<PAGE>
===========================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
- ---------------------------------------------------------------------------
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended Commission File Number
JULY 31, 1998 0-15264
MANATRON, INC.
(Exact Name of Registrant as Specified in its Charter)
MICHIGAN 38-1983228
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
2970 SOUTH 9TH STREET
KALAMAZOO, MICHIGAN 49009
(Address of Principal Executive Offices) (Zip Code)
(616) 375-5300
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes __X__.
No _____.
The number of shares outstanding of registrant's common stock, no
par value, at September 11, 1998, was 2,930,083 shares.
===========================================================================
<PAGE>
PART I. - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
<TABLE>
MANATRON, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
<CAPTION>
JULY 31, APRIL 30,
1998 1998
----------- -----------
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and equivalents $ 456,890 $ 1,613,669
Receivables, net 7,439,231 5,909,623
Revenues earned in excess of billings and
retainages on long-term contracts 3,264,925 2,723,571
Inventories 176,718 296,420
Other current assets 654,892 676,255
----------- -----------
Total current assets 11,992,656 11,219,538
----------- -----------
NET PROPERTY AND EQUIPMENT 1,244,749 1,310,096
----------- -----------
OTHER ASSETS:
Long-term receivables, less current portion 555,259 567,222
Officers' receivable 339,640 343,724
Computer software development costs, net 1,649,519 1,461,437
Goodwill, net 854,126 900,334
Other, net 41,258 60,725
----------- -----------
Total other assets 3,439,802 3,333,442
----------- -----------
$16,677,207 $15,863,076
=========== ===========
<PAGE>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 100,000 $ 100,000
Accounts payable 1,311,693 1,099,365
Billings in excess of revenues earned on
long-term contracts 1,953,856 1,343,490
Billings for future services 3,864,353 4,747,231
Accrued liabilities 2,852,316 3,052,561
----------- -----------
Total current liabilities 10,082,218 10,342,647
----------- -----------
DEFERRED INCOME TAXES 124,000 124,000
----------- -----------
LONG-TERM DEBT 925,000 125,000
----------- -----------
OTHER LONG-TERM LIABILITIES 99,461 160,814
----------- -----------
SHAREHOLDERS' EQUITY:
Common stock 5,570,945 5,275,130
Retained earnings 366,885 163,797
Deferred compensation (291,302) (103,312)
Unearned ESOP shares (200,000) (225,000)
----------- -----------
Total shareholders' equity 5,446,528 5,110,615
----------- -----------
Total liabilities and shareholders' equity $16,677,207 $15,863,076
=========== ===========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
-2-
<PAGE>
<TABLE>
MANATRON, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
<CAPTION>
THREE MONTHS ENDED
JULY 31,
---------------------------------
1998 1997
---------- ----------
<S> <C> <C>
NET REVENUES $8,083,056 $5,963,985
COST OF REVENUES 5,252,964 3,822,550
---------- ----------
Gross profit 2,830,092 2,141,435
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 2,627,353 2,084,960
---------- ----------
Income from operations 202,739 56,475
OTHER INCOME (EXPENSE), net 349 (35,884)
---------- ----------
Income before provision for
federal income taxes 203,088 20,591
PROVISION FOR FEDERAL INCOME TAXES (Note 2) - -
---------- ----------
NET INCOME $ 203,088 $ 20,591
========== ==========
BASIC EARNINGS PER SHARE $ .07 $ .01
========== ==========
DILUTED EARNINGS PER SHARE $ .06 $ .01
========== ==========
WEIGHTED AVERAGE SHARES OUTSTANDING 2,852,279 2,851,450
========== ==========
BASIC WEIGHTED AVERAGE SHARES OUTSTANDING 3,128,965 2,905,329
========== ==========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
-3-
<PAGE>
<TABLE>
MANATRON, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
<CAPTION>
THREE MONTHS ENDED
JULY 31,
-----------------------------
1998 1997
---------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 203,088 $ 20,591
Adjustments to reconcile net income to net cash
and equivalents used for operating activities:
Depreciation and amortization expense 511,231 371,353
Deferred compensation expense 38,401 19,633
Decrease (increase) in current assets:
Receivables, net (1,529,608) 478,380
Revenues earned in excess of billings and
retainages on long-term contracts (541,354) (288,385)
Inventories 119,702 147,936
Other current assets 21,363 46,467
Increase (decrease) in current liabilities:
Accounts payable and accrued liabilities 12,083 (490,861)
Billings in excess of revenues earned on
long-term contracts 610,366 (249,006)
