Travis County Commissioners Court
July 26, 2005
Item 33 - Part 2: Vendor Presentations
Good afternoon, we have returned from a very short recess. We are still discussing item no. 33. A report of collection of delinquent taxes, we have spent the better part of the last couple of hours listening to county staff give a report and the Commissioners court and now we have a chance to hear from the vendors. And who do we have represented here? I see linebarger's law firm, perdue, also. I understand that we have a couple of citizens who would like to give testimony. I understand they need to run to other commitments, if they want to come first, that's fine with me.
>> does it matter --
>> doesn't matter at all. One of those five chairs there, six. And if you would give us your full name, we would be happy to get your comments.
>> thank you, aim alicaia may, president of the greater Austin chamber of commerce. I just wanted to have an opportunity to share with you a letter that we had written to county Commissioner Margaret Gomez back on June 14th. Essentially with respect to the issue at hand, we are very -- we are very supportive of the present administrative expertise of the county attorney's office, we want to make sure that we make that and state it clearly. We are not here to see criticize the work of anything, we think that we have done very good work. With that being said, our mission as the greater Austin hispanic chamber of commerce in the community, we are committing to its efforts in creating a profitable business environment for minority owned small businesses of the greater Austin community. The greater Austin hispanic chamber of commerce serves as an economic development business resource, which provides quality services to its members and advocates the economic diversity benefits of our community. With that being said, in accordance with our goals and purposes, the greater Austin hispanic chamber of commerce encourages the county Commissioners court to review any opportunities to outsource tax collection functions of the county. The -- the fiscal year 2005 adopted budget of Travis County recognizes the need for additional revenue for employees to administer tax collection efforts. The chamber supports the court's review of private proposals that would enhance the present effort of the county. Proposals however should recognize the requirements of increased revenue, small -- which includes small and minority business owners, participation and job development in minority neighborhoods in Austin. With that being said, we only stress to you that we think that including partnerships is important in our community, requesting a proposal, having the opportunity for requesting proposals and doing this would probably be a good effort and with all of the information that we saw today that was presented from the county auditor's office, we certainly are not -- would be the first to say that we are not qualified nor have the expertise to weigh in all of the facts as we saw some very important information that was presented. However, our concern is that persons of color and of low income that may be unfairly administered be carefully taken a look at in how we are doing our processes as was noted earlier. With that being said, that would close the comments from our chamber, thank you. Any other citizens?
>> good afternoon, judge, Commissioners, jerry gonzalez. I just wanted to I知 a long time business owners, I love numbers, you can stack numbers that come out any way that you want to. There are assumptions made, as I looked at the analyses, looked at the report, we are assuming, taking into account this. Those are assumptions, they have variables. As we are looking at it. The question that I have, I知 glad to see this is on the agenda for discussion. Because the point from my perspective, I think that alicia, the hispanic chamber of commerce made very good points, i, too, am concerned about the people in east Austin, people of color, making sure that it was an equitable system.
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>> [one moment please for change in captioners]
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>> ...just starting to dig into the layers and get deeper and deeper, is there a weather way. I知 not saying it's not being done right now, but is there a way to streamline the system, file less lawsuits. Whether you like it or not, falling lawsuits is not the most -- not the best route to take and filing hraults themselves generates additional revenue on top of the faxes. You are the taxes, you have the money coming in and with all the lawsuits filed you have additional revenue coming in making even more of a tax burn or payment burden. I feel people aren't delinquent purposely. They don't say oh, i've got a notice, I知 going to ignore it. By the way, they are about to give me 10 days, I知 going to ignore it. There's usually issues. If you look at precinct 1, 4, it's affecting homeowners and small businesses. In east Austin, you know as well as I do as there's more development those tax bases are going up. Those people who have lived there a long time are all of a sudden paying higher taxes. They are lower socioeconomic folks and its impacting them adversely. It's also affecting business. At the same time when the small business owners are being targeted and they have these additional taxes that's a burden. I for one believe everybody should pay taxes, however, there should be a better methodology in collecting taxes here in Travis County. From some of the proposals i've seen, this whole situation is not an adversarial one of private versus public. From what i've seen so far, it's everybody stay in a lane and work together so it's going to be a combination she a partnership where the county still does what it does yes and a private sector can do what it does best. That's when it starts making sense, when each entity can do what it does best to make sure those tax rates and collections stay the same. As I see the success, and I agree with Commissioner Sonleitner, congratulations to the county on doing such a great collections, they do a fantastic job, but at what cost? When you are looking at 98, 9% collection rates what is that costing the county in labor, time, effort, paperwork, and I also have the questions i've seen the numbers and I知 sure the best intentions with two years experience and being independent and confirmed by other people that an auditor does the best job, but I知 also curious what kind of burden that has on the court systems. With almost 8,000 lawsuits filed, how many of those are really necessary, and that's also costing the county time, money and effort not only in dollars but manpower. As I知 looking at the proposal, I understand nobody is going to get displaced, lose a job, and I think county government is big enough or there's enough to do where there isn't -- anybody is not going to get the place. In fact, it's going to be positive because maybe those folks can be used more efficiently as opposed to being a tax collector. As we look at the partnership between whoever firm and the county, there's also some residual effects. I know they've talked about call centers, setting up education funds, an even do youment, if you will. This is a good example, a model that could happen for the rest of the country of how private and public sector could work together for the benefit of the citizens of Travis County. I ask you as Commissioners as you look at this, and i've had a cursory review and i've been trying to keep up with this and I know I don't have all the answers. But I知 astute enough to know which questions to ask. As you've seen the presentation, I also recognize that the county staff made some assumptions. These may or not become true under the private sector does unit collections. I知 also looking at the numbers. Yes, they are very impressive numbers, but at the same time when you are making assumptions and looking at numbers, you can stack them any way you want to. I emphasize as Commissioners, responsibility to the court and the county and citizenry, yes, this might have a little budget deaf set, but what you are maybe going to be losing may be those dollars on all those aggressive lawsuits that are being filed. If you lose a little money then, I think it incumbent on the Commissioners court and budget office to come out with another way to generate positive revenue for the county as opposed to burdening the taxpayers of those already having difficulty and putting difficulty after difficulty on their plate. Is the success ratio great? Sure it is. If I got sued by the county, i'd figure out whatever I could. The proposal from the law firm, it's a partnership, it's a combination of each group doing what it does best and the county still coming out ahead. Thank you for your attention and time.
>> thank you very much.
>> let me ask -- can I ask him, judge? You say you don't think lawsuit is a good tool, you say you think everybody ought to pay their taxes.
>> yes, sir.
>> you saw the articulation about what Travis County does before it files a lawsuit. We do everything, j.r., but come to your house and take you to dinner. [laughter]
>> and it is not like that that is our -- we go out of the way, out of our way to not file a lawsuit on you. As a guy that's been in business in this community for a long time and a guy in business in east Austin and was the guy in a business that when your taxes were due January 31, it was a hard pill to swallow, but you know what you do? You go and work. There are ways around working with the county before a lawsuit is filed. And I don't know anybody to think that we are lawsuit happy because we're not. We give you every opportunity. And I would think as long as you are willing to talk to us and probably give us $10 a week, do whatever, you probably will stay out of a lawsuit. So I just want people to understand just in case they broke in on you and didn't get to watch the last two hours because that is not the case with Travis County. I just want to make sure that you really don't think that.
>> point taken, Commissioner. I see your point.
>> now let's hear from the vendors.
>> I think [inaudible]. I was told that y'all had scheduled two hours for this. Was that right?
>> that was the county judge's estimate.
>> okay, well, we're two hours into it.
>> at a more optimistic moment. This court is committed to spend the time necessary to deliberate this issue today.
