Item 8A- Interlocal AgreementAGENDA ITE M:
S UBMITTE D BY:
DATE:
CITY OF AT LANTIC BEACH
C ITY COMMISSION MEETING
STAFF REPORT
AGENDA ITEM #8A
JUN E 13, 20J 6
ln torlocal Agreement among lh e Du va l Co unty Property Appraiser,
Du va l Co un ty T ax Co lJ cctor, and th e C ity of Atl a ntic Beach to
co nt rac t w ith a vend or to inves ti gate possibl e fraud ulent homes tead
exempti o ns.
Ru ssell Caffey, Direc to r of Finance
May 27,20 16
STRATEGIC PLAN LINK: N one
BACKGROUND: Thi s agreement a uth ori zes th e Du va l Coun ty Pro perty Appraiser 's to
co ntrac t with a thi rd pa tty to in vesti gate potenti al h omestead
exempti o n fra ud .
Thi s will be at zero cost to th e City and w ill po tentiall y he lp better
utlli ze a maj or revenue source.
BUDGET: No ne
RECOMME NDATION: A pprove th e In terloca l Agr ee ment amo ng th e Duval Co unt y Pro perty
Appraiser , Du val Co unty Ta x Col lecto r, and th e Ci ty of A tl antic
Beac h.
ATTACHME NT: l. lnterloca l Agree me nt a mo ng th e Du val Co unty Prop erty App ra iser,
Du va l Co un ty Tax Co ll ecto r, and th e City of Atl anti c Beach .
2. Letter from Jerry Ho ll and -Prop erty Appraiser, Du va l Co unty
R E VIEWED BY CITY MANAGER:
JERRY HOLLAND
PROPERTY APPRAISER
Office (904) 630·7777
Email: JHollaod@coj.net
February 25, 2016
OFFICE OF THE PROPERTY APPRAISER
RE: Investigation of Improper Property Tax Exemptions
Dear Council members:
AGENDA ITEM ff8A
JUNE 13,2016
231 East Forsyth Street
S uhe 270
Jacksonville, F lorida
32202-3361
The Homestead Property Tax Exemption is a va lu able benefit for permanent Florida residents.
Coup led with the Save Our Homes cap, homeowners can save thousands of dollars in property
taxes each year. Due to its money-saving benefits, it is ripe for fraudu lent or improper claims .
A claim of improper homestead exemption shifts the burden of property tax payments to other
property owners, and robs the Cities, Schools and other taxing authorities of needed revenue.
Florida Statute s. J 96.011 (9) provides a process for filing Jiens for back taxes, 50% penalties,
and 15% interest per annum for a period up to 10 years on parcels that receive undeserved
homestead exemption. The amounts collected are returned to the taxing authorities by the Tax
Collector. The Property Appraiser does not receive any portion of th e funds coJlected under
this statute.
The current method of detecting possible homestead exemption fraud relies primarily on reports
from citizens and returned mail from the post office. The majority of potential fraud cases come
in as tips and complaints from the general public. We also rely heavily on our returned,
undeliverable maiJ as that is a red flag that a homestead exemption is no longer valid. There are
many cases of homestead fraud that go undetected using these methods.
There are new technological developments in software and database mining that allow
companies to run statistical. mass data analysis that we do not have the capabilities to run.
This software enables us to uncover potential undeserved homestead exemptions by identifying
property owners who receive benefits or have indications of residence in other jurisdictions
nationwide.
Page 2
February 25, 20!6
Inves tiga tion of Imp rope r Prope rty Tax Exemptio ns
AGENDA ITEM #SA
J UNE 13,2016
We des ire to co ntract with a vendor wh o offers a service that has help ed to recover milli ons in
tax dollars for other co unties. They use th ei r mass data analysis softw are to detect poss ibl e
home stea d exemption fraud pai red with th ei r highly trained investigative staff to ver ify
information . They th en return th eir findings to us so th at we can validate that th e homestead was
improper and fil e lien s agai nst parce ls receiving underserved benefits.
We beli eve that a more aggressive and co mprehensive disc overy approac h of improper
homestead will occur if we utili ze a qu alifi ed third-party vendor than if we continue to try to
discover improper exe mpti ons using ou r current methods. We also believe that tax in g authorities
will rec eive a greater financial gain usin g this appro ac h despite the fac t th at a porti on of th e
proceeds will be paid to the vendor (a maximum of 30% of collected liens). If no li ens are file d
and paid , the vendor will not be paid .