Billings for future services (882,878) (212,517)
---------- --------
Net cash and equivalents used for operating activities (1,437,606) (156,409)
---------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Decrease in long-term receivables 16,047 103,998
Other, net - 3,411
Investments in computer software (385,701) (96,418)
Net additions to property and equipment (182,590) (91,001)
---------- --------
Net cash and equivalents used for investing
activities (552,244) (80,010)
---------- --------
-4-
<PAGE>
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance (repurchase) of common stock 94,424 (187,374)
Purchase of common stock for ESOP - 50,000
Borrowings (repayments) under line of credit 800,000 602,000
Decrease in long-term liabilities (61,353) (56,081)
---------- --------
Net cash and equivalents provided by (used
for) financing activities 833,071 408,545
---------- --------
CASH AND EQUIVALENTS:
Increase (decrease) (1,156,779) 172,126
Balance at beginning of period 1,613,669 457,691
---------- --------
Balance at end of period $ 456,890 $629,817
========== ========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
-5-
<PAGE>
MANATRON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
- ---------------------------------------------------------------------------
(1) GENERAL INFORMATION
The consolidated condensed financial statements included herein have
been prepared by the Registrant, without audit, pursuant to the rules
and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been omitted pursuant to such rules and regulations,
although the Registrant believes that the disclosures are adequate to
make the information presented not misleading. It is suggested that
these consolidated condensed financial statements be read in
conjunction with the consolidated financial statements and notes
thereto included in the Registrant's Annual Report on Form 10-K for
the year ended April 30, 1998, as filed with the Securities and
Exchange Commission on July 29, 1998. There have been no significant
changes in such information since the date of such Form 10-K.
In the opinion of management, the accompanying unaudited consolidated
condensed financial statements contain all adjustments, consisting of
only a normal and recurring nature, necessary to present fairly
(a) the financial position of the Registrant as of July 31, 1998, and
April 30, 1998, and (b) the results of its operations for the three-
months ended July 31, 1998 and 1997, and (c) cash flows for the three-
months ended July 31, 1998 and 1997.
(2) FEDERAL INCOME TAXES
As of April 30, 1997 and 1996, the Company recorded valuation allowances
totaling $912,000 and $834,000, respectively, against certain of its
future tax benefits, including its tax loss carryforwards, due to the
uncertainty of their ultimate realization. Approximately $166,000 of
this valuation allowance was utilized in fiscal 1998 to offset the
provision for federal income taxes. As of April 30, 1998, the
Company had tax loss carryforwards of approximately $211,000 and a
valuation allowance of approximately $746,000 remaining, which will
be utilized to offset any provision for federal income taxes in fiscal
1999. As a result, the Company has not recorded a provision for
income taxes for the three months ended July 31, 1998. The tax loss
carryforwards are available to offset future taxable income through
the year 2011.
-6-
<PAGE>
(3) COMPREHENSIVE INCOME
In July 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income" ("SFAS 130"). SFAS 130 establishes
standards for reporting and display of comprehensive income and its
components in a full set of financial statements. The objective of
SFAS 130 is to report a measure of all changes in equity of an
enterprise that result from transactions and other economic events
of the period other than transactions with owners. Comprehensive
income is the total of net income and all other non-owner changes
in equity. The Company adopted this standard effective May 1, 1998.
Total comprehensive income was the same as net income for the
three month periods ended July 31, 1998 and 1997, respectively.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
Net revenues of $8,083,056 for the three months ended July 31, 1998, have
increased by 36% in comparison to the $5,963,985 of net revenues that were
reported for the comparable period in the prior fiscal year. These amounts
include revenues from computer hardware and software shipments, sales of
computer forms and supplies, and various related services such as mass real
estate appraisals (revaluations), software support, training, hardware
maintenance, and forms processing and printing.
