HomeMy WebLinkAboutAgenda - 10-20-2009 - 4hORANGE COUNTY
BOARD OF COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: October 20, 2009
Action Agenda
Item No. ~ ~ {'1
SUBJECT: Addendum to Existing Inter-local Agreement for Tax Collections
DEPARTMENT: Revenue
PUBLIC HEARING: (Y/N) No
ATTACHMENT(S):
1) Chart Cost of Collections Paid by
Towns
2) Addendum to Present Inter-local
Agreement on Collections
3) Original Inter-local Agreement
INFORMATION CONTACT:
Jo Roberson 245-2735
PURPOSE: To allow for the Towns of Chapel Hill, Carrboro, and Hillsborough's participation in
the cost acquisition and yearly maintenance costs of the Property Information Management
System (PIMS), and to establish a reserve account to allow for the preparation for
enhancements, improvements and law-driven changes to the software in coming years.
BACKGROUND: The current tax software used by Orange County has been in existence for
nearly 30 years. The software was developed and. has been maintained by County staff. After
several years in development it has been recommended to the Board of County Commissioners
that new software be acquired that will involve outside vendors. In July of 2006, the Board of
County Commissioners and the Towns of Chapel Hill, Carrboro, and Hillsborough entered into
the existing Inter-local Agreement for Tax Collections (Attachment 3). The purpose was to
provide for continued centralized and systemized collection of property taxes owed to the
respective jurisdictions. Included in the Inter-local Agreement is a statement concerning the
intention of the towns to participate in the procurement of new tax software. Additionally, the
towns agreed within the Agreement to pay a yearly cost toward the maintenance of the system.
Staff from each jurisdiction has been meeting over the past several months to develop and
agree on a staff level to the proposed addendum (Attachment 2). The proposed addendum
being presented will in no way affect the cost for collection currently paid by each of the
respective towns. Attachment 1 is a chart reflecting the sums each of the towns has paid over
the past 10 years for the collection of monies on their behalf. The towns have agreed to
continue payment for services at the rate of one-half of 1 %. Additionally, town staff have agreed
to sharing the cost of yearly maintenance for the North Carolina Property Tax System (NCPTS)
portion using the agreed upon percentages. The percentages are the same percentages which
are being brought forward for approval of the respective Boards as the fair and equitable cost for
acquisition costs (Attachment A of Attachment 2). These costs will be determined based upon
the combined costs of the NCPTS billing and collection portion of the new system. It is
2
recommended that the funds paid by the towns in yearly maintenance be set aside and held in a
fund for future enhancement and to pay programming costs for unplanned law changes as
directed by the North Carolina General Assembly. Attachment A reflects the percentages for
each of the jurisdictions involved as reflected within the Addendum.
FINANCIAL IMPACT: The adoption of this Addendum will have no direct financial cost
associated for Orange County. It is estimated the towns will pay in support for the first full year
the combined total of $36,480. That amount is based on a cost of $160,000 support cost per
year. In addition to the yearly maintenance costs, the towns will also pay yearly installments,
beginning in FY 2010-11, toward the cost of acquisition and installation of the billing and
collections portion of the PIMS system, which totals $875,975. The amount of the towns'
installment payments is based on a percentage of participation equivalent to the number of
billings currently handled by Orange County on behalf of each jurisdiction, as reflected in
Attachment A.
RECOMMENDATION(S): The Manager recommends that the Board:
• Approve the recommended Addendum and authorize the Chair to sign the Addendum;
• Direct the Manager to forward the Addendum to the corresponding jurisdictions for
approval and signatures; and
• Direct the Financial Services Director to establish a reserve account to be held for future
enhancements and payment required for law-change requirements over and above the
yearly maintenance cost for participation with the software vendors.
