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HomeMy WebLinkAboutAgenda - 09-20-2005-5eORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: September 20, 2005 Action Agenda Item No. 5 - e. SUBJECT: Contract for Leaal Services -Collection of Delinquent Real Prooertv Taxes DEPARTMENT: Revenue PUBLIC HEARING: (YIN) No ATTACHMENT(S): INFORMATION CONTACT: Contract Ja Roberson, ext 2727 TELEPHONE NUMBERS: Hillsborough 732-8181 Chapel Hill 968-4501 Durham 688-7331 Mebane 336-227-2031 PURPOSE: To consider approving a contract far legal services that will supplement the County's ability to pursue effective collection of real property delinquencies as provided by North Carolina law, BACKGROUND: As one approach to pursuing more timely and effective collection of seriously delinquent real property taxes, staff and the County Attorney have discussed a pilot project to retain the services of an outside attorney to initiate foreclosure proceedings on a case-by-case basis as determined by the Revenue Director, The County Attorney would continue to handle certain more complicated foreclosure proceedings on behalf of the County, For less complex foreclosure cases, staff propose that the Board approve the accompanying agreement with Attorney Cyrus Hogue of Hillsborough. There is no direct cost to the County through this arrangement as Mr, Hogue would earn his fees based an awards made through the Clerk of Court's Office for any foreclosed properties, Each year the Revenue Department is charged with the collection of all ad valorem property tax due to Orange County and its municipalities. There continues to be growth in the property tax billings each year of approximately 1800 registered motor vehicles and approximately 500 real property land parcels . Currently, Revenue is handling approximately 93,000 Registered Motor Vehicle billings and 45,000 regular property tax billings annually. Additionally, Revenue handles 8,300 Business and Individual personal property billings, As these numbers continue to grow, there are additional bills becoming delinquent each year, The added burden of this growth in collections requires staff to seek additional approaches to maximize collections. Each year staff are finding additional properties that for various reasons are uncollectable by all other means but foreclosure, Properties are worked using all methods available to the Tax Collector prior to reaching the foreclosure stage, 2 Orange County has for many years run a successful in-rem foreclosure process. The in-rem method of foreclosure is a relatively inexpensive means of foreclosing the tax lien and selling the property. The legal theory underlying in-rem is that the land itself is being proceeded against, rather than the landowner, This type of foreclosure may be conducted by the Tax Collector's staff only, The deed presented to the successful bidder is known as a Sheriffs Deed and is anon-warranty deed. The process has been and is still very successful in bringing properties back to a tax paying status, Staff plan to continue to use in-rem procedures to the maximum extent they are appropriate, but with the continued growth in delinquencies, staff are finding it impossible to successfully work all "current year" delinquencies and back year real property delinquencies. As distinguished from the in-rem process, foreclosure of a tax lien by means of an action in the nature of a mortgage foreclosure is a civil action, That process requires the services of an attorney to file a civil action, and is the type of action for which staff propose the County retain Mr. Hogue's services. NCGS § 105-374(k) provides that property conveyed by mortgage style foreclosure is in "fee simple, free and clear of all interests, rights, claims and liens whatsoever": the deed is known as a Commissioners Deed, State law does allow for both In-Rem Foreclosure and Mortgage Foreclosure. Currently, Revenue staff have 785 real estate properties with delinquent taxes owed for 2004 that must either be cleared with same measure of collection remedy or foreclosure. Of these properties, staff expect to actually begin foreclosure on perhaps100 properties, In many cases, once the foreclosure process has been filed with the Clerk of Court, interested parties of these properties will then resolve the tax delinquencies and related costs, and the full foreclosure process is not ultimately carried out, The Revenue staff have an additional 302 properties with delinquent taxes from 2003 or earlier. The proposed agreement with Mr, Hogue is non-exclusive, meaning that the County may choose to use other firms or attorneys to perform the same kind of work, if it so chooses. Furthermore, the County is making no guarantee of a minimrum number of delinquent accounts to be assigned to Mr, Hogue. Revenue Department staff estimate that as many as 25 properties may be assigned in a year to Mr, Hogue (or other legal firms, should the County pursue additional similar contracts) for process, but this number will vary depending on the complexity of cases and the effectiveness of other forced collection measures short of foreclosure. FINANCIAL IMPACT: There is no direct cost to Orange County for the proposed services. The attorney will provide to Orange County non-exclusive services for collection and/or foreclosure of delinquent real estate taxes, All work will be undertaken promptly, professionally and courteously by the attorney, The attorney agrees by way of contract to accept as payment in full all court costs, publication fees, and reasonable attorney fees as awarded by way of the courts, RECOMMENDATION(S): The Manager recommends that the Board approve the accompanying contract with Attorney Cyrus Hogue, subject to final review by staff and the County Attorney, and authorize the Manager to sign it. ORANGE COUNTY REVENUE DEPARTMENT ATTORNEY CONTRACT THIS CONTRACT made this day of , 200_, by and between ORANGE COUNTY, a body politic and corporate of the State of North Carolina, hereinafter referred to as the COUNTY, and Cyrus D Hogue, III, Attorney at Law with a place of business in Hillsborough, North Carolina, hereinafter referred to as the ATTORNEY: WITNESSETH WHEREAS, the COUNTY desires legal services for collection by foreclosure of delinquent real estate taxes: and WHEREAS, THEREFORE, in consideration of promises mutually exchanged the pazties agree as follows: The ATTORNEY will provide to ORANGE COUNTY non-exclusive services for collection and/or foreclosure of delinquent real estate taxes, ALL work will be undertaken promptly, professionally and courteously by the ATTORNEY and will be at no cost to ORANGE COUNTY. The Court costs, publication fees, reasonable attorney fees and similar fees will be collected as part of the foreclosure process as provided by law or absorbed by the ATTORNEY, 2, The Revenue office of the COUNTY on an "as needed" basis will refer this work, There is no guarantee of any specific number of cases during any particular period of time and the arrangement may be terminated by either party upon thirty (30) days' written notice, If termination is initiated by the ATTORNEY, they must be responsible for following to conclusion any work in process at that time and will be paid pursuant to the Contract for said work. The term of this CONTRACT shall begin on the date shown above and will continue until terminated or amended, Work will be coordinated through Jo Roberson, Tax Collector/Revenue Director, or her delegate. 4. ATTORNEY will hold ORANGE COUNTY harmless for any damages, claims, etc,, resulting from the ATTORNEY performance of services under this CONTRACT. 5. ATTORNEY is an independent contractor and shall not be deemed an employee or agent of the COUNTY for any purpose. 4 WITNESS the following signatures and seals pursuant to authority duly granted. Clerk to Board Witness County Manager Cyrus D Hogue, III Attorney At Law This instrument has been pre-audited in the manner required by the Local Government Budget and Fiscal Control Act. Finance Director Approved as to Legal Sufficiency County Attorney