T hi s propo sa l will require th e Property Appraiser and Tax Coll ec tor to execute an Jnterlocal
Agreement (Agreement) with eac h taxing authority in which the taxing authority agrees to ha ve
30% of the proceeds of the lien co ll ectio ns paid to th e vendor. A copy of the propose d
Agreement, a pro posed contrac t with a ve nd or, and the authorizing legatio n are attached .
We respectfully req uest that you join us in our efforts to reduce the incidence of improper
exemptio ns by executing the attac hed Agreement The proposa l creates a fundin g mechanism to
aJlow us to rev iew the validity of all residency-based property ta x exemptions and should serve
to decrease the number of exemptions that are improperly clai med .
I lo ok forward to meetin g with you to di scuss th e proposal furt her and answer any questions.
Jerry Holland
Property Appraiser
Interlocal Agreement
for Use of Property Tax Collections to Fund
Exemption Audit Services
AGENDA ITEM #SA
JUNE 13, 2016
THIS AGREEMENT is made and entered into as of the "Effective Date" defined below,
and is by and among the DUVAL COUNTY PROPERTY APPRAISER ("PROPERTY
APPRAISER"), DUVAL COUNTY TAX COLLECTOR ("TAX COLLECTOR"), and the
CITY OF ATLANTIC BEACH, FLORIDA, a municipal government under the laws of the State
of Florida (the "TAXING AUTHORITY"). This agreement shall hereinafter be referred to as the
"Interlocal Agreement."
WHEREAS, the PROPERTY APPRAISER is responsible under Florida law for the
administration of ad valorem property tax exemptions, including homestead exemption, and the
preparing and filing of tax liens for back taxes related to the removal of undeserved exemptions;
and
WHEREAS, the TAX COLLECTOR is responsible under Florida law for the collection
and distribution of ad valorem property taxes, including back taxes and tax liens, and associated
penalties, fees, and interest; and
WHEREAS, the TAXING AUTHORITY receives local property tax revenue to fund
essential public services; and
WHEREAS, the Parties to this Interlocal Agreement recognize that there may be property
owners on the Duval County tax roll claiming undeserved and/or fraudulent personal exemptions
from ad valorem property tax, such as the homestead exemption (hereinafter collectively referred
to as "Personal Exemptions"), which reduces property tax revenue or unfairly shifts the property
tax burden to other property owners; and
WHEREAS, the PROPERTY APPRAISER and TAX COLLECTOR intend to contract
with a duly procured third party vendor (the "Vendor") for audit services to identify properties
with undeserved Personal Exemptions for the purpose of collecting taxes due on those properties,
which funds would otherwise be unavailable to the TAXING AUTHORITY (hereinafter the
"Vendor Audit Agreement"); and
WHEREAS, the Vendor shall provide said audit services in exchange for the fee
established in the Vendor Audit Agreement, which fee consists of an amount subject to the
procurement process but shall in no event exceed twenty-eight percent (28%) of any tax,
penalties, and interest collected from tax liens filed by the PROPERTY APPRAISER on parcels
identified through a Vendor audit as not being entitled to Personal Exemption(s) (hereinafter, the
"Fee"); and
WHEREAS, the Fee shall be paid exclusively from the taxes, penalties, and interest
collected in relation to the removal of Personal Exemptions as a result of audits performed by the
Vendor, it being understood that said Fee: (a) shall not be payable from any current or future
taxes that have not yet resulted in a lien; (b) shall not be payable from any tax lien filed by the
PROPERTY APPRAISER as a result of the PROPERTY APPRAISER's discovery of an
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AGENDA ITEM #8A
JUNE 13, 2016
undeserved Personal Exemption; and (c) shall not constitute a pledge or general obligation of tax
funds or create an obligation on the TAXING AUTHORITY to appropriate or make monies
available for the purpose of this Interlocal Agreement; and
NOW, THEREFORE, the PROPERTY APPRAISER, TAX COLLECTOR, and the
TAXING AUTHORITY agree as follows:
TERMS
1. Vendor Audit Agreement. The parties acknowledge and agree that the Vendor Audit
Agreement is presently being procured by the PROPERTY APPRAISER and/or TAX
COLLECTOR, and shall set forth such terms and conditions associated with that procurement
process. Once executed, the Property Appraiser and/or Tax Collector shall deliver a true and
correct copy of the Vendor Audit Agreement to the TAXING AUTHORITY for its records. A
draft Vendor Audit Agreement is attached hereto as Exhibit A and incorporated herein by this
reference; however, the parties understand and agree that during the procurement process, the
draft Vendor Audit Agreement may be adjusted to provide for indemnification, insurance, and
other legal provisions, and shall provide for the Vendor's Fee in an amount not to exceed twenty-
eight percent (28%) of the collected lien resulting from the removal of the undeserved Personal
Exemption, and shall provide for the TAX COLLECTOR's administrative fee of two percent
(2%) of the collected lien resulting from the removal of the undeserved Personal Exemption.