Service revenues have increased by 40% over the prior year primarily
because of the new revaluation contracts totaling approximately $30 million
that were signed with Allegheny County (Pittsburgh), Pennsylvania, and
Hamilton County (Cincinnati), Ohio, during fiscal 1998. In addition, as
previously reported, the Company signed a new contract with Dauphin County
(Harrisburg), Pennsylvania, in June of 1998 which includes approximately
$3.6 million of revaluation services. As a result, the Company's backlog
for appraisal services at July 31, 1998, of approximately $32.8 million is
slightly higher than the $31.8 million it had at April 30, 1998.
Revenues from hardware, software, and supply sales have increased by 26%
over the prior year primarily because of additional software license fees
from new and legacy products and a number of hardware upgrades by customers
in the Midwest.
As a result of the increase in net revenues, cost of revenues for the three
months ended July 31, 1998, also increased 37% to $5,252,964 versus the
comparable prior year amount of $3,822,550. Margins have decreased from
36% in the prior year quarter to 35% in the current quarter because of the
increase in service revenues. Service revenues typically generate a lower
margin than software sales.
-7-
<PAGE>
Selling, general and administrative expenses have increased by 26% to
$2,627,353 for the three months ended July 31, 1998, compared to $2,084,960
for the same period in the prior fiscal year. This increase primarily is
due to annual salary adjustments and other increased costs associated with
the ongoing development and rollout of the Company's new software products,
including Year 2000 compliance work.
As a result of the factors noted above, the Company had a 259% increase in
its operating income of $202,739 for the three months ended July 31, 1998,
versus $56,475 for the three months ended July 31, 1997. In addition,
interest expense, which is included in other expense, has decreased from
$42,258 to $13,421 because the Company has reduced its average
outstanding indebtedness in the last 12 months.
The Company's provision for federal income taxes generally fluctuates with
the level of pretax income. In addition, the effective tax rate is
generally impacted because of non-deductible goodwill amortization related
to the Company's acquisitions of ATEK Information Services and Specialized
Data Systems. However, as described in Note 2, the Company has not
recorded a provision for federal income taxes for the three months ended
July 31, 1998, because certain unrecorded future tax benefits, including
the Company's tax loss carryforwards, will be utilized to offset it.
As a result of the factors noted above, the Company reported net income of
$203,088 or $.07 per share for the three months ended July 31, 1998, versus
$20,591 or $.01 per share for the comparable period in the prior fiscal year.
This represents a significant improvement over the prior year.
YEAR 2000
The Company is currently in the process of addressing a potential problem
that is facing all users of automated information systems. The problem is
that many computer systems that process transactions based on two digits
representing the year of transaction may recognize a date using "00" as the
year 1900 rather than the year 2000. The problem could affect a wide
variety of automated information systems, such as mainframe applications,
personal computers, and communication systems, in the form of software
failure, errors, or miscalculations. By nature, the software development
industry is highly dependent upon computer systems. The year 2000 issue
is especially important to software vendors because most applications have
date dependencies as an integral part of their logic.
The Company has been developing and implementing plans to prepare itself
and its customers for the year 2000 for the past few years. The Company's
plan is regularly updated and monitored by technical personnel and is
reviewed by management of the Company on a periodic basis. Specifically,
the plan addresses the Company's internal data processing systems its
software products, its third party products and communications with its
customers as follows:
-8-
<PAGE>
INTERNAL DATA PROCESSING
The Company's internal data processing systems include hardware and
software that facilities its business operations. They include:
- - customer information systems
- - accounting, human resource and payroll systems
- - customer support systems
The Company's Technical Services department has spearheaded the effort
to manage these systems through a smooth year 2000 conversion.
Currently, the internal hardware and operating systems have been
inventoried and are substantivally year 2000 compliant. The internal
software systems are in varying degrees of compliance with the
target being to have them all compliant by mid 1999. The Company
believes that its internal systems will be able to effectively
support its operations through the year 2000 and beyond.