>> I知 guessing you would like it to be as expeditious as possible and that's going to be our goal. On our end, by the way, this is dr. Gustasi, one of the folks we employed to help us look at our numbers and I知 going to be asking him to explain some of the statistical data that we believe brings to light information that you would need to know considering the presentation and the information provided earlier. I can tell you get ready to hear a tale of two different worlds. Our presentation is going to tell you very much of what you heard is off base. And I知 going to start with something that you would think is an incredible statement to make. I will not, I will do my best to not impune the motives of anyone who has participated, but I will tell you I think the report -- I will have to challenge the accuracy and the validity of the conclusions. It doesn't sound possible that I would start off our proposal with saying the first sentence on the summary document that you've just been given: the reviews committee report contains no evaluation of our proposal. The proposal we made, although the second part of what they were instructed to do says evaluation of the proposals of private firms, our proposal is never mentioned in this document. It was never mentioned in the report you've got today. There is no economic analysis of it. Here's what happened. And if you see that, you'll come to have a better idea of why it made a pretty dramatic statement considering all of the months that's gone into it and 2,000 hours and all those things. I知 not den grading that. I assume there was a lot of work. But what happened is the county has assumed -- the county does it this way and your report says it's pretty good. They say private firms in other counties, we see them do it some other way. And they analyze that and go into great deal of the economics. But on page, I think, 157 of our proposal -- excuse me, 177, but on page 13 of the summary that you have in front of you -- I won't wade through all the details of our bigger -- but look on page 13. There is where you see actually what our proposal was. And it is on this chart, and what it proposes is, frankly, it proposes what I always bargained for and could never get when I was county attorney. I thought the dependence we have doing it with public process like we have now, you can't make the fee unless you file a lawsuit. We've become dependent on those and that is the reason to justifying in-house collection system that we filed in this county more lawsuits than any other county in the state. You're going to see information, and I hope you will look at it in detail and make me prove that it's true. They are disproportionately against the lowest valued homesteads and small businesses. They are disproportionately against people on the east side, and they are disproportionately against minority. That is our reality. That is not what any of the good officeholders in this county wants it to be and that was not the intended result. What we found is you go deeper into the numbers is that the unintended result of it. And we have never looked at it in this detail. I never knew that our creeping up numbers on the number of lawsuits would have been that dramatic and what the reality is today. But what this is, without going into lengthy detail is a proposal that was never mentioned to you. It's not do it all this way or do it this other way. It's to form public-private partnership in which the public sector attorney would sue the people that have to be sued, the bigger accounts, the easier money, the money that judge Biscoe months ago referred to as the low-hanging fruit. But in reality, after you do that, even if you sue them real early, the private sector has a five-month grace period before anybody gets a fee put on there. But there is an incentive for the public collector to sue you as early as he can because if you pay and there's a lawsuit sitting there, you get the fee. The hidden problem with that is especially on the lower valued properties is to get the fee, you jack up the unintended consequences he now has to pay court costs. If you have a property that has a $1,000 tax bill and they want that $150 attorney fee, they have to file a lawsuit that has several hundred dollars in court costs that gets stuck on top of the $1,000 fee. We're going to give you numbers rapid fire on those things. My main point though is after several months and many hours and a long presentation, you have yet to hear what we actually proposed and have no economic analysis of it. The second thing that -- and actually we asked, I mean I know it's an internal report and the internal departments were active as resources and I don't think there is a suspensional -- intention to mislead the court. There is, I think, repeated avenues to review it one way or another. And this is the biggest defect in it. Secondly, and I would say these are things that are not curable by just saying, I mean you would think an independent report would say let's don't just go off and make assumptions about what people do in other counties, let's actually analyze what they say they would propose to do and what economic effect would it have. Secondly, the most persuasive numbers that you could ever get, and on the top issue that we looked at is collection rate. Well, the report they've just made makes a good point in one way which is it's hard to know with different jurisdictions how do you weigh in the socioeconomic factors, the jobs, the general economic atmosphere from one county to another one to miles away, different sizes, different demographics. That's always true. It's a heck of a lot less true if you are in the same county and you are pretty well next door to each other. But what we thought for the first time, unlike anything we ever had in Travis County before, the private firm, the linebarger firm, presented in our report a five-year collection rate with the second biggest school district in Travis County in our area, Round Rock. We've had that as a collection model, we've been their collector for over five years now. You -- and it's a little hard to understand why something that is that apples to apples would be largely ignored in the report to you. In fact, the only year -- we beat -- and this is the point I知 making. That is the collection rates for the Travis County -- the county attorney's office are good. And it's just a heck of a lot easier to have good collection rates here. We are beneficiaries thank goodness of a very good local economy. The greatest good thing the county attorney, this one and every one we've had for a while is the beneficiary in the collection rate you have at the end of the year and at the end of September in having a tax office that outperforms everybody. So we start off if it's 100-yard dash, nelda starts us off on the 81-yard line and a whole lot of people start off in other counties where we collect, you know, back there around the 70-something-yard line. It's a lot easier to get up there that last 99% if you start out several percent ahead. But those cumulative collection rates that we are rightfully proud of, to be really honest about it, you would have to say the only thing we're talking about here is do you outsource the lawyer part of it and if so how and how much. If you are looking at the lawyer part of it, if you start one lawyer out from the 80-yard line and one off on the 75-yard line, it's not a really fair -- if you look at just where they ended up, they will probably end up a little different even in the one on the 75-yard line did a little bet better. You might not catch that other one because he started off at a different place. The only year that -- remarkably that you did receive information about our performance here in Travis County in the Round Rock district was the one year out of five that we didn't beat everybody. And there's a goofy deal here. We started out saying we don't know why, but our collection rate for that --
>> the microphone, the one --.
>> on the end.
>> we started off -- if you see in your book, we filed these the same numbers -- is this okay? But this one was up here at 101%, didn't make sense. We put a footnote saying essentially -- I知 not sure how we worded it, but we've got to figure that out. We knew there was an adjustment during that year that would change that number, but we didn't know really thousand figure it out. It was a more odd adjustment than usual because it was an adjustment to the original levy, which is the way all adjustments are, but it came from an adjustment prior to the reporting of the original levy. So you would first think, well, it's in the original levy because it's prior to the release and report of the original levy, but it was not. At any rate, it was clarified. And when you look at that, in that one year, we didn't beat everybody. We beat most everybody. But in all of these years, for every entity that Travis County collects for, the linebarger firm in Travis County, the entity that it collects for beats every one of them, the collection rate for the county, the collection rate that the county does for the city, the collection rate the county does for the school district, every one of them till you get to this one year here and we beat them in 78 out of the 80 jurisdictions in that year. It might turn out to be 73 or something, depending on if there weren't 80. But there were only two that I know of that we didn't beat them in that one year. And there were two or three that we didn't beat them out of the 80 in this last year. But none of this data -- it is the closest thing to reliable apples to apples comparison that you could hope to have without an argument about how you weigh in the data from far away jurisdictions compared to how we do it here. The -- I would tell you as far as the spirit of what we want to bring forward, the spirit of our position is in that original document. And what it says, this original proposal, the heart of our proposal, we think that the public will be best served with a partnership, and the real debate would be if the county attorney's office starts off on January 31 doing whatever work would probably -- with probably reduced staff because they would end up having to do less later. If they did whatever they would want to do, whatever made sense without having to file lawsuits just to get the fee in, you would have a lot fewer lawsuits. They would have a great return on what effort they made. And I thought the debated would be and some expert, truly independent expertly would have to report to the court if this proposal is unlike all the other counties, this county already has a computer system. It already has an in-house collection group. It already has an infrastructure to do it. But it's big and growing. If you retained it, streamlined it a little, but then you got a private sector who says well, we could at a time over on 7-1 and we do everything. Most of those counties that doesn't have that, they don't do -- they don't have a staff that does any of that up until 7-1. But if you said, well, let's don't do it all one way or all the other, your real analysis would be at what point could you get the benefits of both. And it would in any respect cut into the profit margin for the firms, and the further you go along that continuum increase the revenue for the county. So if you got closer to 7-1 before the partnership became either mutual for several months or turned it over, you would have a continuum in which some smart expert would say about in here, if you really were fair to both sides in analysis, somewhere in here you would get to the point where it's actually better for the county because the -- weighing both the expenditures and revenues would allow you to file the lawsuits when you want to and on the bigger accounts. But instead of filing thousands of lawsuits, way down the food chain against the lowest valued homesteads and the small businesses, you would be after some months you could have those done under 3307 where there's no court costs and where the attorney fee, if it comes in, doesn't require a lawsuit, court costs or any of that activity to get it, but it would only be done on the smallest fraction of the most delinquent taxpayers. But if you had to use it, they at least wouldn't be hammered with a lawsuit to the numbers that they would be now.
>> let me ask a question real quick because you brought up some good points, as everybody else has. But we have a real critical situation in low-income areas, and no doubt about it precinct 1 and precinct 4 on the low-income areas, if you want to look forward the county. When it comes to property taxes, there are some challenging situations for people to pay their taxes. And I know that we should pay our taxes, all of us should do that. Something that the county brought up that I really need to know and that is a lawsuit not being filed against persons that fit into some kind of tax payment program. What I need to find out, I don't mean to cut you off, but it's just been bugging and bothering me, has there been any provisions made whereby those persons that have been overwhelmed by explosion growth on the eastern side of Travis County, explosion growth, and of course their property values are going up and senior citizens are struggling having to pay their taxes. I hear them all the time, trying to help them out the best we can. What kind of provisions have there been made if the tax repayment program -- tax payment program that's offered by the county where we prevent lawsuits and give those persons a chance to pay their taxes, is that something similar to what you suggested about court costs and all these other kind of things? How does it connect? I知 really not understanding. I need to get it straight in my head.
