Timing did what decades of offers and counter-offers couldn’t do when it came to changing who collects current and delinquent property taxes for Memphis.
The City Council approved Tuesday, Dec. 18, an interlocal agreement for Shelby County Trustee David Lenoir to collect property taxes for the city.
The agreement, negotiated between Lenoir and Memphis Mayor A C Wharton Jr., is the culmination of several decades of attempts by both sides of city-county government to reach such an arrangement.
Lenoir had offered such a contract several times since taking office in late 2010, but the difference this time was the city’s delinquent tax collection contract with the Linebarger law firm of Texas is nearing the end of its term.
The firm won a 2004 no-bid contract from then-Memphis Mayor Willie Herenton.
Faced with having to spend several million dollars for computer software to collect back taxes in-house at City Hall as well as Linebarger being targeted by federal lawsuits over its collection practices, city officials sought alternatives.
The lawsuits, which began nearly as soon as Linebarger won the contract in 2004, claim the firm was piling on fees and other costs on delinquent taxpayers despite a state law that caps attorney fees in such cases at 10 percent.
Memphis City Attorney Herman Morris said the litigation, which included the city as defendants, was a key factor in negotiating the agreement with Lenoir.
“It has the benefit of avoiding the potential for litigation, frankly, ad infinitum,” Morris said. “The litigation issue is a significant driver, but it is not the only driver.”
Lenoir is charging the city a flat rate of $1.25 million to assume the duties. He will not add employees to his office for the new work. Lenoir recently inked a contract to collect property taxes for Lakeland, which earlier this year instituted a property tax for the first time.
Morris said the total cost to the city under the interlocal agreement is $2.2 million annually, compared to $2.7 million if all of the duties were done by the treasurer’s office.
Nine employees of the city treasurer’s office, which collects property taxes now, will be offered “comparable” jobs elsewhere in city government. The treasurer’s position and office, which collects other fees and taxes for the city, will remain in place although smaller.
Recalling the city’s decision to outsource city wrecker drivers last year, some council members were hesitant about the Lenoir agreement.
“If y’all are going to keep them, that’s fine,” council member Harold Collins said of the treasurer’s office employees. “But if you are not going to keep them, tell them.”
Council member Joe Brown was more adamant.
“I know you are going to lay these people off,” he told Morris. “That has been the style of the mayor when he was in county government.”
Council member Janis Fullilove was also a critic.
“What are those jobs?” she asked of the comparable jobs for the office employees displaced. “Is it picking up paper along the side of the highway? Is it tree trimming?”
Council member Myron Lowery had reservations but ended up voting for the deal.
“We’re in the same boat,” he said. “Our dollars are the same. One dollar is spent the same way. … We are one Shelby, just like we’re one Memphis.”
The contract goes next to the Shelby County Commission for approval.
The two offices worked out the last of the specific terms Tuesday morning just before taking the contract to a council committee.
When the two working groups went to council members Tuesday, Lenoir was present as was deputy city attorney Regina Newman. Newman, who was Trustee in 2009 until she lost to Lenoir in the 2010 county elections, was among the past holders of the office who had sought such a consolidation in the past.