Submitted By: Emory Roberts
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Presentation By: Emory Roberts
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Department: Finance
STAFF RECOMMENDATION (Motion Ready):
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Approve additional contract expenditure with The Notice Company, Inc. for class action notice and claims administration services in the amount of $275,000
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OCALA’S RELEVANT STRATEGIC GOALS:
Fiscally Sustainable.
PROOF OF PUBLICATION:
N/A
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BACKGROUND:
On February 20, 2014, Class Representatives filed a class action lawsuit against the City challenging the City’s Fire Fee as an unconstitutional tax imposed in violation of Article VII, Section 1(a) of the Florida Constitution. Class Representatives requested the trial court declare the Fire Fee unlawful and order class-wide refunds to the greatest extent permitted under law.
On June 19, 2020, the Fifth District Court of Appeal (“DCA”), in a 14-page appellate decision, reversed the trial court and ruled the City’s Fire Fee was an unconstitutional tax. On October 11, 2021, the Court held a hearing on Class Representatives’ Motion to Compel the City to Fund the Common Fund. The Court found the Fifth DCA’s mandate was the final judgment in the case, the Fifth DCA had resolved all legal issues and properly considered and disposed of all the City’s defenses. The Court granted Class Representatives’ motion, determined the City had collected $79,282,909.44 in illegal taxes from class members since February 20, 2010, and ordered the City to deposit the illegal taxes into a separate fund (the “Common Fund”) within sixty (60) days to be disbursed upon further order of the Court.
The Court reserved jurisdiction regarding all remaining aspects concerning the management of this class action, including disbursement of the Common Fund and payment of refunds, class representative service awards, attorneys’ fees, and costs.
On February 11, 2022, the Court approved a Class Notice of Final Hearing to disburse refunds, attorney’s fees, costs, and class representative service awards for May 10, 2022, and required the City to mail the Notice of Final Hearing to each class member within 30 days. To facilitate this requirement, on March 14, 2022, the City Manager’s Office executed an agreement with The Notice Company, Inc., for Class Action Notice and Administration Services (the “Original Contract”) with a maximum initial contract expenditure amount of $50,000.
On May 16, 2022, the City was ordered to initiate its disbursement process for class member refunds within 60 days. The order included two pro-rata distributions with an initial distribution of 91.5972% and a second distribution after July 1, 2023, up to 8.4028% (a maximum of 100% refund) for class members who cashed the first distribution check.
On May 17, 2022, Council approved the further engagement of The Notice Company, Inc., for the provision of Claims Administration services up to a maximum contract expenditure amount of $200,000. This expenditure ceiling was established based upon estimates provided by the City’s outside counsel. This engagement was formally ratified between the City and The Notice Company, Inc., via a June 13, 2022, addendum to the original contract (the “First Amendment”).
FINDINGS AND CONCLUSIONS:
Since Jun 13, 2022, contract expenditures for claims administration services have exceeded the $200,000 expenditure ceiling by $4,293.17 due to higher than anticipated mailing and administration services during the first fire fee refund distribution phase. Staff anticipates that the City will expend an additional $275,000 for additional claims administration services through the conclusion of the second distribution phase due to:
• Class member address verifications;
• Class member telephone calls;
• Class member emails;
• Class member claim forms processing; and
• Extended Court ordered disbursement timeline until April 30, 2024, for the distribution, processing, and reconciling of first and second distributions.
These additional anticipated expenditures will bring the total contract value to $475,000.
FISCAL IMPACT:
Funds are available from the General Fund Reserve for Contingencies to support the expenditure of up to $275,000. An accompanying agenda item is provided on the consent portion of the same agenda.
001-099-999-513-81-99800 ($275,000)
001-099-950-999-81-31010 $275,000
PROCUREMENT REVIEW:
The underlying Original Agreement and First Amendment were reviewed in compliance with the City’s Procurement Policy.
LEGAL REVIEW:
The underlying Original Agreement and First Amendment were reviewed and approved for form and legality by former City Attorney, Robert W. Batsel, Jr.
ALTERNATIVE:
• Approve with Changes
• Table
• Deny