>> well, i'll hit you with a few direct responses. First of all, another frustrating thing when we saw the report is we have seen -- i've lived in Austin now 35 years or thereabouts. And for decades people would predict, you know, because of the growth and because a the up-ies wanting to move downtown and all these other factors, east Austin real estate is going to start skyrocketing soon, but it never happened. Well, it has now. And the result is at a time because of those inflating and rapidly increasing disproportionately increasing property values, there's not a lot the county can do. That raises the taxes more over there, more in any segment where there is a disproportionate increase in valuation like we're having with that development now, but that kind of disproportionate increase in the taxes also sky rockets their payments, make it more difficult to pay, you get more delinquencies. What we're doing right now is at the time of greatest need, we're filing more lawsuits, and the lawsuits are the most regressive way to work it out. One of the frustrations we had, for example, you wouldn't see it in their report, from the fee of the firm, we put in our report that we would dedicate at least $100,000 a year to a hardship fund for people that not in our judgment, not to give the money back to the county, it's not legally allowed, but you can set it aside and have a county administered tax office where if grandma is not the age where she gets an abatement option but she is in the hospital or there's a state issue, there's equities that some independent -- that you can be looked to to pay some portion of taxes for the most extreme situations. The other thing is if you look at -- this is more Round Rock data and this is what I was telling you we knew -- we actually said about that 101 when you said it's impossible, we knew we would have to clarify and said in our very first presentation of it that that number exceeds 100% to a large adjustment applied, this is an unusual result because that adjustment and we would have to clarify. But on the question you're asking, think about if you had these realities.
>> the microphone there.
>> another lawyer telling me how to do it.
>> this -- i'll go through them quickly. This stands for one principle. A lawsuit that has -- whether it's 250 or $500 on average, our belief is they average about $407. But this principle won't change. If you're suing -- the lower value properties you sue, you have a very regressive effect because the suits have a same amount to sue everybody. But if you've got a $1,000 tax bill, to get that $150 fee, you tack on a $500 -- say a $500 cost because some of the costs that are not acknowledged include the title work and things like that. But look at these numbers. If you look -- and all these charts are -- divide the homes that by valuation in each precinct. When you will see in precinct 1, the lower valued homes, this is how much his tax bill goes up just for the suit alone. Nothing but the suit. That's how it raises his -- in the lower valuation for precinct 1, you just upped his tax bill just because you sued him. If you look in 2 and 3, they don't have quite that kind of problem. It's still regressive, but it's not regressive three and four and five times over. The differences are more moderate, but they are still there. It's regressive if you are going against the lower end of the small businesses and homesteaders, you are going to have a very regressive effect because the cost on the suits are the same for -- no matter what level. Precinct 4 is probably the greatest internal unfairness on the regressive nature of it.
>> I知 confused about something because you keep talking about it's a lawsuit, it's a lawsuit, it's a lawsuit. The firms get to slap on 15 to 20% is the maximum fee whether there's a lawsuit or not. So are you telling me that somebody is going the feel real bad because the extra fee is a lawsuit, but they are not going to feel bad -- you've just also raised that same person's taxes owed 15, 20% depending on what county you've got your collection rate with.
>> if that were true, you would have a point, but it's not.
>> you don't charge a 15% fee as of July 1st?
>> I mean that the people that you charge by July 1st are a smallest, most delinquent group. What I知 pointing out here is we sue more people. These people pay by July 1st overwhelmingly. We're suing people you don't have to sue and get sued in other counties. Why are we suing them? We're suing them because we want to get the attorney fees.
>> is it also possible we're suing them because we have to protect the right to collect that debt, and what is offered to us in terms of a remedy is a lawsuit. It would be lovely if we could all walk over to the state capitol and get the same right to assess a fee on July 1st as the private firms do, but they are the ones who have that right, not anybody who has their collections in-house. That would be lovely if the firms would join us in getting the same ability to collect on a lawsuit, but since that's the only avenue we've got, we use the tools that we've got, and normally when you tell a county attorney's office he's filed too many lawsuits the response the thank you.
>> you are exactly right because you all have, we have without realizing these consequences, you think it's good that they file lawsuits because it brings in revenue.
>> it brings in the debt that is owed.
>> well, let's examine that. Let's examine that. You're going to find that that exaggerated lawsuits more than any other county doesn't change your collections. Make me prove it.
>> I wish we had the data from harris county, but linebarger didn't turn in a that data because I would have focused attention about the huge targeting of poor taxpayers who have not paid their bills in the third ward. But we didn't get any data on harris county so I can't really go down that path.
>> well, I suspect you know that we requested the data and that harris county said they can't provide it in a way y'all wanted to get it.
>> which is an amazing thing for the largest county in the state of Texas can't tell you what your collection rate is.
>> let me speak to your question because I want to speak to it directly.
>> let's be courteous to each other too. Ask your question if you have one and let him answer and if you have another one, ask it.
>> that's my question.
>> there will be plenty of opportunity for debate, but we're here gathering information today in discussion so if we can let -- be courteous to one another, i'd appreciate it.
>> I agree, judge. I知 trying to go too fast because I think there's time pressure. But i'll try to move it along. A point that I would like to make on the question that Commissioner Sonleitner raised, how -- in these early stages when there are lawsuits and lawsuits being filed in February, March and right on down the line for the private sector, there are -- you could file lawsuits if you need to. But they couldn't have a fee under 3307 until a five-month grace period. But look on your executive summary in our proposal the bottom of the page 4. That's a pretty telling statistic on what you asked about. Travis County, if you see it says in nueces county, are they unnecessary -- it starts with a question unnecessary. It says they are unnecessary because statistics show that properly pursued, almost all taxpayers pay before July 1. In fact, if you compare for '03, between -- beginning in February up to July 1 of '03, Travis County has 17% of folks that paid during the months when they are still getting sued. In nueces county where those suits are one-fifth the number, they had a 22% -- 24.5% increase in their collections with no lawsuits. What I知 telling you is your lawsuits are not the key factor in getting people to pay early on, it's those incredible penalties that by state law gets tacked on to them and the fact that they are being called and they are getting letters and they are actually, you know, in the good collection outfits you were joking, Gerald, we practically take them to dinner. We had walk and talk programs where you do go visit them. That's basically for businesses and places where it's appropriate to try to make that contact. I want to run through these quickly because the -- a key part of our proposal and the reason you will see before he had to leave the president of the naacp and the other community leaders from the hispanic community writing you letters that you have and coming over here to talk not because they want to complain about the officials, but because they have seen some of these numbers. And the broader that these numbers are understood, the more concern there is going to naturally be. That's the way it ought to be. I believe these numbers will come to concern the court too. If you look at not just that it would be regressive, if you got sued, but look at then -- this is a two-year question of what levels of people we really are suing and look at that by precinct. Who is getting sued. Of the lawsuits in precinct 1, look how many more people of the lower valued homesteads got sued. They are all delinquent. This is how many more people of the lower valued -- and these are homesteads. It's not that 86% number that was thrown out. We never claimed that that 86% represented below the median price range that was raised in the earlier proposal, we never claimed -- if you look at the actual words we said, that if you look at the bench mark just of the $197,000 valuation of the average homestead in Travis County, 86% of the suits that were filed were filed below that amount. But we never said they were all homesteads. It's just that's the valuation level at which almost everybody sues. It's not much of a defense if you say, well, not all of those are homesteads. What a defense. It just means the rest are small businesses or smaller accounts, period, of some type. If you look at -- if you go through these, and by the way, on the rebuttal of how many homesteads were sued, look at the conclusion that was reached, and it actually says that below that average amount, the 197,000, only 17% they say of homesteads are sued, period. Well, like I said, there's a lot of different types of entities sued, but we -- looking at homesteads, in the numbers right above that -- and I can't put my finger on it right now, i'll get back to it -- but they admit it's 77%. They impuned what they thought our assertion was that -- that of all homesteads, 88 -- 86% of them or that all lawsuits, 86% of them -- of all homesteads, 86% of them are below that amount. Their own numbers in the rebuttal admitted it was 77%. If you go by this by precinct and you look at who actually got sued in the last two years, how regressive it is, and then you look at the actual suits, that's who is getting sued. The number the left is always the people at the lowest end of the valuation chain. Well, precinct 2, it's not -- you know, it's nothing to go too happy about because it's the biggest chunk in that precinct 2, but it's nothing dispro forks nature as what you find in 1 and 4. This is precinct 3. This is Travis County data. And this is on the question of not -- it's just raw data. Who did you sue? Well, who you choose to sue in every precinct is the highest number in every precinct is the lowest valued homestead. And these are just homestead numbers.