THE COMPANY'S SOFTWARE PRODUCTS
A core strategy of the Company is to develop and market turnkey soft-
ware systems for local government. Most of these products have some
dependency on dates. As such, the Company has been working to update
them to properly handle years after 1999. Of the Company's 75 major
products, only 53 are targeted for compliance. The others are either
being discontinued or replaced by more modern products. As of July
31, 1998, this effort is estimated to be 60% complete. For
comparison, as of January 31, 1998, this effort was estimated to be
only about 13% complete. As of July 31, 1998, the breakdown is as
follows:
- - Products that are compliant 23%
- - Products in QA Phase 40%
- - Products in Programming Phase 4%
- - Products with analysis completed 22%
- - Products not yet started 11%
The Company further expects this effort to be primarily complete
by the end of 1998. Some work will remain for early 1999, but it is
expected to be limited. The Company expects to use 1999 to focus on
its customers and ensuring that their systems are upgraded and
functional prior to January 1, 2000.
THIRD PARTY HARDWARE AND SOFTWARE
The Company's software products run on industry standard hardware
and operating systems. To facilitate the deployment of its software,
the Company acts as a value-added reseller for a wide variety of
-9-
<PAGE>
hardware manufacturers, installing and supporting both the hardware
and software for its customers. The Company's technical services
department is spearheading the effort to document the year 2000 compliance
status of third party hardware and software and to identify those products
that need upgraded or replaced. This identification effort is also
substantially complete; however, this information changes as vendors
release more information about and options for managing the year 2000
issue.
COMMUNICATIONS WITH CUSTOMERS
Another important aspect of the Company's year 2000 strategy is the
coordination and communication of its efforts with those of its
customers. Communication of the strategy to customers also has
been substantially completed. The communication includes the
compliance plans for specific software products and the year 2000
services offered by the Company. This communication will continue
throughout 1999 as the Company works with its customer base to
upgrade or replace those software and hardware systems. To
support this effort, the Company has launched a year 2000 area on
its web site to make relevant information available to both Company
personnel and customers.
The Company will continue to assess the impact of, and work on, the Year
2000 issue throughout fiscal 1999. The Company's goal is to perform tests
of its systems and applications during 1998 and 1999 and to have all
targeted systems and applications compliant with the century change by June
1999, which would allow the Company to have time to address last minute
issues.
The costs to implement the Year 2000 changes primarily consist of personnel
expense for staff dedicated to the effort and professional fees paid to
third party providers of remedial services. It is the Company's policy to
expense such costs as incurred. The Company also may invest in new or
upgraded technology which has definable value lasting beyond 2000. In
these instances, where Year 2000 compliance is merely ancillary, the
Company may capitalize and depreciate such an asset over its estimated
useful life.
Based on currently available information, management does not presently
anticipate that the costs to address the Year 2000 issues will have a
material adverse impact on the Company's financial conditions, results of
operations, or liquidity. The costs, to date which range from
approximately $300,000 to $500,000 have had, however, a negative effect on
the Company's earnings and the future costs associated with the Year 2000
issue are expected to have a similar effect.
-10-
<PAGE>
The costs of the project and the date on which the Company believes it will
complete the Year 2000 modifications are based on management's best
estimates. There can be no guarantee that these estimates will be achieved
and actual results could differ from those anticipated. Specific factors
that might cause differences include, but are not limited to, the ability
of other companies on which the Company's systems rely to modify or convert
their systems to be year 2000 compliant, and the ability to locate and
correct all relevant computer codes and similar uncertainties.
FINANCIAL CONDITION AND LIQUIDITY
Working capital of $1,910,438 at July 31, 1998, has increased by 118%
compared to the April 30, 1998, amount of $876,891. These levels reflect
current ratios of 1.19 and 1.08, respectively. The increase in working
capital primarily is due to the increase in receivables which are a result of
the additional revenues for the quarter.