~~c lnwe~n'~ ~ H
Cost of Collection by Jurisdiction
YEAR CARRBORO CHAPEL HILL HILLSBOROUGH TOTAL
`08/09 40,862.66 81,778.05 20,494.60 143,135.31
*07/08 40,077.02 89,691.77 20,118.22 149,887.01
"06/07 41,192.30 82,701.90 20,636.84 144,531.04
"05/06 35,850.83 78,285.96 19,057.10 133,193.89
"04/05 34,012.46 74,756.61 17,827.30 126,596.37
"03/04 33,777.01 74,085.92 17,444.84 125,307.77
"02/03 33,901.30 73,874.71 18,030.73 125,806.74
*01 /02 32,125.11 67,176.10 17,241.65 116, 542.86
"00/01 27,543.36 62,321.17 15,147.32 105,011.85
"99/00 26,749.57 63,225.53 13,078.48 103,053.58
A~+ a
ADDENDUM TO THE INTER-LOCAL AGREEMENT
FOR TAX COLLECTIONS
This is an ADDENDUM to the Inter-local Agreement for Tax Collections entered into on July 3,
2006, by Orange County (referred to as "County"), the Town of Carrboro, the Town of Chapel
Hill, and the Town of Hillsborough (individually and collectively referred to as "Town" or
"Towns"). This ADDENDUM sets forth the terms and conditions for the shared costs between
the County and the Towns for the purchase and yearly maintenance costs of a centralized and
systemized tax billing and collection software system for the Joint Tax Collection System. The
parties to this Addendum, pursuant to the authority contained in Article 20, of Chapter 160A of
the North Carolina General Statutes, this the day of October, 2009, do hereby agree as
follows:
WHEREAS, on July 3, 2006, the County and the Towns entered into an Inter-local
Agreement to provide for centralized and systemized collection of property taxes in Orange
County benefiting the units of government contracting both in costs and information services;
and
WHEREAS, pursuant to Article VI of the Inter-Local Agreement, the Towns agreed to
pay a surcharge to be credited toward the purchase and yearly maintenance of a comprehensive
software package to support and maintain the collection of tax revenues due to the Towns; and
WHEREAS, the County has identified and secured funding for the first installment of the
acquisition and installation of comprehensive billing and collections software that will support
and maintain the collection of tax revenues; and
WHEREAS, it is anticipated that the County will seek and acquire additional financing
during fiscal year 2010-11, with repayment to begin in fiscal year 2011-12; and
WHEREAS, the surcharge collected will used for acquisition and installation of the
comprehensive tax billing and collection portion of the software acquisition calculated based
upon an formula agreed upon by the parties (see attachment A), and a yearly support and
maintenance cost which is to be determined by staff from all jurisdictions no later than
November 30`~ of each year and approved by the Manager of each jurisdiction.
NOW THEREFORE, in consideration of the premises and of the following mutual promises,
covenants, and conditions, The County of Orange, the Towns of Carrboro, Chapel Hill and
Hillsborough agree as follows:
1. The County Responsibility:
4
a. The County will provide the initial funding for the acquisition of the
comprehensive tax billing and collection software system and all related
requirements; the total cost for the acquisition and installation of the software
5
shall not exceed $2.5 million. The County will acquire the financing for both
the County and the Towns' portion of the cost of the acquisition and
installation of the tax billing and collection software and related requirements.
b. The County will finance the cost of the tax billing and collection software
system in two installments: the first financing installment shall be for $1.5
million over a 64 month period; and the second financing installment, shall
occur during fiscal year 2010-2011, for the balance needed to complete the
project not to exceed $1 million and financed for a period of 54 to 64 months.
c. The County will bill the Towns for their portion of the cost of the acquisition
and installation of the software in two yearly installments beginning in fiscal
year 2010-2011.
d. The County will bill the Towns beginning in fiscal year 2010, and every year
thereafter. On June 30th the County will bill the Towns for an interest and
principal payment. On November 30th of the same year the County will bill
the Towns for an interest only payment. The County will bill the Towns for
the cost software system until the Towns' portion of the costs is paid in full.
2. The Towns Responsibilities:
a. The Towns will pay the County a surcharge toward the purchase and yearly
maintenance of the comprehensive software package to support and maintain
the collection of tax revenues due to the Towns.
b. Each Town will repay the County their portion of the cost of the acquisition
and installation of the tax billing and collection software based upon a formula
agreed upon by the parties (see attachment A).
c. Each Town will repay the County in two yearly payments: on or by July 31St
of each year the Towns will pay the County a principal and interest payment
and on or by December 31St of each year, the Town will pay an interest only
payment, beginning July 31, 2010;
d. Each Town will pay a yearly support and maintenance cost which will be
determined by staff from all jurisdictions no later than November 30th of each
year and approved by the Manager of each jurisdiction. This cost will be in
addition to the cost of acquisition and installation of the software.
3. The Parties Responsibilities:
a. Each party within this ADDENDUM agrees that requested customization of
reports or software will be the sole financial responsibility of the requesting
entity.
6
4. Each year the Towns and County will convene prior to November 15`x' to review
prior year expenditures and coming year estimates for expenditures in preparing
cost projections for the yearly maintenance costs for the next fiscal. This
information will then be brought forward to each jurisdiction's review.
This ADDENDUM shall become effective when properly executed by all parties
pursuant to Resolutions adopted by the governing board of each. The parties hereto have
caused this ADDENDUM to be executed in accordance with resolutions of their
respective governing bodies this the day of , 2009.