>> do you define low value homes and lower to middle value homes somewhere in your document?
>> we just look at the total valuation and take the numbers in each quatrel and see where does that stop at. That --
>> and each bar is a percent of 100. So the blue one there would be whatever number that is of 100.
>> yes, sir.
>> okay.
>> well, look at the disparity of who gets sued in precinct 4.
>> I actually have a question. Takes us back to when you were the county attorney. Did you ever -- when we do these collections, we are in a partnership with 84, 89, what's the number?
>> 83.
>> 83 jurisdictions to collect their taxes. Did you ever get a phone call from any of those taxing entities saying we disagree with your collection techniques? We don't want you filing lawsuits. Oh, just let them slide. The money will come in whenever. Because my recollection is there was one particular school district, lago vista, who basically was like we need you to be more aggressive. I don't remember the superintendent of del valle or any trustee calling up saying, oh, we'll take our money whenever. They have budgeting too and they agree and sign a document saying we turn all of this stuff over to you. They ought to or should be familiar with the techniques. Did you ever get anybody to say there's a dis-- whenever. Get the money to us whenever, it's not really important?
>> well, of course they didn't say the money is not important. They never knew, like you've never known until this study, how far of how dispositive portion nature the concentration of the lawsuits are. And if they -- they were never asked me not to file or file lawsuits. And in a low collection area, they would want to do more. But -- but the point is I certainly never heard anyone call and said, hey, if lawsuits are not necessary to collect my -- keep my collection rate high, please keep filing them anyway. I never had anyone call and say if you have options to file lawsuits but reduce the unfairness in how you do it, we want you to stay unfair in how you do it anyway. I never heard anyone say. That but my presentation, the spirit of it is we would never propose to reduce the collection rate, period. But the question -- we know that it is a box that you're in legally. We've always known that. We -- you know, the 3307, the private way of collecting with that add-on fee on the smallest group of taxpayers that are most delinquent, Travis County, when that law was passed, you read our summary, there's a little half-page historical background, that summary will tell you Travis County thought that's a good way to do it. We want to do that and not have them do the 3348 and all those lawsuits. And bill aleshire and other he collected officials -- elected officials changed our system to that kind of collection system. Lying around here somewhere -- I went back and looked, and these come from the early '80s. That's when we were trying to do it the way the private sector does it because everybody thought it was better than having to rely on the lawsuits and we converted to that system. We got two or three a.g.s opinions, one requested by my old boss Margaret Moore. Said the a.g.'s opinion came back and said the in-house lawyer, the government lawyer cannot use that process that the private sector uses, and we didn't agree with the opinion. It said phoerlsz, as I remember it -- more or less, as I remember it, since the government lawyer has a duty to do it without a fee, he can't add on another fee unless specific authorize and the legislature never agreed to specifically authorize it. They've gone back to the legislature and the legislature has never agreed to change it. A humorous side note to that is if you look at the 80-some jurisdictions, I believe there's 28 of them we're debating whether or not they should be collected under -- we think we collect under 3348 for the county attorney's office and the private sector says 3307 is better. 28 of our jurisdictions actually still operate under the 3307 contracts that are the private collector type of contracts because nobody ever thought to change them over the years. Some of them are 20 years old. But we don't do it under 3307, but that's what their contract says we're authorized to do. I make that point for this reason. If you looked at and could do it with the 3307, we wanted to do it. But we were told we couldn't. At that moment Travis County said how can we get around those a.g.s opinions. And the way they decided to do it and the way we've carried on all these years is to say, well, we can collect the fee, we can't collect it under 3307 like we set it up to do, but they tell us we can collect it with a lawsuit so we'll have to just start filing enough lawsuits to pay for our collection process. The reason we've always been under the same theology and that was we don't want the innocent taxpayer who pays on time to have to fund public or private collection process to get the money from the delinquencies because it punishes the innocent taxpayer by having to pay his fair share and paying out of his pocket to get the collection done for the delinquents. We had a good intention, raise enough money with the fees to pay for our in-house collection. But we got the incentive is so strong that over the years if you look at your budget documents for the last 24 months, and they've always been there, the performance measure nor the delinquent tax division in the county attorney's office is how many fees you are bringing in. Well, then if you are in the box that you can't make a fee without filing a lawsuit, the incentive has been so strong that we file more and more lawsuits. The year I left, it increased 44 percent in one year. Now, the proposal we make is to say how could you thread the needle there. Our proposal would cut the profit of the private vendor. It would maximize the revenue by the county and there would be an argument about where you ought to cut it off to get the best deal for each side. But that to me is a public policy debate.
>> that's a good point. Earlier in the discussion we heard and I brought the point up about the $5.3 million up to [inaudible] in revenue, a decrease in revenue if the county decides to outsource. And I hope that -- and I guess I -- I hope what you are suggesting is that that -- I知 trying to figure out is that really a statement that we have to deal with because of the fact that if the auditor is not able to certify that we will have a revenue decrease, in other words, that's something that has to impact us in the budget process, and that, in my mind, I need to wrestle around that and that's one question I want to make sure if that's what you are leading into because I think that's what I need to here also is that magnitude of --
>> yes, sir, part of the frustration is all of those numbers that the auditor ran had nothing to do with our proposal. In other words, all of those numbers change if you -- the assumption in the auditor's number running was that you would do it all or nothing. And if you had no public lawyer involved and you privatized the whole thing, I don't agree even with all those numbers, but the point is they ran numbers on an alternative that is not the alternative we've proposed. It speaks not one word to the alternative we proposed. And the economics of the alternative we proposal will be dramatically different than anything that was analyzed. Now, I want to tell you part of our frustration is we actually made a written request, the county departments had considered resources and so they had contact with the review committee. I said could we clarify it, explain anything, figure out -- you know, not on the same wavelength about it, and they eventually put that in writing, and they had their reasons, I thought all the firms ought to come by and say do you get it or did we -- you know, here's our pitch. But they didn't think it would be appropriate to do that. And I think some of these big questions that are the gaping discrepancies in the information that was even evaluated and presented to you might not have happened if we had been allowed to do that. But the bottom line is those numbers, I would not advocate anything that would have one dollar of reduction in net revenue to Travis County. And if you -- by whomever you look to to answer it says that will be the effect and that the net benefits, key word net, for the whole thing, is not better for the public, I urge you to not hire any private lawyer including mine. My firm. But the reality is it needs an honest look at what the proposal was, not some hypothetical that has nothing to do with the proposal. I will make a couple of other quick points. And this is in your packet. There is a -- it's our executive summary, a tab on the side that says executive summary. Back toward the back, I知 not going to go through all that, but there will be a tab on the right, it will be red or purple. Go to that and you'll see two charts in there, different ways of expressing the same thing.
>> [inaudible].
>> and this is the dilemma that I think all the good people involved on both sides of this need to put their heads together and figure out can we do this better or not. I can tell you this, gus garcia came up here to talk today, the sterling lands and leaders on the east side that have written you letters, a lot of them they don't agree with me on a whole lot of things. When I was in office they didn't. But the consistent theme is if these numbers are true and the response from the in-house review was, well, we can't control it if they don't pay their taxes. Well, everybody knows that. But do we really have no more gumption than to say it's just something we're going to have to put up with if what we're doing is suing more than any other county and we're having such a disproportionate and unfair result on the people who have the most trouble paying. I propose that we have more gumption than that. This chart will tell you not a hypothetical. This is who you sued in the last two years. And this is homestead suits. We still don't have four precincts that are really all the same population. But look at this. These two big chunks here are the east side. That's precinct 4 and precinct 1.
>> precinct 2 is on the east side. On the east side. Precinct 2 includes the east side. It is all of the town of Pflugerville, which is 25,000 people, and the unincorporated, it's huge. It's on the east side of the interstate.
>> but I will have to -- i've heard your explanation before and I will have to say this. I think what we're talking about here is the traditional east Austin, which is east of i-35, where the i-35 was a barrier to all kinds of economic opportunities, and I -- nowadays what is east of i-35 in the northern part simply does not fit the definition. I知 sorry, I have to disagree. I was trying to make it along the distinction that the information is presented to us in. Which is by precinct. But let me tell you, Karen --
>> Commissioner.
>> Commissioner. This is the precinct 2. It's nothing that you would really want it to be. The lawsuits filed against citizens of your precinct are overwhelmingly against the poorest homeowners and the smallest businesses. Now, that ain't anything you want, but that is our reality right now. I want to shift gears and wrap it up pretty quickly.
>> pretty quickly mean about in about five minutes?
>> yes, sir.
