Houston Chronicle

Tax collection contract may be shared

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

- 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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