Shareholders' equity at July 31, 1998, increased by $335,913 to $5,446,528
from the balance reported at April 30, 1998, because of $94,424 of employee
stock purchases, $203,088 of net income and $38,401 of deferred
compensation expense that occurred during the first quarter. As a result,
book value per share has increased to $1.86 as of July 31, 1998, from
$1.80 at April 30, 1998.
The nature of the Company's business is not property or equipment
intensive. Net capital expenditures, which were approximately $183,000 for
the three months ended July 31, 1998, are about two times higher than the
$91,000 of capital expenditures reported for the comparable period in the
prior fiscal year. The net capital expenditures relate primarily to the
purchase of additional or new computer hardware and software for the
Company's technical and support personnel.
As the Company's revenues are generated from contracts with local
governmental entities, it is not uncommon for certain of its accounts
receivable to remain outstanding for approximately three to four months,
thereby having a negative impact upon cash flow. In addition, as of July 31,
1998, the Company owed $825,000 on its $5,000,000 revolving credit agreement
and $200,000 on its ESOP loan. It is, however, anticipated that the
revolving line of credit, together with existing cash balances, and cash
generated from future operations will be sufficient for the Company to meet
its working capital requirements for at least the next 12 months.
The Company cannot precisely determine the effect of inflation on its
business. The Company continues, however, to experience relatively stable
costs for its inventory as the computer hardware market is very
competitive. Inflationary price increases related to labor and overhead
will have a negative effect on the Company's cash flow and net income to
the extent that they cannot be offset through improved productivity and
price increases.
-11-
<PAGE>
"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995
Certain information contained in this Form 10-Q may constitute or include
forward-looking statements. Such forward-looking information involves
important known and unknown risks and uncertainties and other factors that
may cause the actual results, performance, or achievements of the Company
to be materially different from any future results, performance, or
achievements expressed or implied by such forward-looking statements.
These risks and uncertainties include, but are not limited to,
uncertainties relating to economic conditions; possible future acquisitions
and divestitures; technological changes and developments in the competitive
environment in which the Company operates; spending patterns of the
Company's customers; success of the Company in negotiations with its
lenders; size, timing, and recognition of revenue from significant orders;
ability of the Company to successfully implement its business strategy of
developing and licensing client/server decision support applications
software designed to address specific industry markets; new product
introductions and announcements by the Company's competitors; changes in
Company strategy; product life cycles, cost and continued availability of
third party software and technology incorporated into the Company's
products; cancellations of maintenance and support agreements; potential
obsolescence of the Company's existing products or services; pricing and
availability of equipment, materials, inventories, and programming; success
in and expense associated with the development, production, testing,
marketing, and shipping of products, including a failure to ship new
products and technologies when anticipated, failure of customers to accept
these products and technologies when planned, and any defects in products;
perceived absolute or relative overall value of the Company's products by
the Company's customers, including features, quality, and pricing compared
to other competitive products; amount, and rate of growth in, the Company's
selling, general and administrative expenses; occurrence of any
expenditures and expenses, including depreciation and research and
development expenses; costs and other effects of legal and administrative
cases and proceedings (whether civil or criminal), settlements, and
investigators, claims, and changes in those items; developments or
assertions by or against the Company relating to intellectual property
rights; adoption of new, or changes in, accounting policies and practices
and the application of such policies and practices; and effects or changes
within the Company's organization or in compensation and benefit plans.
Since the purchase of the Company's products is relatively discretionary
and generally involves a significant commitment of capital, in the event of
any downturn in any potential customer's business or the economy in
general, purchases of the Company's products may be deferred or canceled.
Further, the Company's expense levels are based, in part, on its
expectations as to future revenue and a significant portion of the
Company's expenses do not vary with revenue. As a result, if revenue is
below expectations, results of operations are likely to be materially
-12-
<PAGE>
adversely affected. Shareholders are cautioned not to place undue reliance
on the forward-looking statements made in this Form 10-Q, which speak only
as of the date hereof.
PART II. - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS. The following documents are filed as exhibits to this
report on Form 10-Q:
3.1 Restated Articles of Incorporation. Previously filed as
an exhibit to the Company's Form 10-K Annual Report for
the fiscal year ended April 30, 1995, and incorporated
herein by reference.