>> then give the doctor a chance to --
>> I am. He drove all the way here from san antonio. We're going to run through -- we're going to run through his report, and they are found in the document that's attached as exhibits to document called summary of linebarger's position. If you look at those, and we're not going to do the editorial on them, but I知 going to be the vanna white and try to move the material around. And I think what -- doctor, would you give them the 20-second quick r quick and dirty on who you are?
>> judge Biscoe, Commissioners, I知 a consultant in economics from san antonio. Primary specialization is in property tax, [inaudible] appraisal and [inaudible] finance and working in these areas for the last 20 years.
>> he may be too bashful to tell you that is he has a ph.d. From economics harvard and a bs from the university of Texas at Austin.
>> we won't hold that against you. [laughter]
>> now from here on we don't have exhibits, but they are in your packet starting with number 5. And the category is the impact of lawsuits on tax collection. And Commissioner Sonleitner, this -- if you could look at the top three graphs, that's telling you what Travis County collection rates were during the years when we're escalating the number of lawsuits. But look at whether or not increase or decrease in the number of lawsuits changed your collections at all. Dr., would you --
>> yes. I think this is a very telling chart here. A lot of assumptions are going on and one of the many assumptions is the only way you collect is to file suits. And that is not necessarily so. To have an effective collection program, you want to sue as many of the large accounts because those are the big, sophisticated taxpayers who have attorneys and who are used to these kind of things and for them to maximize their revenues and so on, they have a way of deciding when they are going to pay and when they are not going to pay. As far as suing the small taxpayers are concerned, you want to sue enough to assure compliance, but you don't want to sue all of them. And it doesn't impact your collection rate if you do that. And this particular chart shows that between 2002 and 2003, Travis County increased the number of lawsuits from 3,723 to 5,183, 39d -- almost 39%. 40% increase in the number of lawsuits. It had no impact on your collection rate. Your collection rate in fiscal year 2002 was [inaudible], in 2003 it was 982856. Essentially the same collection rate with 40% more lawsuits filed.
>>
>> [one moment, please, for change in captioners]
>>
>> ...to sue all of them. And it doesn't impact your collection rate if you do that. And this particular chart shows that between 2002 and 2003, Travis County increased the number of lawsuits from 3,723 to 5,183, 39d -- almost 39%. 40% increase in the number of lawsuits. It had no impact on your collection rate. Your collection rate in fiscal year 2002 was [inaudible], in 2003 it was...
>>
>> ... Your own documents, put out the review when we first started talking about this months ago, basically said look at how much we are spending in house on county attorney and in house on the tax office, about 2 million a year. Look at how much we are bringing in in attorney''s fees, add it up, do the subtraction, there's several million that is a net benefit to you because of the attorneys' fees exceed those two expenditures. What is completely left out of that analysis is two things. You will notice our symbol for that chart is not a building. It's not something called Travis County government. It's a little man. It's a little man who has a pobt right here. Look at the taxpayer, not divide it up one government, the analysis for Travis County, we take the total amount it costs us to operate that system, around 10 million, they only subtracted 5 million as the cost because they are able to have the other jurisdictions pay half of that cost. They didn't count anything against those as the amount of court costs hammering people in lawsuits. If you put in those two things, and you say what do we do for the taxpayer, we hammered in $10 million more than you would have on the net if you had privatized it. If you would look, we really are trying to move quicker, on the court cost issue itself, if you break down by precinct, in the report I just received they said well it's not really a 400 something dollar average court cost, it's really only $250, I think that's wrong numbers, but those numbers that you are looking at there, are numbers that show you that it's still very regressive, even if you reduce it. Because you are suing so many people at the lower end of the evaluations and the small businesses and the effect on them is still disproportionate. Can you explain under number 8. Basically it's how disproportionate the effect of the number of lawsuits against people at their lowest value range is. We used that bottom 25% amount, which was $111,000.
>> where are you?
>> number 7. It is number 8. Loss of distribution.
>> yeah, number 8.
>> right. We basically said the number of people that are getting sued in those lower values are so much greater than their percentage of the actual population.
>> well, there was a rebuttal of that, paid a study together, but what did their own study show?
>> yes, basically the county report showed that 37% of all of the homestead lawsuits on those that were below $100,000 were -- were 37% of their lawsuits were on homesteads that were below $100,000. We went back and said okay, how many of those -- homesteads are below $100,000. [indiscernible]% of all homesteads in Travis County are below $100,000. So of all houses below $100,000, 18% are -- all houses in Travis County, 18% are below $100,000. Of all lawsuits filed on homestead, 37% were on houses below $100,000. So the number of lawsuits filed were twice as many proportionately on the low price home than they were on others. So you got 18% compared to the 37%. So if you wanted to be care, you would want to -- 18% lawsuits on 18% of the houses, you are filing 37% of the lawsuits on 18% of the houses. So you are filing twice as many lawsuits as you would if you wanted this to be completely fair and across the board. Is that clear? I知 seeing a little --
>> that's another way that could be fair. That is there is no equity between the taxing jurisdictions related to a homestead exemption. It strikes me there one of the ways that Travis County assists, especially on somebody at the very low end, we give a 20% homestead exemption. If it turns out that that person is over 65 or disabled, there's $65,000 deducted after that. So that $100,000, knock off 20%, down to 80, knock off 65,000 for the elderly, you are down to 15,000. That same property, the city of Austin gives you zero. So they are being taxed on the full value of that and depending on what the state legislature does, it's either going to be 15,000 or more, so I mean there are -- that's very instructive, but I think it's also instructive to the taxing jurisdictions of how they can be most helpful to people at the low end of the ladder.
>> of course even with that, some of these people aren't able to pay and suing them is not the way to do it. I mean there are other ways to do that, the law firm has found a way to actually very effectively collect those taxes without suing those -- those very low income --
>> [indiscernible] what is the real number for lawsuits that are filed? The cost of that lawsuit? I知 hearing variations from 200 something to 400, maybe 500, I don't really know. What is that actual number, that is on top of a whole lot of other stuff.
>> okay.
>> we estimate somewhere between 390 and 450.
>> between how much now.
>> 380 to 450 is our estimate. The county's estimate is 250. But the reason why their number is low is because their number includes personal property and all of the personal property losses or a large portion of them, the ones below 5,000 are filed in the j.p. Court and of course the court costs on those is only $77 or something. So you add a large number of your property accounts to this whole -- this whole batch, that lowers the average. Now, if you take the personal property account out, and calculate the -- the average court costs on real property, it's going to be much higher than $250. We believe that it's very close to -- to somewhere between $350 and $450.
>> actually, I want to just cut in here.
>> come on.
>> swing it, yeah, swing it. The mic.
>> first of all, the lawsuits that we are talking about are on real property and personal property. So it does make sense to calculate what the court costs averages are for -- on all lawsuits. Second of all, our number is not an estimate on the court cost. That is actual. We went through and calculated exactly what they were. So we didn't, you know, make an estimate, i'm, you know, sure that your experience may be different than ours, but I知 telling you that Travis County's number is the actual number.
>> I guess what -- those assessed lawsuits, are they basically disproportionate as far as what I知 looking at here as far as the east side? East side of Travis County?
>> okay. That's what I need to know! When you looked at the lawsuits --
>> it's unfair because -- [multiple voices]
>> representatives from perdue is here right.
>> I知 sorry, judge.
>> -- [speaker interrupted -- multiple voices]
>> they need an opportunity to speak, also. [multiple voices]
>> I -- I will get back with you, I知 not sure that will be today. [laughter] -- [speaker interrupted -- multiple voices]
>> sorry.
>> let me ask a real important question. Now, I did catch your point about the number of lawsuits being reduced and the collection rate at Travis County remaining about the same time.
>> yes, sir.
>> but what hard evidence do we have that if we negotiate more with those who live in the lowest value properties, we are likely to -- to have the -- have pretty much the same collection rate with them as we do as a result of filing the lawsuits.
>> well, the -- the experience with the law firm is that by calling them, by working with them, you actually collect, setting up payment arrangements, those kind of things eventually generates the elections. Frankly I call filing lawsuits, having a shreng hammer in your hand, a lot of these people going through a hardship, genuinely want to pay their taxes, they don't want to be delinquent.
>> but they will be certainly [indiscernible] filed. But when you see what evidence do we have, if you are the number one filer in the state and in many counties file two and three and four times as many, well, if -- if your collection rate is maybe a little better but comparable, then you know that it's really not the lawsuits, that that we just gave you shows that even within our own county, when we skyrocket the lawsuits or bring them down the next year --
>> right.
