Tax collection con­tract may be shared

Crit­ics say po­lit­i­cal heay­weights on pay­roll present con­flicts as city weighs divvy­ing up cushy con­tracts

Houston Chronicle - - FRONT PAGE - By Ericka Mel­lon and Mike Mor­ris

City lead­ers are pre­par­ing to de­cide whether their ven­dor for col­lect­ing back taxes — a law firm with nu­mer­ous pub­lic of­fi­cials on its pay­roll — should share its lu­cra­tive con­tract with a com­peti­tor.

Hous­ton city lead­ers are pre­par­ing to de­cide whether their long­time ven­dor for col­lect­ing back taxes — a law firm with nu­mer­ous pub­lic of­fi­cials on its pay­roll — should share its mul­ti­mil­lion-dol­lar con­tract with a com­peti­tor that en­joys its own po­lit­i­cal con­nec­tions.

The City Coun­cil is sched­uled to con­sider the col­lec­tions con­tract Wed­nes­day af­ter months of lob­by­ing. Sim­i­lar bat­tles play out reg­u­larly in cities, coun­ties and school districts across Texas as the two ri­val firms ex­ert their in­flu­ence.

Pub­lic records show that the col­lec­tions gi­ant known as Linebarger, Gog­gan, Blair & Samp­son — for years the ven­dor for the city, Har­ris County and the Hous­ton school district — boasts a pay­roll of politi- cal heavy­weights. These con­sul­tants in­clude state law­mak­ers who have the power to set the col­lec­tors’ profit mar­gins and hold sway at the Capi­tol over the very gov­ern­ments voting on the con­tracts.

The long­est-serv­ing mem­ber of the state House, Hous­ton Demo­crat Sen­fro­nia Thomp­son, has reaped the most money from Linebarger’s city and HISD con­tracts — more than $2.3 mil­lion over the last decade, records show.

The com­pany also has paid the law firm of state Rep. Sylvester Turner, D-Hous­ton, morethan $1 mil­lion from its city and HISD deals since at least 2009, ac­cord­ing to pub­lic records.

An­other state rep­re­sen­ta­tive, Hous­ton Demo­crat Ana Her­nan­dez, re­ported re­ceiv­ing a re­tainer of at least $25,000 from Linebarger in each of the last two years.

“It raises po­ten­tial con­flicts,” said Craig McDon­ald, di­rec­tor of the watch­dog group Tex­ans for Pub­lic Jus­tice. “Law­mak­ers should not be work­ing with or for law firms that are do­ing busi­ness with the state of Texas or Texas govern­ment en­ti­ties.”

Linebarger and its chief ri­val, Per­due Bran­don Fielder Collins and Mott, rep­re­sent thou­sands of lo­cal gov­ern­ments across Texas in akey in­dus­try that en­sures cash-strapped cities and schools get the mil­lions in funds they are due.

For the law firms, the work can be lu­cra­tive. Texas law al­lows them to col­lect a fee of up to 20 per­cent of the late taxes and penal­ties. The added cost is borne by the delin­quent tax­pay­ers.

The list of sub­con­trac­tors paid by the firms — many of them mi­nori­ties and women, hired in part to meet af­fir­ma­tive ac­tion goals — is packed with cur­rent and for­mer politi­cians and those in their or­bits.

The three Hous­ton law­mak­ers are joined on Linebarger’s pay­roll by state Sen. Royce West of Dal­las, state Rep. Ser­gio Muñoz Jr. of Mis­sion and state Rep. Joe Desho­tel of Beau­mont. Oth­ers re­ceiv­ing pay­ments in re­cent years in­clude for­mer Hous­ton state Rep. Al Luna III; for­mer HISD trustee Paula Arnold; and Kippy Car­away, a mem­ber of Mayor An­nise Parker’s ex­ec­u­tive staff. Car­away’s fees stopped when she joined the city in 2012.

