City gets another extension on fire fee refunds

File photo of Jason Zimmerman, an attorney for the City of Ocala, questions a witness on the witness stand during the $80 million City of Ocala Fire Fee lawsuit hearing at the Marion County Judicial Center in Ocala, Fla. on Tuesday, May 10, 2022. [Bruce Ackerman/Ocala Gazette] 2022.

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Posted October 3, 2022 | By Jennifer Hunt Murty

During a hearing held on Oct. 3, the City of Ocala was granted a ten-day extension by Judge Robert W. Hodges to send refund checks to 4,000 businesses who paid a fire service fee that was later ruled illegal after missing a court-ordered time frame.

The attorney representing the city, Jason A. Zimmerman, who filed the Motion for Extension on behalf of the city told Judge Hodges that all residential accounts who had received the final hearing notice had received a refund check.

The attorney for the city, Zimmerman also told Judge Hodges during the hearing that the Notice Co. had reported fraud in the way of unauthorized deposit settlement funds. Zimmerman indicated he would provide the specifics of those fraudulent transactions to attorney for class.

Judge Hodges recommended that the attorneys to supply unauthorized deposits of settlement funds also to law enforcement.

According to an email obtained by the Gazette from the firm representing the city to the attorney for the class Derek Schroth, 59,927 checks had been sent out “for a total amount of $50,192,198.15. Of that, $39,536,968.46 has actually been cashed.”

The city’s motion was heard after it missed the court’s time frame to issue initial refunds within 60 days of a judge’s May 16 order.

The $80 million in court-ordered refunds stem from a class-action suit filed in 2014 over the roughly $15 a month that more than 89,000 Ocala residents and businesses who paid much higher rate based on square foot for fire services as an add on to their Ocala Electric Utility bills.

During the trial, the city’s attorney argued Ocala had implemented the tax in 2006 to spread the cost of fire services across a broad group of citizens, some of whom would not typically be paying for the services because they did not own property or were tax-exempt. An appellate court found the fees constituted an illegal tax, and a judge ordered the city to refund the nearly $80 million in fees that was collected from utility customers over the eight years.

It seems to be the largest illegal tax refund ever ordered by the courts in the State of Florida.

The city contracted with The Notice Company, Inc. of Massachusetts to administer the refunds. Under the contract, the company is responsible for “providing notice and distributing payments to eligible Class Members” and keeping track of when those notices are returned by mail.

Additionally, the company was responsible for creating and maintaining a website, setting up toll-free phone lines, and monitoring and responding to emails about refunds.

Emory Roberts, Interim Chief Financial Officer, reported to the city council in an Aug. 16 meeting that the company had been overwhelmed by the number of calls for refunds and has been unable to respond to residents’ messages.

According to the agreement with the Notice Company, after class members receive their initial checks, a new bank account will be set up with the remainder of the proceeds and the company will prepare a database listing class members who cashed their checks.

Whatever is left over from the $80 million after the company is unable to locate all the claimants, the class members who cashed their checks will be entitled to a second distribution “on a pro rata basis subject to a cap of 100% refund to each Class Member between First and Second distributions.”

The city states in its motion that “based on the current claims submissions and the verified addresses, the city anticipates that the Class Members will receive the second distribution in 2023 for the full amount of their refund.”

Any remaining balance undistributed will revert to the city once a one-year claim period has passed.