>> the reality is the threat of a lawsuit and the incredible escalation of penalties, is what brings people and most of these lawsuits even when filed most -- many of them end in partial pay agreements. Well, you can have a partial payment agreement without the lawsuit. I am a fan of -- after you've done everything that you can, you fine people, call them, send -- find people, call them, send them letters. Walk and talk, go out and see them when you need to, especially businesses, you may actually draft the lawsuit and send it to them. But there are so few people that will not pay pretty soon if they see that, it is simply not accurate to say that these lates and incredible numbers have much of an effective rate on your collection rate. The data says the opposite. If that joined with internal inequity in it, the real position we are saying is couldn't there be a way to get the parts out of the system that we would rather not have, which is massive number of lawsuits and still keep the collection rate up. If you can't, well that's your judgment, that's the spirit of our proposal.
>> number 8, going on 9.
>> judge, I --
>> let's let them finish and have the court ask whatever questions we have. Then let's thank ken for coming by today. The county judge will recommend after we finish with perdue, that we have this item back on the court's agenda in two weeks rather than one because I will have a series of questions that I would like to have answered, you all may well need two weeks, plus next week we have four members of the court here instead of five. This is an issue where I think we need a full complement of members here. Now, sorry to cut you off there. Done with 8, headed to 9.
>> if I may just say two quick things. One quick thing about the court costs. Since we are looking at homesteads here, it's relevant to use court costs on real property and not personal property. So the 350 to 450 more relevant than the average on all lawsuits.
>> okay.
>> on page 9, really the same -- same kind of a thing. Looking at -- at the -- staff made a comment that essentially the same number of lawsuits apply in all precincts. We agree with that statement. But when you look at the percentage of the lawsuits filed on lower priced homes, again you see that the largest portions of the lawsuits are -- are filed in precinct 1 and precinct 4. The first chart shows 97% of the lawsuits in precinct 1 are filed on homes that are below 197,000 average full value in the county. In precinct 4, 95% of the lawsuits are filed on homes that are valued below 900. Below $197,000. And the next page, if you lower the bar, say okay what about $100,000, maybe that would reduce lawsuits, still 70% of the lawsuits in precinct 1 are filed on homesteads below $100,000. And in precinct 4, 62% are filed on homesteads below $100,000.
>> it's driven by the fact that residents in precincts 1 and 4 make less income overall on average than those in 2 and 3.
>> that's right. The home values are lower generally. If you are going to file a lot of lawsuits you are going to have to do that.
>> if that's the solution, that ties into what we would say the private solution is. If you are getting that -- getting that far down the chain, the evaluation -- the valuation chain, you have a lot better way of collecting than a -- as a tool, a lawsuit as a tool, that greatly escalates 60 to 70% the result of their -- what they have to pay. If -- if you can find that. What we think is the 3307 for that smallest portion at the lowest end is the solution to get around that inequity. Let me say, I should have said --
>> we heard you loud and clear on that. In conclusion, that's how your next sentence starts [laughter]
>> in conclusion, we appreciate your patience. I said I would assume that no one would -- that Pflugerville wasn't east Austin because it's a different city. But I didn't mean that their interests are not important. Just I don't think anyone living in Pflugerville thinks they live in east Austin. So -- I want you all to do the right thing and if doing the right thing is to ignore our proposal then do it. I think if the county departments and the private sector and any other firm, including ours, with some independent guidance, would show you a different set of numbers that would be a blended public/private partnership, all of the assumptions that you have heard today in the report would be dramatically different.
>> here's my question. What I will need between now and two weeks from now, preferably one week from now, is a one or two pager that indicates if the four bullet proposal that submitted -- that linebarger submitted were adopted, how the county's revenue would be the same or be increased. Right?
>> yes, sir.
>> the other thing I知 not sure that I understood the $10 million additional cost to taxpayers because the other information we got reached a different result. So if you could explain that in simple english in a page of -- or two, it would help me understand that. And the other thing is a kind of a one pager on here is our strategy for dealing with low income residents, here is the revenue result. And here are the reasons why we think this will be better than filing a lawsuit, what I hear you saying is in other counties this approach has worked, a little bit more specifics about -- about that. I知 suggesting if we can get this in our hands in one week that would give us an opportunity to review it in one week, right? Then if we have this back on the agenda on August 9th, it looks a whole lot better than August 2nd. There would be probably some questions to staff, sort of clarifying some of the presentations made, sort of --
>> [indiscernible]
>> we may have to kick that down to August 17th.
>> yeah.
>> 16th. To make sure all of the players are here.
>> yeah. Actually, I -- i'll be out -- that would be better for me, too.
>> the 16th of August.
>> yeah.
>> we will be there. We will be here. We will be here any time that you say.
>> I have one last question and on point I知 going to ask it to the folks from perdue as well. Up until the last practically the last paragraph you did not use the word independent. When marty tuey's statesman story first came out there were some quotes, concerns that you had that the analysis that was done was not independent and that it skewed, biased, whatever you want to use to describe it, but you did not talk about at at all until your presentation until you got to the end talking about looking at an independent analysis of a hybrid solution. Are you still having concerns that the process that we set up was one that was doomed from the very beginning? Because it was in-house people who do it.
>> well, my job is to work with whatever process y'all set out. I do think you have seen the result of -- we know that the two resource departments for this report that you got were -- came in opposed to privatization. And if one side has access to the review and the other side is denied access to the review, and in other words we were not resources, we were given written things, we couldn't speak directly. And whatever the access is, I think it's more efficient and there is a circle the wagons thing that happens in any organization. Everybody we are dealing with are honest people. Everything, but when you get a position, it's -- it's I think it's hard to be completely unbiased once you have started out from a position. But my faith in the individuals would lead me to say if they themselves think that's the right thing to do, I would abide by anything y'all thought or they did, too. I have one thing that wasn't said. And it's important to the jurisdiction that Travis County represents. Our proposal, it's a one sentence addition to the proposal. But it's in there. I -- I would never have -- did not want our firm to be -- to be representing anyone who would want to be in the system but would want us not to represent them. Whether it be another private firm or more importantly the Travis County attorney general's office. In my judgment there is no reason if -- if any jurisdiction, if you all say we can do this better, and we can have a public/private partnership and we go into that partnership with some firm, if some jurisdiction says I don't want that firm doing any 3307 business for our properties, we could make that happen. My point is I -- I would not want, I think it's more efficient to have a cutoff date and cooperate in some way and make it as simple as you can for a public private partnership. But I would not want to urge that any entity that still wants to keep the county attorney no matter what agreement is made, as their attorney, exclusively, should be prohibited from doing that.
>> is that in our file, one of the copies of our files, the chair, it looks like it might be our old files.
>> we have very patient representatives from perdue here.
>> representative.
>> I知 going to -- I won't be able to get us out before 5:00, I will be very brief.
>> we want to give you an opportunity to express yourself. If you can come back on the 16th I know that we will have additional opportunities to give comments, between now and then. Okay?
>> I知 john banks the managing attorney of the perdue brand and Austin office. I appreciate you giving us an opportunity to appear on behalf of the firm. I知 going to probably be in agreement with both of the presentations that were before me in part. I think there are things that I知 going to bring -- I think there's a very significant basic fact that goes to the very hard of the last hour and a half long or two hour long discussion. Filed against the lower valued homesteads, Commissioner Davis with regard to your question about what can be done, what provisions can be made for folks impacted by the explosive growth, I hope to address that, also. I'll tell you quite frankly, I apologize, I can't see my paper with my glasses on, I can't see you with them off.