COUNTY OF ORANGE
BY:
ATTEST:
Valerie P. Foushee, Chair,
Orange County Board of Commissioners
Donna Baker, Clerk to the Board of Commissioners
TOWN OF CARRBORO
BY:
ATTEST:
CLERK
Mark Chilton, Mayor
TOWN OF CHAPEL HILL
BY:
ATTEST:
Town Manager, Chapel Hill
CLERK
7
TOWN OF HILLSBOROUGH
BY:
ATTEST:
CLERK
Tom Stevens, Mayor
This addendum has been pre-audited in the manner required by the Local Government Budget
And Fiscal Control Act:
Gary Humphreys, Orange County Finance Officer
L. Bing Roenigk, Town of Carrboro Finance Officer
Kenneth C. Pennoyer, Town of Chapel Hill Finance Officer
Greg Siler, Town of Hillsborough Finance Officer
8
ATTACHMENT A
This formula will be used to determine the cost of acquisition for both the billing and
collection modules. Staff has additionally agreed the same formula should be followed
for the yearly maintenance costs.
• All bills are counted'/2 for the County and'/2 for the respective
Town(s).
• The percents for each Town is depicted as follows
Chapel Hill 14.2%
Carrboro 6.1
Hillsborough 2.5%
County 77.2%
9
~~~~
NORTH CAROLINA
ORANGE COUNTY
This AGREEMENT, made and entered ties the3 day of
2006, by and among Orange County (hereinafter referred to
Co ty), Town of Carrboro, Town of Chapel Hill, and Town of Hillsborough
(hereinafter individually and collectively referred to as Town or Towns), to
provide for centralized and systemized collection of property taxes in Orange
County which will benefit the units of government contracting both in cost and
information services, the parties to this agreement, pursuant to the authority
contained in Article 20, of Chapter 160A of the North Carolina General Statutes
contract and agree as follows:
I. The County shall perform for itself and each of the Towns all of
the tax collection functions prescribed in Subchapter II of Chapter
105 of the North Carolina General Statutes (hereinafter referred to
as the Machinery Act). This activity shall hereinafter be referred to
as the joint tax collection system.
II. Effective July 1,1978, the County tax collector began the joint
venture as tax collector for the County and each Town that is a
party to this agreement under the original interlocal agreement
signed in 1979. Reference in this agreement of "tax collector"
shall hereinafter refer to the County tax collector. The tax collector
and any deputy tax collectors shall be appointed by the County
Board of Commissioners.
III. Effective with the tax levy for the fiscal year beginning July 1,
2006 and each fiscal year thereafter so long as this contract is in
effect, aad not to exceed 99 years, The governing bodies of the
County and the Towns shall adopt an order pursuant to North
Carolina General Statutes § 105- 321 (b) directing the tax collector
to collect the taxes charged in the tax records and receipts. A copy
10
of this order, along with the tax receipts, shall be delivered to the
tax collector. Thereafter, the tax collector shall cause the
preparation of the tax "Scroll" and shall deliver a copy thereof to
each of the TOWNS. The Annual Settlement of the tax collector as
detailed in Sections 105-352 and 105-373 of the North Carolina
General Statutes shall be made to the governing body of the
County.
IV. Except as expressly provided herein The Orange County Board of
Commissioners shall have the sole and absolute authority to make
any and all elections, determinations and decisions for the County
and the Towns that the governing bodies of the County and each
Town aze authorized to make pursuant m Articles 21, 26, 27 and
28 of Chapter 105 of the North Carolina General Statutes.
V. When taxes are paid is full, tax receipts will be marked paid as a
verification of the transaction. Partial payments may be made and
partial payment receipts shall be issued and forwarded to the
taxpayer by the tax collector. Any such partial payment shall be
identified where appropriate~as to a particulaz parcel or tract of
land and credited as prescribed by law as to collection expense,
interest, penalty and principal and to each governing body
proportionally. Each town shall be credited by the tax collector
with that portion of the payment received that bears the same
relationship to the total amount received as the amount of taxes
owed to the Town for the property bears to the total amount of
taxes owed for the property. All tax payments received by the
Towns shall be deposited in an account designated by the County.
Processed information shall be forwarded to the County tax
collector.
VI. All tax collections that aze made pursuant to the joint tax collection
system shall be deposited daily in accounts specified by the County
Finance Officer. At or before 1:OOPM of the work day following
11
the collection deposit date the County Finance Office will cause
each governmental unit's share of that day's deposits to be
transferred to as account as designated by the Finance Officer of
each Town. The share of each unit shall be determined by a
computer distnibution of all payments. Daily transfer information
will be provided to Carrboro, Chapel Hill, and Hillsborough by
telephone call from the County Finance Office at or before 12:00
PM on the date of transfer. The County Finance Officer will
provide monthly reports with detailed payment and distribution
information to the Finance Officer of each governmental unit.
