The city’s contract for tax collection services is on the agenda today, an item expected to continue the city’s business relationship with the mayor’s law firm for at least another year.
The meeting includes a work session that begins at 3 p.m. and will consider the construction contract for the new animal shelter and give the City Council a peek under the hood of the 2013-14 budget.
The tax collection contract has been scheduled as a consent agenda item for the regular meeting, which begins at 6:30 p.m. at City Hall.
The city staff has recommended to the City Council that Denton continue to contract with Sawko & Burroughs for tax collection services.
A Denton law firm in which Mayor Mark Burroughs is a partner, Sawko & Burroughs has been the city’s tax collector since 2005.
The city has two performance benchmarks as part of its agreement with the firm. The firm is required to collect at least 60 percent of the past-due bills for the current year and 30 percent of the money that is past due for more than one year.
The city collects about $45 million in property taxes each year, with about $750,000 referred to collection annually, city records show.
Collections in the year after the economic collapse in 2008 were the worst in recent history, with more than $990,000 getting turned over to the firm for collection.
As a general rule, many tax bills are paid soon after they are turned over for collection, according to Assistant City Manager Bryan Langley.
“Those that go unpaid for more than a year usually have some complication, such as a bankruptcy, that affects collection,” Langley said.
As of April 30, the city had about $1.2 million in unpaid property tax bills, about 20 percent being taxes that became past due in 2011 and were referred to the firm in 2012, city records showed.
From 2006 to the present, the firm has had varying degrees of success in collecting past-due bills that are a year old.
The best year was 2006, with nearly 75 percent collected, city records showed. For the past three years, the firm has collected an average of about 65 percent of tax bills that are a year past due.
For more protracted collection battles, the firm’s best success again was in 2006, with nearly 46 percent of old accounts paid. In the past three years, that has dipped to an average of about 37 percent of old accounts.
In his memo to the City Council about the matter, Langley wrote that any difference between the current firm and a potential new firm, specifically their collection performance and procedures, was “minimal.” State law is written that the city and other taxing entities will eventually be paid the tax, interest and penalty due, “it’s just a matter of when,” Langley said in an interview Monday.
The city’s largest outstanding property tax bill, by far, sits with the owners of a shuttered radioisotopes plant, Langley said. The firm, representing both the city and the school district, along with another firm representing the county, filed suit to collect those taxes in 2008. According to county tax records, as of June 6, NuView Molecular Pharmaceuticals Inc. still owes more than $600,000 in property taxes, interest and penalties, dating from 2007. About $142,000 of that is owed to the city.
Two trial dates scheduled for this year have been delayed, court records show. The first continuance, in March, included a deadline for a partial tax payment and a new trial date in June. A second continuance was granted June 5.
Denton attorney Michael J. Whitten, who represents NuView, said that his client has struggled for several years to try to get financing arranged to reopen the plant.
“My client, over the past several months, has raised some money and twice made payments on the tax bills,” Whitten said.
There is still hope to raise enough financing to restart the business and pay the entire bill in full, Whitten said. Otherwise, his client plans to continue to chip away at what is owed, he said.
Burroughs said his firm would rather that the taxes be paid in full than in a payment plan, but they have been encouraged by the progress made in the past several months.
Although the tax collection contract began after Burroughs finished his third term on City Council and before he was elected mayor, the contract has been a source of controversy. Burroughs, who cannot run for re-election next year because of term limits, has said the arrangement poses no conflict of interest for him, since the firm collects its fee — an amount limited by state law — directly from delinquent taxpayers.
PEGGY HEINKEL-WOLFE can be reached at 940-566-6881 and via Twitter at @phwolfeDRC.