>> [indiscernible]
>> that's right. But I think there are, this isn't going to sounds like somebody that wants your contract, although I would love to have it. I think there's provisions, I think there are actions that can be taken that will significantly can improve efforts and resolve concerns about -- about these lawsuits against this portion -- the disproportionate number of lawsuits against lower home said. I think there are things that can be done with your system that's in place right now. I知 going to go into those. One of the most significant facts that I have not heard mentioned at all, I guess that I got a little bit upset about this, I know nelda spears, I have known her for some time. When I read in the paper, I知 not saying that the Austin american-statesman was -- was 100% accurate or not accurate in quoting folks, but when I hear that -- that there is a suggestion that lawsuits in this county are racially motivated, it bothers me. Because I absolutely, being in this industry, being a taxpayer of this community, I don't believe that. Does that mean that the system doesn't treat or treat anyone fairly. That means that the system fundamentally is flawed. I don't think that you are going to remove those defects and the problems that you have got with the property tax system. If you go out and higher a law firm, you are not going to remove them by keeping your current system in place. One of the things that you have got to recognize, when you talk about the number of lawsuits filed against lower valued homes, think about why there's more numbers against the lower valued homes. Mortgages play a significant role where lawsuits get filed. You go into upper ends homes, I know this is consistent with what Travis County does, we run file. We identify lien holders, guess what? Chase manhattan, wells fargo, whether it's -- whether it's green tree servicing llp on a manufactured home, when you contact those folks and you tell them we are going to run up a bunch of costs, they tend to want to avoid those costs and pay the taxes and roll it over into the note and avoid the lawsuit. That's a simple fact that's never been mentioned. That's one of the reasons why you are going to be able to work. I mean, you have other avenues, you have greater resources and other folks that you can contact on upper end homes. By upper end homes, I don't mean confining it to west Austin. I知 talking about homes where you have still got a mortgage, whether it's an 80, 100, $150,000 home. If you have got a mortgage out there, you are going to have very -- a much greater likelihood of -- of collecting the tax without having to file a lawsuit. Now, I would suggest this, because I知 not privy to all of the conversations that take place between the county attorney's office and taxpayers and county attorney's office and lien holders, but if you don't have a procedure in place, where you run title and contact lien holders before you ever file a lawsuit, you need to do that. There are lawsuits, I know there are lawsuits that are filed where a lien holder probably should be contacted. You make sure that you have that procedure in place and you are going to limit, are you going to minimize certainly decrease the number of lawsuits that get filed. Other things that I want to mention, I would like to address, what I perceive to be the recurring issues and concerns of the court and certainly again as a taxpayer of Travis County, that I think that all taxpayers would have issue with, that would be -- that would be Commissioner Davis, you indicated that you asked the question, you said what provisions are made by -- for the folks that are impacted by explosive growth. Let me tell you, I think there are at least three different things that you can do. Whether you hire another law firm, I知 not telling you don't hire another private law firm. I知 just telling you whether you hire a law firm or whether you keep the machinery in place that you have, you can implement these procedures and you are going to see some significant improvement. One of those, and Commissioner Sonleitner talked about the local homestead option. The problem is you won't believe how many people aren't aware of what legal rights they have. Taxpayers. Educate the taxpayers. There are things that you can send out fliers in the October tax statement, whether you -- before you send out a letter advising that they are going to be sued, you notify them in those letters, give them an opportunity to know more about i've got an option that I can claim a homestead. I can claim a disability exemption. I can claim a senior citizen exemption. There are so many times, I represent a lot of school districts and counties surrounding Travis County where folks, I will be talking to somebody that's 75 years old, I will find out, I will look on the tx county data, which you all looked at hundreds of times, I will say they don't have a homestead exemption. The first thing that I say is why haven't you at least applied for this homestead exemption? It's amazing. It's astounding how many people the percentage of the public, educated work -- I mean, that are -- that just simply don't take advantage of all of the homestead, all of the exemptions in place. Another very significant area that is overlooked, deferrals. Now, there has been recent legislative changes that are going to require law firms and tax offices to tell people about these deferrals. But the thing is you don't need to change the machinery in place, you don't need a private law firm to talk to people about deferls. You have deferrals available to all senior citizens. Deferrals available to anyone who is going to qualify for social security disability benefits. Frequently. I知 dove tailing this, but it's a very significant option available when you are talking in terms of what -- what can you do about this explosive growth. Well, Commissioner, unfortunately you are not going to decrease the tax liability. That's something that we have to live with. Representing folks over in hays county, kendall county, where property is desirable. You end up having to live with it, at least avoid throwing seniors out of their houses, you give them an opportunity to stay there and defer that tax. There are a lot of folks who do not simply are not aware of the tax code provisions that allows them to defer their tax. Again by deferring the tax, you are not extinguishing that, simply placing it on hold, allowing it to stay out there and accrue, only 8%, not 12%, not attorneys' fees, not even the higher rate of interest. You are allowing people to defer that tax, 8% interest, they will let it be taken care of when they cease to use that property as a home instead. They need to move to a nursing home is not ceasing to use that property as a home instead. It's usually when they pass away or decide to move on, it's clear their intent is not to use it as homestead. But deferrals a great way to help folks, particularly senior citizens. To fend off rising property taxes. School tax goes, of course, can be frozen, a lot of that still comes down to educating the citizenry and letting them know here's some of your options, and, you know, I was thinking about how do you do that? Well, certainly fliers and tax statements, pretty cheap because postage is always expensive. If you are already doing the mailing include it. But if there's public service announcements on one of the -- on chang necessarily 17, public service announcements. When people are talking about delinquent taxes in the course of recovering, number one I recognize as an attorney, you know, I don't keep a client, if I don't bring in the revenues. But there's nothing that prevents, I don't think that I have ever had a clientele me not to talk to folks when I am trying to collect a delinquent tax and tell them about exemptions, tell them about deferrals. Doesn't matter if you are using a private law firm, if you are going to keep the machinery in place. Make it part of your day to day procedures when you are trying to collect the tax when you educate them so that it's not a recurring problem every year. One of the things Commissioner Gomez about these taxes that build up for 10 years, number one, you hopefully minimize those number of accounts because that is a problem. If you let these little properties build up, build up, build up, and then all of a sudden there's no equity in the property, if it happens to be a homestead man people can't go out and get loans on it, there's nothing they can do. But if you educate folks and you give them other options, hopefully you don't end up having that 10 year tax liability. Another area that -- that I think, again I don't mean to see keep repeating, but educating the taxpayer, but you also talked to them about the payment agreements. And the benefits derived from entering into payment agreements. You know, early on, as soon as the tax becomes or the tax statement sent in October, folks go down, enter into payment agreements, start paying those taxes. When a payment agreement is in place, the -- the interest will accrue, attorney's fees not supposed to attach. So they avoid some of that harshness. If they breach it, it does. But you get folks started early on in the process, that can certainly be something that I don't know how the tax office handles it right now, but that's something that's certainly could be in a flier in your October mailing. Tell them about here's what we can do. There's a lot of things that will -- that will decrease the harshness of the tax system and I will tell you, I don't think that you will get anybody on either side defending the fairness and the rightness and the justness of our property tax systems, that's why the legislature keeps meeting every session. It's unfair, it's harsh. People that don't -- aren't familiar with it don't understand or appreciate how punitive it is. You know the tax that goes delinquent on February 1st, by the time it rolls around in our private world outside of Travis County, by the time it rolls around to July 1st, they are getting popped with 33% penalty interests and attorneys fees. 12 speakers penalty, 15% attorney's fees, 6% interest. There's another thing that you can educate and talk to people about. One of the things that we do, I think this ought to be made absolute multi-tall practice, whether you go with the law firm, stay with your current system. That is let people know about this harshness. It's cheaper to go out and charge your taxes on a credit card than wait around and get popped with that attorney's fee and those penalties and that interest. So, you know, you as a -- as a public official or county official, myself as an attorney, you know, I can't look somebody in the eye and go oh, man just wait around, i'll talk to you July 2nd. You can't do that. You have to let people know I guess there's recently -- there's a reason private law firms stayed around, most of them tend to do that. Some folks just don't listen. But certainly there are -- there are large percentages of folks out there that don't know all of the benefits that are available to them. That would save them from the -- from these lawsuits. Commissioner Gomez, I don't know if I answered it, there was a question that you posed, I知 more than happy to try to answer it, that -- that I had some notes here. How to address people who are delinquent. Maybe how to avoid those lawsuits.
>> I will tell you one of the things that you do. Again that is regardless of what system you have in place, you keep the communication, this is consistent with open -- advising and informing not advising in the legal sense, but educating the taxpayer, you community with the -- communicate with the taxpayer. You would be amazed with personal phone calls and contact -- which you ought to, before any lawsuit is filed there ought to be at least two to three attempts to talk to somebody in person. If it's abandoned property a different story. If it's a homestead, talk to them on the phone or go out and personally visit them. If you do that, what you are going to find is there are going to be a lot of people you talk to, find out what kind of picture that it has got. If it's a spouse that's lost a job, if it is a single mom that just simply can't make ends meet, it never ceases to amaze me when I am talking to somebody, they have got, lord knows I went to t.c.u., they have a kid up at t.c.u., that they have a kid at baylor or sending them out of state and paying tuition and they have got complaint afford to pay that tax because they have to pay to that new car, the insurance. It's real hard to be sympathetic. The point that I知 getting at, I知 not trying to be cute, you talk to folks, you find out is there a legitimate, real hardship or one where people simply haven't placed their priorities in the correct order. The judgment make the call, you have got to. You know if it's employment or financial issues. Also involved with the folks as best you can in the tax office that may have had past dealings with them, that's one of the ways that you avoid these lawsuits, again it's just -- it's communication and talking to folks. Let me ask you something. Owe think we are getting off on something, I realize there's things to do to decrease the amount of lawsuits, I wish we could go you know what, apply that to everybody that deserves an exemption or whatever then do it. What's opposed to make them go and do it. But I don't think that's what we are talking about today. The question that I would have with the law firm, that is in the business of -- of privatization, is the lawsuit is not what you are -- what are you interested in? I知 assuming that you are interested in, where I知 going to make my money is in the legal part of this thing. Maybe you are telling me Commissioner Daugherty we are coming to you because precinct 3 is where we know we can get the money out of. I知 more than happy to talk about -- I知 sorry that people can't pay their taxes, I don't want them to be sued either.