Additionally, monthly reports will be provided which include a
listing of any changes to the levy such as discoveries and taxes
released, refunded, compromised, or in any way affected by
actions of the County Board of Commissioners, Tax Collector or
Assessor.
The County's annual audit will include an audit of the tax
collection system . Upon completion of such audit the County will
provide each Town with a separate report containing the Town's
tax levy and collection information to include the auditor's
opinion. Any special audit requests shall be directed to the County
Finance Officer and shall be paid for by the requesting unit
through a supplemental billing directed by the County to the
requesting unit.
The County will bill each Town quarterly for its services in the
operation of the joint tax collections system. This quarterly billing
for each town will be computed at a rate of 5/10 (one half) of 1%
of the total taxes collected for each respective Town. Tax
collections will be based on the monthly tax levy and collection
information provided to the Towns as mentioned above. This
12
change in charge of collection will take place no earlier than July
1, 2007. Notification of this change will be given by January
2007. The current formula in place will remain until such change
is instituted.
The Towns will remit payment to Orange County within 30 days
of receipt of the bill from the County. To the extent that the annual
financial tax audits reveal that actual year-end collections are
different from calculated costs previously billed by the County,
adjustments will be made either by refimd or invoice for final
payment no later than 45 days following the close of the fiscal year
end.
Additionally the Towns agree to a surcharge to be credited toward
the purchase and yearly maintenance of a comprehensive software
package to support and maintain the collection of revenues due.
The surcharge will be detensuned by staff from all jurisdictions no
later than November 30th of each year and approved by the
manager of each jurisdiction for their levied surcharge. The
surcharge will be a calculated based on agreed formula.
VII. Collection of all delinquent taxes shall be the sole responsibility of
the County. The County will use the same diligence and effort to
collect taxes owed to the Towns as it does to collect taxes owed to
the County. The County may elect to buy property at foreclosure
on the basis of sound business considerations. Nothing in this
section or agreement requires the County to purchase property at
foreclosure or otherwise in situations where the market value of the
property does not exceed the cost of extinguishing all liens on the
property at the time of sale.
VIII. Additionally, the County agrees under NCGS 153A-156 to handle
the collection and auditing of all short term lease or rentals, known
13
as Grross Receipt Tax, within the County area. This includes all
three Towns, at no cost to the Towns.
IX. This agreement maybe terminated at the conclusion of any fiscal
year. The governmental unit wishing to terminate the agreement
may do so only after giving each other unit of government twelve
months written notice of its decision to do so.
X. This agreement shall become effective when properly executed by
all parties pi~*~~a*+t to resolutions adopted by the governing boards
of each. This agreement maybe amended pursuant to a resolution
properly executed by all parties and adopted by the governing
board of each party. The parties hereto have caused this agreement
to be executed in accordance with resolutions of their respective
governing bodies, this the 3 day of 2006.
CLERK
~: •''"- -"~~°~'% TOWN OF CARRBORO n,
~[
1811 " - BY: ~~ ~•
MAYOR
.:
p '-~........ •
TO OF EL HII..
~--
BY:
TOWN MANAGER `''~K
ATTEST:
14
~o•NN Op
~~
cyAPE~~
TOWN OF
A ST: MA ~~~'~~`, OF 1'~(js~~~~,'%
~~ ~ ~:
O ~'
'r°"'
CLERK . '` ~ _
..~ ,
yo
This contract has been preaudited in the manner required by the'Y,fk~1
Government Budget and Fiscal Control Act.
!%~ L~ -
Ken Chavious, Orange County Finance Officer
J~
L. Bingham Roenigk, Town of ro
Finance Officer
Kay Jo n, Town of Chapel Hill Finance Officer
<~ ~ n
Greg Siler, Town of Hillsborough Finance Officer
v7
T
oa~~4nooe
Tax Collections Intedocal Agreement Work Group
Options for Recouping Cost to Collect Taxes Within Town Jurisdictions
Current Practice Coun cha es Towna 112 of 1% of collections
% of Total
2007 Collections Attributed to
Each Entity
FY 2009-10 I FY 2010-11 I FY 2011-12 I FY 2012-13
118,142,453
the total levy value, the following values are attributed to the individual jurisdictions;
Assumption Assumes annual increase in levy of 2.5%;
RMV levy will revert to State July 1, 2011
Calculation (2007 Collections' 2.5% annual increase
in levy) 1/2 of 1%