The parties to this Interlocal Agreement agree that in no event shall the fees deducted from the
collected Personal Exemption lien payable to the TAXING AUTHORITY exceed thirty percent
(30%) (which is the sum of the TAX COLLECTOR's administrative fee and the maximum
potential fee payable to the Vendor), which cap is intended to be commensurate with the cap
established in the authorizing legislation in Ordinance 2016-168-E of the City of Jacksonville for
that respective taxing authority. Once the Vendor Audit Agreement is procured, executed, and
a copy delivered to the TAXING AUTHORITY, the PROPERTY APPRAISER and TAX
COLLECTOR agree that the Vendor Audit Agreement may not be subsequently amended
without the prior written approval of the TAXING AUTHORITY; however, the foregoing
condition does not apply to any annual renewals of the Vendor Audit Agreement so long as such
renewals are on the same terms and conditions as the original Vendor Audit Agreement and do
not extend the expiration date beyond April12, 2021.
2. Effective Date. This Interlocal Agreement shall become effective on the last date of
the following: (a) the date that all other taxing authorities in Duval County (to wit: the City of
Jacksonville, City of Jacksonville Beach, City of Neptune Beach, School Board of Duval
County, St. Johns River Water Management District, and Florida Inland Navigation District)
fully execute and deliver their respective interlocal agreements for this matter; (b) the date of
execution and delivery of a duly procured and executed Vend or Audit Agreement; and (c) the
complete signature and delivery of this Interlocal Agreement.
3. Authorization of Reduced Collections for Fee Payment:
As noted in section 1 above, the TAX COLLECTOR is also authorized to deduct an
additional two percent (2%) of the lien monies resulting from the removal of the undeserved
Personal Exemption collected as an administrative fee; the TAX COLLECTOR's administrative
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AGENDA ITEM #8A
JUNE 13, 2016
fee shall be paid exclusively from the taxes, penalties, and interest collected in relation to lien
associated with the removal of Personal Exemptions as a result of audits performed by the
Vendor, said administrative fee shall not be payable from any current or future taxes that have
not yet resulted in a lien, shall not be payable from any tax lien filed by the PROPERTY
APPRAISER as a result of the PROPERTY APPRAISER's discovery of an undeserved Personal
Exemption, and shall not be a pledge or general obligation of tax funds or create an obligation of
the TAXING AUTHORITY to appropriate or make monies available for the purpose of this
Interlocal Agreement. The TAX COLLECTOR shall distribute the remaining tax revenue after
deduction of Vendor's Fee and the TAX COLLECTOR'S administrative fee to the TAXING
AUTHORITY according to governing Florida law.
This Interlocal Agreement does not constitute a pledge or general obligation of ad
valorem taxation, or create any obligation on the TAXING AUTHORITY to appropriate or make
monies available for any tax year, and does not create the right in any party to compel the
exercise of the ad valorem taxing power ofthe TAXING AUTHORITY or any taxing authority.
The TAX COLLECTOR agrees, on no less than a quarterly basis, to provide to the
TAXING AUTHORITY an accounting of all tax proceeds collected pursuant to the Vendor
Audit Agreement, the Fees paid to Vendor, the administrative fees retained by the TAX
COLLECTOR, and the total funds distributed to the TAXING AUTHORITY and each taxing
authority. Within sixty (60) days of the Effective Date of this Interlocal Agreement, the
representatives of each party agree to meet to develop the format and content of the quarterly
reports, and also agree to meet at least annually (at a time or times to be determined by the
parties) to review the results ofthe Vendor Audit Agreement and this Interlocal Agreement. The
TAX COLLECTOR agrees to provide the TAXING AUTHORITY access to its records for
review and audit purposes.
