The City Council voted unanimously Monday to get out of a contract that was costing the city money every time city officials got a property owner to pay an overdue tax bill.
The contract with Tower Capital Management will end on Jan. 31. That’s the earliest the contract would allow a cancellation.
The company was hired to try to collect late taxes. It was guaranteed a commission on any delinquent taxes paid to the city, but the contract didn’t take into consideration the possibility that the city would intensify its efforts and get many property owners to pay up without the help of Tower.
The city threatened to foreclose on hundreds of properties. Many owners immediately paid up.
Since the contract said Tower got paid for every overdue bill paid, the city has wound up paying $600,000 to Tower this year.
The city is poised to foreclose on another 200 properties next month, which might lead to many last-minute paid bills. Tower will benefit from those, too.
Mayor Gary McCarthy said the city would continue its efforts even though Tower will get a cut.
“It’s to get that message out that people will be held accountable,” he said. “We’re beefing up our collections.”
He added that Tower will continue to try to collect taxes until the Jan. 31 cancellation.
“If they do nothing, I’m not going to pay them. It would be breach of contract,” he said.
But Tower officials have indicated they’ll keep sending out letters urging owners to pay.
“It’s a marriage that’s ending amicably,” McCarthy said.
McCarthy was also roundly criticized during the council session for his decision to fire budget analyst Jason Cuthbert two weeks ago.
Cuthbert was fired after he publicly urged the council to vote against the sales tax agreement with the county — an agreement that the mayor had personally negotiated. Cuthbert disagreed with the negotiations and wanted the council to fight harder for a larger share in the countywide sales tax revenue.
He gave the council charts showing that the city’s share of the sales tax revenue had stayed flat for 15 years while the county’s share had grown from $13.4 million to more than $60 million.
He argued the county could share a little more with the city by returning to the 2006-2007 tax rate, at a cost of about $100 per property owner.
McCarthy fired Cuthbert two days after he spoke out about the deal.
On Monday, residents said McCarthy was wrong to fire Cuthbert.
“It is a shame, it really is, that one person had to be sacked,” said resident Harry Brand.
Resident Tony Buonome said his friends likened the termination to a Nazi-like suppression of the truth.
“It’s unbelievable” Buonome said. “I just don’t understand it. I felt real bad for this young man.”
Resident Mary McClaine added that the council was at fault for putting Cuthbert in the position of speaking publicly.
“It should not have been necessary for Jason Cuthbert to send charts to City Council. City Council should have requested the information,” she said.
She also said that “only the uneducated” could have negotiated the sales tax deal that the council approved.
“You betrayed us,” she said, her voice breaking with emotion.
Councilman Vince Riggi, who voted against the sales tax deal, added that Cuthbert should not have been fired. He commended Cuthbert for providing useful information.
“He’s certainly a man of immense integrity,” Riggi said. “I wish him all the best.”
In response, McCarthy defended the sales tax agreement as the best possible deal.
Anyone who thinks otherwise is “foolish,” he said, adding that only an “overly simplistic analysis” could show that the city should get more revenue.
The city doesn’t deserve to get more because most of the growth in sales tax revenue is in the suburbs, he said.
“There’s no way there’s 6 or 7 million dollars left on the table,” he said. “This deal is not a great deal. But it’s a good deal. It’s a fair deal.”