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HomeMy WebLinkAboutAgenda - 10-20-2009 - 6eORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: October 20, 2009 Action Agenda Item No. (pe _SUBJECT: Outsourcing of Business Personal Property Listin Function DEPARTMENT: Revenue/Assessor/Manager PUBLIC HEARING: (Y/N) No ATTACHMENT(S): Contract with Tax Management Associates INFORMATION CONTACT: Jo Roberson, 245-2735 Frank Clifton 245-2306 PURPOSE: To approve a contract for aone-year pilot project outsourcing business personal property listing as part of the reorganization of the Tax Assessor's Office and the Collector's Office into the Tax Administration Office. BACKGROUND: On September 15, 2009 the Board of County Commissioners directed staff to develop and present to the Board a more specific reorganization plan which allows for the merging of the Tax Assessor's Office and the Revenue Department. One aspect of the reorganization requires that plans be instituted that will allow taxation and excellent public service to continue after the retirement of key staff and with a countywide hiring freeze mandated. Staff has developed a reorganization plan that will allow for not only the continuance of taxation and excellent public service but will potentially enhance operations while allowing for coinciding budget cuts as well. Over the past year, Durham County, Tax Management Associates (TMA) and the North Carolina Department of Revenue have worked together to develop a viable outsourcing of business personal property listing, managing, and billing that conforms to North Carolina General Statutes. With the impending retirement of the County's only business personal property appraiser effective January 1, 2010, staff would recommend the Board consider pursuing a contract for aone-year pilot program with Tax Management Associates. This one-year recommended pilot process will allow staff to thoroughly evaluate the overall value to the County. This recommendation is based on the belief that outsourcing will not only provide cost savings to the County but will also produce significant enhancements in the implementation and administration of the business personal property taxation program. With the TMA team (consisting of 45 special project team members) at Orange County's disposal, much more can be accomplished than one Orange County Business Personal Property Appraiser could achieve. With an entire team involved, Orange County will be able to more thoroughly insure the accurate and complete listing of businesses and to also realize enhancements in areas such as statistical and benchmarking analysis that will locate questionable listings and will find businesses that have in the previous year listed but who have not made current listings. There will be the resources and the software to create management reports that will identify specific listings for special review and audit. There will also be time and 2 the business structure to utilize extensive Internet search capabilities and some field canvassing to locate and discover unlisted businesses. Increased manpower means more responsiveness to the needs and issues of taxpayers, better communication and increased educational efforts as well as the availability of greater taxation knowledge and legal expertise. Business personal property staff will also be freed up to concentrate on the discovery, education, and taxation of unlisted businesses. Tax Office staff has worked with Financial Services Department staff to determine a cost analysis and recommendation for pursuance of this course of action. By entering into a contract with Tax Management Associates, the County could freeze the existing Business Personal Property Appraiser position. On a twelve-month basis, the freeze would equate to a salary and benefits savings of $80,000, some of which would fund the pilot program. The outsourcing effort will cost, per the attached contract, $13-$15 per business listing. The cost for the pilot period of one year is projected to be $60,000. The cost of promoting a staff member to oversee coordination efforts between the County and TMA is projected to be $10,000, for a total cost of $70,000. (The cost of maintaining the system that currently exists by hiring an experienced business personal property appraiser plus using a second employee, with half of that position's time allotted to business would have a cost of approximately $85,000 annually.) This equates to an initial County cost savings of $15,000, but is expected to be only the beginning of the potential County benefits. For example, between the end of Fiscal Year 2004-2005 and the end of Fiscal Year 2008-2009, the statistical report shows the personal property tax base has increased significantly. Much of this increase is likely due to annually recurring business personal property discoveries made through the enhanced auditing program. Using the current County tax rate, this growth represents a significant increase in tax revenues annually. Since discovered business personal property is annually recurring, there is an additive effect that is enhanced with each additional discovery and with every new tax year. This growth is projected to expand with the implementation of the outsourcing project. The bottom line is that with every business personal property program enhancement there is the excellent potential for increased listings, discoveries, and educational opportunities that will generate significant and annually growing monetary returns to the County. It is therefore the recommendation that this program should be pursued on a pilot basis for one year since the program has the potential to result in streamlined business personal property taxation processes with many revenue related benefits. More importantly staff believes this should be pursued since it also enhances educational opportunities and services to the public. This pilot program with Tax Management Associates will allow staff to thoroughly evaluate the benefits to the County of outsourcing