4. Termination: This Interlocal Agreement shall automatically renew at the beginning of
the TAXING AUTHORITY's fiscal year (July 1) until such time as the Vendor Audit
Agreement is terminated or otherwise expires (it being understood, however, that the Vendor
Audit Agreement natural expiration date shall be no later than April12, 2021). Upon termination
or expiration of the Vendor Audit Agreement, this Interlocal Agreement automatically expires
except for such provisions as survive termination as further agreed herein.
Any taxing authority, including the TAXING AUTHORITY, may opt out of the
Interlocal Agreement provided it notifies the PROPERTY APPRAISER and TAX COLLECTOR
in writing at least ninety (90) days before the end of the taxing authority's fiscal year, and such
termination shall be effective upon the first day of the following fiscal year of such taxing
authority. Notwithstanding the foregoing, the parties recognize that the TAXING
AUTHORITY's fiscal year is July 1 through June 30, and as such, its fiscal year commences
before the municipal taxing authorities' respective fiscal years that commence October 1.
Accordingly, the TAX COLLECTOR and PROPERTY APPRAISER agree to give the TAXING
AUTHORITY written notice within ten (10) business days of any other taxing authority's
subsequent termination during the TAXING AUTHORITY's fiscal year. Upon receipt of notice
regarding such third party taxing authority's subsequent termination, the TAXING
AUTHORITY may elect, at its option, to terminate this Interlocal Agreement by written notice to
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AGENDA ITEM #SA
JUNE 13, 2016
be delivered to the PROPERTY APPRAISER and TAX COLLECTOR and to be effective no
later than December 31 of that fiscal year.
The parties acknowledge that, to the extent feasible, Vendor audit services shall not be
provided for any parcel in a specific tax district if any taxing authority in that tax district
subsequently withdraws from an agreement or memorandum of understanding for use of
property tax collections to fund exemption audit services.
Upon termination of this Interlocal Agreement, Fees for all tax liens collected from audits
completed by the Vend or in affected taxing authority districts up to the date of the notification of
termination shall be payable in accordance with the terms provided by the Vendor Audit
Agreement. Because tax liens may not be paid within the term of this Interlocal Agreement, the
authorization of reduced collections for Fee payment shall survive the termination of this
Interlocal Agreement as follows: the TAXING AUTHORITY's responsibility for payment of
the Fees for tax liens collected from audits completed by the Vendor pursuant to the Vendor
Audit Agreement during the term of this Interlocal Agreement shall terminate upon the earlier of:
(a) the collection and payment of all liens resulting from Vendor audits pursuant to the Vendor
Audit Agreement, or (b) such time as agreed to between the Vendor, the PROPERTY
APPRAISER, and the TAX COLLECTOR; provided, however, in no event shall Vendor be paid
for Fees for tax liens that have expired pursuant to section 95.091, Florida Statutes (providing for
the expiration of such liens within twenty (20) years from the date the lien was filed).
5. Severability: Should any provision, portion, or application 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, or should future changes to Florida law conflict
with any portion of this Interlocal Agreement, the parties shall negotiate an equitable adjustment
in the affected provisions of this Interlocal Agreement with a view toward effecting the purpose
of this Interlocal Agreement, and the validity and enforceability of the remaining provisions,
portions, or applications thereof, shall not be impaired. If a future change to Florida law conflicts
with or preempts the entirety of this Interlocal Agreement, the Interlocal Agreement will be
immediately terminated.
6. Public Records: The parties are public agencies subject to Florida's public records
laws, including records retention, production, and confidentiality provisions. The PROPERTY
APPRAISER and TAX COLLECTOR agree to retain all records maintained by their agencies
and associated with the performance of this Interlocal Agreement in compliance with applicable
Florida records retention schedules, and to make all non-confidential or exempt records available
for inspection or copying upon request and in compliance with Florida's public records laws.
7. Liability: The PROPERTY APPRAISER retains sole discretion and authority to
grant, deny or remove exemptions, or file liens for undeserved Personal Exemptions in
accordance with Florida law. All legal costs involving appeals of the removal of Personal
Exemptions resulting from audits shall be the responsibility of the PROPERTY APPRAISER.