Part-time job

“Within the leg­isla­tive arena, there are thou­sands of things that come be­fore us,” said Turner. “If you sim­ply say we should not be in­volved in any mat­ter where what we do could have some in­flu­ence on busi­ness, then that would ex­clude us from ev­ery­thing — not just pub­lic busi­ness but pri­vate busi­ness as well. That says the only people youwant in the Leg­is­la­ture are rich and don’t need to work.”

Hold­ing a seat in the House or Se­nate is con­sid­ered a part-time job in Texas. Leg­is­la­tors earn $600 a month, plus a $150 daily al­lowance when a law­maker is in Austin or trav­el­ing on of­fi­cial busi­ness.

The only Texas law­maker tied to Per­due, ac­cord­ing to the com­pany and re­cent state records, was Sen. Wendy Davis, the Demo­cratic gu­ber­na­to­rial nom­i­nee. In 2011, Per­due in­cluded her law firm in its pro­posal to Fort Worth ISD, but the com­pany did not win the con­tract.

Prac­tices de­fended

Seek­ing to land its firstever share of Hous­ton’s property tax work, Per­due de­ployed lob­by­ist and at­tor­ney Roland Gar­cia — Parker’s pick to chair her His­panic Ad­vi­sory Board and the brother of the Metro chair­man she ap­pointed, Gil­bert Gar­cia. Per­due also plans to hire the con­sult­ing firm started by Roland Gar­cia’s wife if it re­ceives the city work, records show.

Lead­ers of Linebarger and Per­due de­fended the firms’ prac­tices, say­ing lo­cal gov­ern­ments re­peat­edly hire them be­cause they suc­cess­fully per­form the time-con­sum­ing work of con­tact­ing delin­quent tax­pay­ers, ne­go­ti­at­ing pay- ment plans and, if nec­es­sary, tak­ing them to court. The firms noted that lo­cal reg­u­la­tions some­times re­quire or strongly en­cour­age them to hire mi­nor­ity-or women-owned-firms.

The firms’ in­flu­ence ex­tends to some of the area’s top pub­lic of­fi­cials.

Even as he ques­tioned how the firms pur­sue pub­lic con­tracts, Har­ris County Judge Ed Em­mett ac­knowl­edged he sent a let­ter to Parker prais­ing Linebarger’s work. HISD Su­per­in­ten­dent Terry Grier did the same. Hum­ble ISD Su­per­in­ten­dent Guy Sconzo sub­mit­ted a let­ter sup­port­ing Per­due.

Linebarger’s po­lit­i­cal con­nec­tions re­cently drew at­ten­tion when for­mer HISD trustee Larry Mar­shall was sued on bribery al­le­ga­tions. The case was dis­missed last year, but court records showed his cam­paign trea­surer, Joyce Moss-Clay, worked as a Linebarger con­sul­tant and passed a cut of her fees to Mar­shall. Both have de­nied wrong­do­ing.

Linebarger’s sub­con­trac­tors also in­clude long­time Hous­ton po­lit­i­cal con­sul­tant Marc Cam­pos, paid $850,000; Hous­ton Com­mu­nity Col­lege trustee Car­roll Robin­son’s brother, Marchris Robin­son, an at­tor­ney whose firms got more than $776,000; lob­by­ist Dar­ryl Carter, paid $2.15 mil­lion; and Car­away, of Parker’s team, at $315,000. An in­ves­ti­ga­tion firm owned by Ni­cole West, a close friend of school trustee Paula Har­ris, was paid $220,000; Per­due also pro­posed hir­ing West for the city job.

These amounts were paid un­der Linebarger’s con­tracts with HISD and the city. The school district has tracked pay­ments only since 2011. The city con­tracts cover delin­quent property tax col­lec­tions since 2005 and mu­nic­i­pal court col­lec­tions since 2009.

HISD trustee Harvin Moore said he is not sur­prised big com­pa­nies would hire con­sul­tants. But, told about six- and seven- fig­ure pay­ments, he said he­was trou­bled.

“To me, that’s ev­i­dence that the prices im­posed on the mar­ket­place — a lot of times on the people who can af­ford it the least — are ex­ces­sive,” Moore said.