3.2 Bylaws. Previously filed as an exhibit to the Company's
Form 10-K Annual Report for the fiscal year ended
April 30, 1995, and incorporated herein by reference.
4.1 Restated Articles of Incorporation. See Exhibit 3.1
above.
4.2 Bylaws. See Exhibit 3.2 above.
4.3 Revolving Credit Loan Agreement. Previously filed as an
exhibit to the Company's Form 8-K Current Report dated
November 11, 1994, and incorporated herein by reference.
4.4 First Amendment to Revolving Credit Agreement.
Previously filed as an exhibit to the Company's Form 10-K
Annual Report for the fiscal year ended April 30, 1996,
and incorporated herein by reference.
4.5 Second Amendment to Revolving Credit Agreement.
Previously filed as an exhibit to the Company's Form 10-K
Annual Report for the fiscal year ended April 30, 1996,
and incorporated herein by reference.
4.6 Rights Agreement dated June 2, 1997 between Manatron,
Inc. and Registrar and Transfer Company. Previously
filed as an exhibit to the Company's Form 8-A filed on
June 11, 1997, and incorporated herein by reference.
10.1 Manatron, Inc. 1986 Incentive Stock Option Plan.<F*>
This exhibit is incorporated by reference to the
Registrant's Form 10-K Annual Report for the fiscal year
ended April 30, 1995.
-13-
<PAGE>
10.2 Manatron, Inc. 1989 Stock Option Plan.<F*> This exhibit
is incorporated by reference to the Registrant's Form 10-
K Annual Report for the fiscal year ended April 30, 1995.
10.3 Manatron, Inc. 1995 Long-Term Incentive Plan.<F*> This
exhibit is incorporated by reference to the Registrant's
Definitive Proxy Statement for its Annual Meeting of
Shareholders held October 12, 1995.
10.4 Buy and Sell and Voting Trust Agreement Concerning Stock
of Manatron, Inc.<F*> See Exhibit 9 above.
10.5 Executive Employment Agreement with Randall L. Peat.<F*>
This exhibit is incorporated by reference to the
Registrant's Form 10-K Annual Report for the fiscal year
ended April 30, 1995.
10.6 Form of Stock Purchase Warrant with Brent R. Nicklas, as
amended.<F*> This exhibit is incorporated by reference
to the Registrant's Form 10-K Annual Report for the
fiscal year ended April 30, 1995.
10.7 Manatron, Inc. Employee Stock Ownership and Salary
Deferral Plan.<F*> This exhibit is incorporated by
reference to the Registrant's Form 10-K Annual Report for
the fiscal year ended April 30, 1995.
10.8 Manatron, Inc. Employee Stock Purchase Plan.<F*> This
exhibit is incorporated by reference to the Registrant's
Form 10-K Annual Report for the fiscal year ended April
30, 1993.
10.9 ATEK Information Services, Inc. Stock Purchase Agreement.
This exhibit is incorporated by reference to the
Registrant's Form 8-K Current Report dated July 28,
1993.
10.10 Stock Purchase Agreement between Ronald D. Stoynoff and
Allen F. Peat dated March 15, 1994. This exhibit is
incorporated by reference to the Registrant's Form 8-K
Current Report dated March 15, 1994.
10.11 Agreement between Manatron, Inc. and Ronald D. Stoynoff
effective as of April 1, 1994. This exhibit is
incorporated by reference to the Registrant's Form 8-K
Current Report dated March 15, 1994.
-14-
<PAGE>
10.12 Asset Purchase Agreement between Manatron, Inc. and Moore
Business Forms, Inc. dated November 11, 1994. This
exhibit is incorporated by reference to the Registrant's
Form 8-K Current Report dated November 11, 1994.
10.13 Manatron, Inc. 1994 Long-Term Incentive Plan.<F*> This
exhibit is incorporated by reference to the Registrant's
Definitive Proxy Statement for its Annual Meeting of
Shareholders held October 6, 1994.