The TAXING AUTHORITY has no decision-making authority in relation to exemptions or liens
under this Interlocal Agreement and assumes no liability for any claims, damages, losses, or
expenses, direct, indirect or consequential, arising out of or resulting from the actions of Vendor,
the PROPERTY APPRAISER, or the TAX COLLECTOR under this Interlocal Agreement or
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AGENDA ITEM #8A
JUNE 13, 2016
the Vendor Audit Agreement other than the payment of Vendor's Fees and the TAX
COLLECTOR'S administrative fee, as aforesaid.
8. Notice: Any notice required to be given under this Interlocal Agreement shall be
made in writing and sent by first class mail, postage paid, or by hand delivery to, the contact and
address for the party as it appears on the signatory page of this Interlocal Agreement.
9. Applicable Law: The terms and conditions of this Interlocal Agreement shall be
governed by the laws of the State of Florida.
10. No Third Party Beneficiaries: This Interlocal Agreement is for the sole benefit of the
parties hereto, and in no event shall this Interlocal Agreement be construed to be for the benefit
of any third party, nor shall any party be liable for any loss, liability, damages or expenses to any
person not a party to this Interlocal Agreement other than the Fees owed the Vendor pursuant to
the Vendor Audit Agreement.
11. Sovereign Immunity. Except as otherwise provided by Florida Law, neither the
execution of this Interlocal Agreement by the parties, nor any other conduct, action or inaction of
any of the parties relating to the Interlocal Agreement is a waiver of their respective sovereign
immunity.
12. Headings: Headings herein are for convenience of reference only and shall not be
considered in any interpretation of this Interlocal Agreement.
13. Conflicts. In the event of any conflict between this Interlocal Agreement and the
Vendor Audit Agreement, as among the TAX COLLECTOR, the PROPERTY APPRAISER,
and the TAXING AUTHORITY, the terms of this Interlocal Agreement shall control
notwithstanding any provisions to the contrary in the Vendor Audit Agreement.
14. Execution: The parties agree that this Interlocal Agreement may be signed in
counterparts and facsimile signature; the counterparts and facsimiles of which, when taken
together, shall comprise an entire and original Interlocal Agreement.
[Signatures continued on next page]
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[Signature page to Interlocal Agreement
for Use of Property Tax Collections to Fund
Exemption Audit Services]
AGENDA ITEM #8A
JUNE 13, 2016
IN WITNESS WHEREOF, the parties hereto have caused this Interlocal Agreement to be
executed by the proper officer of each, as of the date first written above.
PROPERTY APPRAISER:
JERRY HOLLAND
As PROPERTY APPRAISER
231 E. FORSYTH ST. SUITE 270
JACKSONVILLE, FL 32202
904-630-2014
jholland@coj .net
DATE:
APPROVED AS TO LEGAL FORM
For the Property Appraiser:
--------------------------
Signature: _______________________ _
Office of General Counsel
TAX COLLECTOR:
MICHAEL CORRIGAN
As TAX COLLECTOR
231 E. FORSYTH ST. SUITE 200
JACKSONVILLE, FL 32202
904-630-2087
mcorrigan@coj .net
DATE: _______________________ __
APPROVED AS TO LEGAL FORM
For the Tax Collector:
Signature: ________________________ _
Office of General Counsel
[Signatures continued on next page]
6
[Continued signature page to Interlocal Agreement
for Use of Property Tax Collections to Fund
Exemption Audit Services}
AGENDA ITEM #SA
JUNE 13, 2016
TAXING AUTHORITY THE CITY OF ATLANTIC BEACH, FLORIDA
MITCHELL E. REEVES
As MAYOR
800 SEMINOLE RD.
ATLANTIC BEACH, FL 32233
NELSON VANLIERE
As CITY MANAGER
800 SEMINOLE RD.
ATLANTIC BEACH, FL 32233
DONNA L. BARTLE, CMC
As CITY CLERK
800 SEMINOLE RD.
ATLANTIC BEACH, FL 32233
DATE: ------------------------
DATE: ______________________ __
DATE: ______________________ ___
APPROVED AS TO LEGAL FORM
For the City of Atlantic Beach:
Signature: _______________________ _
City Attorney
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