For his part, Turner said he is not the main at­tor­ney on the Linebarger work, but his firm gets a flat rate to han­dle lit­i­ga­tion when delin­quent tax­pay­ers are sued. Linebarger pays Turner’s firm $ 10,000 a month un­der both its HISD and city con­tracts, records show.

“That’s not be­ing paid based onmy sta­tus,” Turner said. “That’s be­ing paid based on the work­that this law firm does.”

Thomp­son, also an at­tor­ney, said only that she

“It raises po­ten­tial con­flicts. Law­mak­ers should not be work­ing with or for law firms that are do­ing busi­ness with the state of Texas or Texas govern­ment en­ti­ties.” Craig McDon­ald, di­rec­tor of the watch­dog group Tex­ans for Pub­lic Jus­tice

does “le­gal work” for Linebarger and has an of­fice there. She said her con­tract keeps her from dis­cussing de­tails. She also has reg­is­tered with the city as a lob­by­ist for Linebarger in re­cent years.

Her pay­ments from Linebarger are $ 15,000 monthly on the HISD and city deals, records show.

Thomp­son has not dis­closed her re­la­tion­ship with Linebarger on the fi­nan­cial state­ments Texas law­mak­ers must file an­nu­ally. She said she did not think it was re­quired.

Turner and at least four other law­mak­ers did re­port fi­nan­cial ties to Linebarger on their re­cent forms.

The Texas Ethics Com­mis­sion has not is­sued an opin­ion about whether at­tor­neys in the Leg­is­la­ture must dis­close their clients, said as­sis­tant gen­eral coun­sel Ian Steusloff. But law­mak­ers are sup­posed to list re­tain­ers they re­ceive.

Adaunt­ing maze

Find­ing all the sub­con­trac­tors that any pub­lic ven­dor hires can be dif­fi­cult. Most gov­ern­ments, in­clud­ing Hous­ton and HISD, only re­quire dis­clo­sure of businesses owned by mi­nori­ties or women. Sev­eral sub­ur­ban districts had no sub­con­trac­tor lists for their Linebarger or Per­due con­tracts.

Mike Dar­low, se­nior part­ner at Per­due, noted the city of Hous­ton re­quires con­trac­tors to de­vote 24 per­cent of their con­tracts to mi­nor­ity businesses, which can in­clude at­tor­neys, con­sul­tants for pub­lic re­la­tions, of­fice sup­plies and more.

Joe House­holder, a spokesman for Linebarger, said con­sul­tants and lo­cal at­tor­neys “pro­vide a sig­nif­i­cant level of ser­vice to the firm in ex­change for their com­pen­sa­tion” and must sign agree­ments to honor strict eth­i­cal stan­dards. He re­it­er­ated that the com­pany’s fees do not take away money from lo­cal gov­ern­ments, but come from the delin­quent tax­pay­ers.

Com­pet­i­tive model

The is­sue be­fore City Coun­cil on Wed­nes­day is whether to give Per­due a por­tion of the city’s delin­quent property tax work for the first time, with the firm han­dling late ac­counts in a few ar­eas in which it al­ready does col­lec­tions.

City At­tor­ney David Feld­man said the city is mov­ing to a com­pet­i­tive model for all its col­lec­tions, hop­ing to pull in more rev­enue.

How­ever, Har­ris County Tax As­ses­sor-Col­lec­tor Mike Sul­li­van, who col­lects taxes for the city and other lo­cal gov­ern­ments, de­liv­ered letters to City Coun­cil mem­bers Thurs­day ar­gu­ing the mul­ti­ple-ven­dor ap­proach would “im­pose a se­ri­ous and un­nec­es­sary bur­den” on tax­pay­ers and dis­rupt his of­fice’s pro­cesses.

Linebarger also has lob­bied against the pro­posal, with its man­ag­ing part­ner, Nor­man Nel­son, writ­ing Feld­man Thurs­day sug­gest­ing a six-month ex­ten­sion of his firm’s con­tract to al­low more time to plan with Sul­li­van.

Per­due’s Dar­low said any hur­dles ac­com­mo­dat­ing mul­ti­ple ven­dors could be han­dled within 60 days.

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