon
request by FIRM. FIRM agrees to pay CITY for use of the working
area, its computer terminal, computer tapes, and tax file access.
The payment by FIRM for the above stated support services shall be
in the amount of Three Hundred Seventy-five Dollars ($375.00) each
month.
XIII. TERM
This Contract shall have a term of two (2) years, beginning on
July 1, 1995, and ending on June 30, 1997. Should CITY give writ-
ten notice to FIRM of its desire to continue this Contract, this
Contract shall continue in full force and effect from month to
month at the option of CITY, unless either party delivers written
notice to the other party of its intent to terminate this Contract
at least thirty (30) days prior to the date of the intended termi-
nation. FIRM shall have an additional six months to reduce to judg-
ment and sale all tax collection lawsuits filed and collect all
bankruptcy claims filed prior to the termination date, and shall
have the exclusive right to compensation of fees earned due to
these suits during this six month period. CITY shall have the
right to sooner terminate this Contract by giving thirty (30) days'
written notice of such intention. In case of such termination,
FIRM shall be entitled to receive and retain all compensation due
up to the date of said termination. Upon termination, FIRM shall
immediately deliver all files in their entirety to CITY at no cost
to CITY.
XIV. ATTORNEY'S FEES
Subject to the same limitations set forth in paragraph X, in
bankruptcy, eminent domain and other judicial proceedings, FIRM
will be entitled to only those attorney's fees awarded by the court
and then only if collected by CITY. FIRM agrees to file and
PAGE 5
diligently pursue all claims on behalf of CITY in bankruptcy,
eminent domain and other judicial or administrative proceedings
whether federal or state in nature.
XV. TAX WARRANTS
Upon request and authorization of CITY, FIRM shall prepare and
pursue the issuance of tax warrants. FIRM shall then coordinate
the seizure of personal property pursuant to warrant and actually
accompany the Tax Collector to the location of the personal
property which is to be seized to insure the necessary procedures
have been followed.
XVI. SETTLEMENTS
No settlements or compromises of taxes, penalty or interest
shall be effected where prohibited by law and where authorized by
law, only upon approval by CITY. If a taxpayer requested waiver is
upheld as provided by ~33.011 of the Tax Code, FIRM will bear the
costs of suit if it failed to notify the taxpayer of the delinquen-
cy prior to filing of the suit.
XVII. NOTICE
Any notice or other written instrument required or permitted
to be delivered pursuant to the terms of this Contract shall be
deemed to have been delivered, whether actually received or not,
when deposited in the United States mail, postage prepaid,
registered or certified, return receipt requested, addressed to
CITY or FIRM, as the case may be, at the following addresses:
CITY FIRM
City of Denton, Texas McCreary, Veselka, Bragg &
ATTN: City Manager Allen, P. C.
215 E. McKinney P.O. Box 26990
Denton, TX 76201 Austin, TX 78755-0990
Hayes, Coffey & Berry, P.C.
P. O. Box 50149
Denton, TX 76206
Either party may change its mailing address by sending notice
of change of address to the other at the above address by certified
mail, return receipt requested.
XVIII. COLLECTION REQUIREMENTS
FIRM agrees to collect, between July 1, 1995 and June 30,
1996, not less than sixty percent (60%) of the total dollar value
of the base tax of the 1994 delinquency existing on July 1, 1995.
FIRM agrees to collect, between July 1, 1996 and June 30, 1997, not
less than sixty percent (60%) of the total dollar value of the base
PAGE 6
tax of the 1995 delinquency existing on July 1, 1996. If FIRM does
not collect the above referenced amount each year, it shall provide
CITY with legal services, programming and computer services, or
data processing equipment with a value not less than Seven Thousand
Five Hundred Dollars ($7,500.00) or, at the option of CITY, FIRM
shall pay CITY the sum of Seven Thousand Five Hundred Dollars
($7,500.00) on or before August 15 of the year it fails to collect
the minimum amount specified herein.
XIX. VENUE
The terms, obligations and requirements of this contract shall
be construed in accordance with the laws of the State of Texas.
The obligations and requirements of the parties hereto are
performable in Denton County, Texas. Any litigation involving this
Contract shall be tried in a court of competent jurisdiction
sitting in Denton County, Texas.
XX. ACCEPTANCE OF EMPLOYMENT
In consideration of the terms, covenants and mutual agreements
hereinabove stated, FIRM hereby accepts the employment of CITY and
undertakes the performance of this contract as above stated.
XXI. DIRECTIVES
Ail directives between FIRM and CITY shall be confirmed in
writing.
XXII. COVENANT NOT TO SUE
FIRM further agrees not to bring any cause of action against
CITY relative to this contract. Should FIRM bring any cause of
action against CITY, FIRM agrees the liquidated damages shall not
exceed $1.00 and the filing of such cause of action shall be
considered a material breach of this Contract.
XXIII. AMBIGUITY
Any ambiguity within this Contract shall be liberally
interpreted in favor of CITY.
XXIV. ASSIGNMENT
The rights and responsibilities of CITY under this Contract
may be assigned by the City Council to another governmental unit in
Denton County without approval of FIRM. It is understood and
agreed that this is a professional services contract and CITY is
contracting for the unique services of FIRM. FIRM's rights and
responsibilities under this Contract may not be assigned by FIRM to
another law firm or collection agency without written approval of
the assignment by the City Council.
PAGE 7
XXV. INDEMNITY
FIRM shall and does hereby agree to indemnify and hold
harmless the CITY, its officers and employees, from any and all
damages, loss, or liability of any kind whatsoever, by reason of
injury to property or third persons occasioned by any error,
omission or negligent act of FIRM, its officers, agents, employees,
invitees, and other persons for whom it is legally liable, with
regard to the performance of this Contract, and FIRM will, at its
cost and expense, defend and protect the CITY against any and all
such claims and demands.
XXVI. EXHIBITS
RFP #1759 attached hereto as Exhibit "A" and the McCreary,
Veselka, Bragg & Allen, P.C. and Hayes, Coffey & Berry, P.C.
proposal attached hereto as Exhibit "B" are incorporated herein as
if set forth at length and made a part hereof. The provisions of
Exhibit "A" and Exhibit "B" shall set forth obligations and duties
of the FIRM to the extent that they do not conflict with other
provisions set forth in this Contract, which contractual provisions
shall control.
XXVII. TIME OF THE ESSENCE
Time is of the essence with respect to all matters covered by
this Contract.
XXVIIi. CAPTIONS
The captions appearing at the first of each numbered section
are inserted and included solely for convenience and shall never be
considered or given any effect in construing this agreement.
This Contract is executed on behalf of CITY 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 and by a partner of FIRM who, by execution of this
Contract, represents and warrants that he or she has the authority
to execute this document on behalf of FIRM.
WITNESS the si~re of all ~rti~s hereto in triplicate
originals this the'~'_ day of ~~.- , 1995, Denton
County, Texas. ~ ~
CITY OF DENTON, TEXAS
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
~PPROV~D ~S TO BEG~B ~OR~:
HERBERT L. PROHTY, CITY ~TTORN~Y
McCREARY, VESELKA, BRAGG &
ALLEN, P.C.
5929 Balconnes Dr±ve
P. O. Box 26990
Austin, TX 78755-0990
HAYES, COFFEY & BERRY, P.C.
ES,D. Hayes
COFFEY & BERRY, P.C.
1710 Westminster
P. O. Box 50149
Denton, TX 76206
A: \DELINQUE. TAX
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