>> right.
>> but everybody -- it is the law that you pay your taxes. And that is the thing. If we can do it without lawsuits I知 all for it. But at this point in time I知 going to ask you and I wanted to ask ken --
>> respond Commissioner.
>> why do you want to be in this business that we're in? Where do you make your money? You make your money --
>> we make our money as a private law firm after July 1st when [indiscernible] attaches. I will tell you that there is an answer that's not see how many lawsuits that you can file, that's where I tend to agree with -- in large part -- [microphone feedback] I just looked at ken and that happened. Turn these aside. I think there's -- that he and I are in agreement on this. That is the answer is not seeing how many lawsuits that you can file. But the answer is getting revenues into the coffers. You do that by personal approach and I think their firm does what we do, that is contact people and try to talk to 'em. I can't tell you that nelda spears does or doesn't do that because I have never sat in the office of the county attorney or the tax office, but i've heard and I think that they probably do. But the question is where do we do it, how do we get to a lawsuit, talking to folks, getting them in on payment agreements getting them to bring those monies in. People are going to get sued no question, you cannot avoid litigation in this process. There's lots of folks, folks who don't prioritize. Or they prioritize and they put new cars and travel and the lake house above paying the taxes, but you identify that and so what I was trying to get at is that you are lessening the harshness, not just going out across it, broad brush, we are going to file suit on all of these accounts. You are at least identifying and knowing that there's hardship. By doing that, you are going to lessen the number of lawsuits because you are going to have talked with them. If you talk to them, I bet you I don't have the percentages in front of me, but i'll bet 95% of the people I talk with, we get --
>> I appreciate that. Again I知 talking about you don't make money on working out a payment plan unless you can file a lawsuit after July first, do you?
>> no, sir, I do make money.
>> you make money on collections.
>> you bet. That's one of the ropes why folks are -- the reasons why folks are critical as a whole, come July 1, every accident that's delinquent, whether it's in a lawsuit or not, I get 15% attorney's fee. [multiple voices] one of the reasons people are critical of our industry, she send out a demand -- we send out a demand letter that brings in a large amount of revenue. We send out these demand letters and we generate. In fact our industry could not survive if we had to only earn our keep by filing lawsuits.
>> part of your pitch being benevolent saying you know what we are going to work with your people between March 1 and June the 29th or June the 30th, but come July the 1st, we're getting an automatic 15% and that's where we are going to make our money but we'll right to take some heat off of your folks, work with them, tell them to get into a payment plan, get taken care of. By the way you don't get 15% tacked on to this thing if you get this thing taken care of by July first. [multiple voices]
>> I think any firm that you deal with, any private firm, I really don't know if you are reading the same property tax code and we are working off the same set of laws, so I知 not sure that we are going to be that much different in how we -- our processes, we are going to sell ourselves by the personal approach or service we can provide. I don't know if it's benevolent or business. You have to sleep at night, you don't try to drive people into the dirt. But at the same time between January and June 30th, my existing clients, i'll tell you, that's how we handle it, there isn't any difference. We go out and we go after personal property accounts that we think are at risk, businesses may close, may leave and we may not get that money. Land it's not going anywhere. I知 not worried about waiting until July first. My clients aren't worried about July first. We do a mass mailing in February for most of our clients, say hey, you guys you are delinquent, pay these taxes, no attorney's fee there. May 1st. We have to by law, I think you all talked about this, one of our meetings in the past. You have to send out the may letter by law and you have to tell everybody guess what, July 1st we are going to hit you in the head with a hammer, we are going to charge you 15% as well as all of the penalties and interest. You have to do that. Yes, there are steps, Commissioner, that we take, that any firm is going to take to try to help you collect taxes. Quite candidly we are not going to be doing I don't think what all that the current tax office is doing and the county attorney's office is doing, but my understanding from what you wanted you wanted even if you go out and privatize going to keep some machinery in place for that first half of the year that will help improve collections and then at the end of the year second half of the year, possibly have a private law firm. That was my impression. I don't know how it could work any differently.
>>
>> [one moment please for change in captioners]
>>
>> ... With folks sending e-mails and wanting additional information and making additional inquiries showed that they were looking and still exploring -- in fact when we turned our proposals in, they said, hey, we still need this, or maybe we need that, so I think they took it to heart and they did everything they could to explore and -- or at least gather and compile data that would allow them to evaluate their performance as well as the other law firm's.
>> and this is real important because a lot has been talked about, a proposal that they put in that I don't really remember us asking a question related to that, but they turned it in anyway. Did you feel like the rfi made it very clear to firms that you should be offering up some kind of a public/private partnership or some kind of sharing of the wealth plan or some kind of a help poor people plan that clearly the other firm wants to spend a lot of time talking about. Did you feel like the rfi asked you that question? Because you didn't answer it in the same way, and I知 just wondering if that was your expectation that you were supposed to turn in that or --
>> with no disrespect, I think that question has to be rhetorical, because clearly there was nothing in there that would suggest that we needed to answer in that fashion. And I never did. I mean all I found out about was through the Austin american statesman.
>> the point there being is that if this county were truly interested in something like that, it seems like that is another rfp, iq, f, whatever you want to talk about, to appropriately solicit that kind of a proposal from everybody. I don't think the rfi asked for that. It seems like you and other firms were at a disadvantage of failing to answer a question that we never asked so... Yeah.
>> in further response -- ja creative approach do you -- if had you an innovative creative approach, would you have held it back?
>> I think there are things that I would tell you in a presentation. For instance today the response that I got -- number one, it started out as a request for information, and we provided as much data as far as collections as we could possibly provide. Today I received a letter -- I received a letter Thursday or Friday saying y'all were going to give the report -- or the auditor was going to give that report. I did not view it as I知 giving a presentation toe the court until I walked in and I heard you say we'll have the presentations from the officials and I just went, oh, my gosh. So is there anything creative or innovative that I did withhold? Not anything that we didn't already know about. We talk about it at other counties and other jurisdiction, there are things that we would do to emphasize our support of community, to talk about, you know, scholarship funds and -- and contributions that we would be postured or in a position to make that we certainly haven't talked about. I知 not critical at all about the linebarger firm has come up with a innovative way to do this work and we'll also throw in this. It's not uncommon or not unheard of.
>> we didn't have that.
>> no, that question was not answered specifically.
>> I never thought that we closed the door to it.
>> judge, I agree. I知 not arguing with either one of you. It wasn't asked and you didn't close the door to it, in my mind.
>> any other closing comments from you?
>> no, sir, appreciate your time.
>> thank you very much.
>> thank you very much. This will be back on the agenda August 16th. We know how to reach you if we need to?
>> yes, sir.
>> I think that will be specific information that I will ask for to need to make up my mind. I have no problem sharing that with the court, but rather than have the court answer to me, the court needs to send that to staff, so who is a good point person for county staff to send it to?
>> it's a procurement.
>> it's not procurement --
>> the only e-mails we've got were from mike long. Mike long.
>> what you might do... [no audio available]
>> some of these questions go to the firms for information.
>> judge, ask the court a question?
>> yes.
>> so we will be receiving an e-mail from mr. Long that will outline specific questions that you have for both firms that you would like to have answered within the next week, is that --
>> well, I will send them to purchasing so is mr. Long the purchasing person? He will send it to them by e-mail or by hard copy?
>> e-mail.
>> okay.
>> I think the questions that I知 interested in you touched on them so we'll all get copies to the responses, right? The questions?
>> and I think we ought to be as flexible as possible. There's some creative ideas out there, fine. I don't want to be inflexible about it. Obviously I think that internally we can benefit from other people's ideas. Hopefully we won't steal them, you know, without giving credit, but I think that we can use some creativity.
>> okay. One little problem we have is that a public hearing is scheduled to take place in this room at 6 o'clock.
The Closed Caption log for this Commissioners Court agenda item is provided by Travis County Internet Services. Since this file is derived from the Closed Captions created during live cablecasts, there are occasional spelling and grammatical errors. This Closed Caption log is not an official record the Commissioners Court Meeting and cannot be relied on for official purposes. For official records please contact the County Clerk at (512) 854-4722.
Last Modified:
Wednesday, July 27, 2005 7:49 AM