while also cutting County budgetary expenditures, initially in the short term (immediate budget) and potentially long term. FINANCIAL IMPACT: Cost savings to be realized from the reorganization and reallocation of job duties as it relates directly to business personal property listing should equate to no less than $15,000 for this fiscal year. There is also the great potential for increasing and additive annual returns in County revenues. RECOMMENDATION(S): The Manager recommends that the Board: • Approve aone-year pilot project contract with Tax Management Associates and authorize the Chair to sign the contract subject to final review and approval by staff and the County Attorney; • Direct the Manager and staff to move forward with Tax Management Associates to provide the business personal property process. TAX MANAGEMENT ASSOCIATES, INCORPORATED BUSINESS PERSONAL PROPERTY OUTSOURCING SERVICES CONTRACT ORANGE COUNTY, NORTH CAROLINA This contract made and entered into this day of , 2009, by and between ORANGE COUNTY, a political subdivision of the State of North Carolina, hereinafter called the COUNTY and TAX MANAGEMENT ASSOCIATES, INC., a corporation authorized to conduct business in North Carolina, hereinafter called TMA, to assist the COUNTY TAX ASSESSOR in the outsourcing of certain assessment administration and ad valorem property tax verification functions for the Orange County Tax Office. Contractual services may begin upon full execution of this contract. SPECIAL PROVISIONS WITNESSETH: WHEREAS, the COUNTY desires to obtain listing administration outsourcing for the County's business personal property taxpayers as authorized by the North Carolina General Statutes; and WHEREAS, TMA agrees to provide said outsourcing services for the COUNTY pursuant to the charges, terms and conditions of this Agreement; and NOW, THEREFORE, in consideration of the promises mutually exchanged, the parties agree as follows: A. OUTSOURCING SERVICES. In accordance with the charges, terms and conditions contained in this Agreement, TMA agrees to furnish outsourcing services that assist the County with business personal property assessment administration. The following steps outline TMA's responsibilities: 1. Process Listing Extensions as Directed by the County Tax Assessor With direction from the County Tax Assessor, TMA call center personnel will process both physical and electronic letters requesting filing extensions and depending on rules currently in place at the County, either grant or deny the extension request. Denial of any extension request must be expressly directed by the County Tax Assessor or the County Tax Assessor's designated agent. TMA outsourcing team members and managers have no statutory authority to either grant or deny extension requests and will only process the requests as directed. 2. Process All Hard Copy Listing Forms Filed with Orange County 1 s TMA will collect and process all listing forms sent to Orange County. Each form will be scanned and information from the form will be added to the TMA and Orange County databases. 3. Enter All Information into TMA and Orange County Databases TMA database experts will create a custom relational database to store and sort all information concerning Orange County Business Personal Property Taxpayers including but not limited to name, address, parcel numbers, contact information, values by group, supplies, notes included with the form and any other information that is pertinent to that taxpayer. Records will include discovery data if necessary, extension information and audit data as necessary. This database will be able to be sorted, queried and reported on as necessary. This database will also mirror information currently held within Orange County. Each tax year will be kept as its own database with additions, deletions and changes taking place each subsequent year. 4. Coordinate Databases to Ensure Accuracy on Both Sites TMA database experts will assist in uploading TMA database information to the Orange County database to ensure that the County has a copy of all pertinent BPP Taxpayer information at all times. While TMA databases may house more information than the Orange County database, TMA's database will never have fewer fields or less information than Orange County. 5. Benchmark All Returns for Accuracy and Completeness Each Orange County listing form filed will be examined for completeness and accuracy as they are entered into the TMA database. Forms that are deemed incomplete will be flagged and taxpayers will be contacted for additional information as needed. TMA managers and audit staff will run statistical reports comparing listing forms to prior years and forms falling outside of a predetermined range will be flagged for further investigation. 6. Assist in the Preparation of the Final BPP Roll for the County Tax Assessor TMA database experts will ensure that after all appropriate data has been entered into fields for the respective taxpayers' records, that information is then aggregated into predetermined roll ups for preparation of the final roll. These roll ups will be able to be migrated to the Orange County database as a normal part of the database replication process. 7. Create Management Reporting As Necessary TMA managers from the call center and the discovery team will prepare standardized management reports on a monthly basis to deliver to the County Tax Assessor or the CTA's designated liaison. These reports will include but not be limited to: • Listing reports detailing electronic filings, hard copy filings and granted or denied extensions 2 • Statistical reports for listing forms including deviations from prior years and expected number of audits necessary • Discovery reports including new accounts, canvassing efforts and expected new revenues • Roll reports including latest roll up results from quarterly updates • Balanced scorecard B. COST AND PAYMENT FOR OUTSOURCING SERVICES: 1. The County shall pay to TMA for services furnished under this Agreement the set fee of $15.00 per assessment, but not more than $60,000 ($15 x 4000 assessments) per year for all outsourcing services performed by TMA. This includes all services as previously described in Section A. of this Agreement. 2. All expenses incurred by TMA in performing outsourcing services under this Agreement including, but not limited to, travel, food, lodging, mileage, salaries, etc. shall be the responsibility of TMA. 3. TMA shall invoice the County for outsourcing services on a quarterly basis. Invoiced fees will be due and payable within forty-five days following billing date. C. GENERAL PROVISIONS 1. AUTHORITY TO CONTRACT: The COiJNTY'S authority to contract for the service herein is authorized by North Carolina General Statute 105-299. 2. AUDIT: All invoices shall be submitted by TMA to the COUNTY TAX ASSESSOR with sufficient detail for a proper pre-audit or post-audit. 3. CANCELLATION: This Agreement shall become effective upon signing and shall remain in effect for an initial term of (36) months. This Agreement may be terminated by either party without cause upon thirty (30) days written notice. 4. COLLATERAL ASSIGNMENT: The COUNTY acknowledges and agrees that payment due TAX MANAGEMENT ASSOCIATES, INC. under this Agreement and all other agreements with the government authority (the "Agreement") have been collaterally assigned to Branch Banking and Trust Company (a North Carolina banking corporation, whose address is 6869 Fairview Road, Charlotte, North Carolina 28210-3384). All payments due TAX MANAGEMENT ASSOCIATES, INC. under this the Agreement will be sent, UPON REQUEST, to the Bank at that address pursuant to a financing and cash management arrangement. The Bank is authorized to receive information relating to this Agreement and payments due under the Agreement and all amendments or modifications to the Agreement from ORANGE COiJNTY (the government authority). The Bank is authorized to rely upon the terms of the Agreement. The government authority agrees to give notice to the Bank thirty (30) days prior to termination of this Agreement. 3 5. INDEMNIFICATION: To the fullest extent permitted by laws and regulations, the CONTRACTOR shall indemnify and hold harmless the COUNTY and its officials, agents, and employees from and against all claims, damages, losses and expenses, direct, indirect or consequential (including, but not limited to, fees and charges of engineers or architects, attorneys and other professionals and costs related to court action or arbitration) arising out of or resulting from the performance of this contract or the actions of TMA or its officials, employees, or contractors under this Contract or under the Contracts entered into by TMA in connection with this contract. This indemnification shall survive the termination of this Agreement. 6. NON-DISCRIMINATION: TMA shall not discriminate against any person on the grounds of race, color, religion, national origin, sex, age or disability in the administration of this contract. Nor shall any person be excluded from participation in, or be denied the benefits of this contract on the grounds of race, color, religion, national origin, sex, age or disability. 7. LAW CONTROLLING: The laws of the state of North Carolina shall control and govern this contract. 8. NON-ASSIGNMENT: This Agreement is not assignable by either party, by operation of law or otherwise. 9. MODIFICATION: This contract may be modified only by a written agreement executed by both parties hereto. 10 ENTIRE AGREEMENT: This contract constitutes the entire agreement of the parties and no other agreement or modification to this contract, expressed or implied, shall be binding on either party unless same shall be in writing and signed by both parties. This Agreement may not be orally modified. Any modifications must be in writing, expressly titled a modification or addendum to this contract, attached to this contract, and signed by both parties. 11. SEVERABILITY: Should any provision, portion, or application thereof of this Agreement be determined by a court of competent jurisdiction to be illegal, unenforceable; or in conflict with any applicable law or constitutional provision, the Parties shall negotiate an equitable adjustment in the affected provisions of this Agreement with a view toward effecting the purpose of this Agreement, and the validity and enforceability of the remaining provisions, portions, or applications thereof, shall not be impaired. 12. HEADINGS: The subject headings of the paragraphs are included for purposes of convenience only and shall not affect the construction or interpretation of any of its provisions. This Agreement shall be deemed to have been drafted by both parties, and no .purposes of interpretation shall be made to the contrary. 13. NOTICES: Any notices to be given or submitted by either party to the other pursuant to this Agreement shall be made in writing and sent by first class mail, postage paid or by hand delivery to: COUNTY: CONSULTANT: 4 S ORANGE COUNTY TAX MANAGEMENT ASSOCIATES, INC. 228 South Churton St. 2225 Coronation Blvd. Suite 200 Hillsborough, NC 27278 Charlotte, NC 28227 ATTN: John Smith ATTN: Richard H. Cooke, Sr. Tax Assessor President Executed and entered into by the parties hereto ACCEPTED: ACCEPTED: ORANGE COUNTY TAX MANAGEMENT ASSOCIATES, INC. BOARD OF COMMISSIONERS 200 SOUTH CAMERON ST. 2225 CORONATION BLVD. HILLSBOROUGH, NC 27278 CHARLOTTE, NC 28227 AUTHORIZED SIGNATURE: AUTHORIZED SIGNATURE: VALERIE P. FOUSHEE RICHARD H. COOKS, SR. TITLE: CHAIR, ORANGE COUNTY BOARD TITLE: PRESIDENT OF COMMISSIONERS DATE: DATE: ATTEST BY: TITLE: COUNTY CLERK (SEAL) APPROVED: (If necessary) AUTHORIZED SIGNATURE: ATTEST BY: APPROVED: (If necessary) AUTHORIZED SIGNATURE: NAME: NAME: TITLE: TITLE: DATE: DATE: THIS CONTRACT HAS BEEN APPROVED AS TO LEGAL FORM BY THE ORANGE COUNTY ATTORNEY' S OFFICE ON , 2009. SIGNATURE: ANNETTE M. MOORS TITLE: STAFF ATTORNEY This instrument has been pre-audited in the manner required by the local government budget and fiscal control act. FINANCE OFFICER: 6