10.14 Agreement between Manatron, Inc. and Allen F. Peat dated
October 17, 1995.<F*> This exhibit is incorporated by
reference to the Registrant's Form 8-K Current Report
dated November 13, 1995.
10.15 Employment Agreement with Douglas A. Peat dated October
10, 1996.<F*> This exhibit is incorporated by reference
to the Registrant's Form 10-K Annual Report for the
fiscal year ended April 30, 1997.
10.16 Employment Agreement with Jane M. Rix dated October 10,
1996.<F*> This exhibit is incorporated by reference to
the Registrant's Form 10-K Annual Report for the fiscal
year ended April 30, 1997.
10.17 Employment Agreement with James W. Sanderbeck dated
October 10, 1996.<F*> This exhibit is incorporated by
reference to the Registrant's Form 10-K Annual Report for
the fiscal year ended April 30, 1997.
10.18 Employment Agreement with Paul R. Sylvester dated October
10, 1996.<F*> This exhibit is incorporated by reference
to the Registrant's Form 10-K Annual Report for the
fiscal year ended April 30, 1997.
10.19 Employment Agreement with Larry L. Terhune dated October
10, 1996.<F*> This exhibit is incorporated by reference
to the Registrant's Form 10-K Annual Report for the
fiscal year ended April 30, 1997.
10.20 Manatron, Inc. Executive Incentive Plan for 1997.<F*>
This exhibit is incorporated by reference to the
Registrant's Form 10-K Annual Report for the fiscal year
ended April 30, 1997.
10.21 Manatron, Inc. Executive Incentive Plan for 1998.<F*>
This exhibit is incorporated by reference to the
Registrant's Form 10-K Annual Report for the fiscal year
ended April 30, 1997.
-15-
<PAGE>
10.22 Form of Indemnity Agreement.<F*> This exhibit is
incorporated by reference to the Registrant's Form 10-K
Annual Report for the fiscal year ended April 30, 1998.
10.23 Indemnity Agreement of Daniel P. Muthard.<F*> This
exhibit is incorporated by reference to the Registrant's
Form 10-K Annual Report for the fiscal year ended April
30, 1998.
10.24 Property Revaluation Articles of Agreement for Allegheny
County, Pennsylvania dated May 20, 1998.
27 Financial Data Schedule.
- -----------------------
<F*>Management contract or compensatory plan or arrangement.
(b) The Company filed a Form 8-K Current Report on May 11, 1998
relating to the death of Melvin J. Trumble, president of the
Company's Sabre Appraisal Division and a member of the Company's
Board of Directors.
-16-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
Date: September 14, 1998 By /S/ PAUL R. SYLVESTER
Paul R. Sylvester
President, Chief Executive Officer,
Treasurer and Chief Financial
Officer (Principal Executive,
Financial, and Accounting Officer)
-17-
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DOCUMENT
3.1 Restated Articles of Incorporation. Previously filed as an
exhibit to the Company's Form 10-K Annual Report for the
fiscal year ended April 30, 1995, and incorporated herein by
reference.
3.2 Bylaws. Previously filed as an exhibit to the Company's
Form 10-K Annual Report for the fiscal year ended April 30,
1995, and incorporated herein by reference.
4.1 Restated Articles of Incorporation. See Exhibit 3.1 above.
4.2 Bylaws. See Exhibit 3.2 above.
4.3 Revolving Credit Loan Agreement. Previously filed as an
exhibit to the Company's Form 8-K Current Report dated
November 11, 1994, and incorporated herein by reference.
4.4 First Amendment to Revolving Credit Agreement. Previously
filed as an exhibit to the Company's Form 10-K Annual Report
for the fiscal year ended April 30, 1996, and incorporated
herein by reference.
4.5 Second Amendment to Revolving Credit Agreement. Previously
filed as an exhibit to the Company's Form 10-K Annual Report
for the fiscal year ended April 30, 1996, and incorporated
herein by reference.
4.6 Rights Agreement dated June 2, 1997 between Manatron, Inc. and
Registrar and Transfer Company. Previously filed as an
exhibit to the Company's Form 8-A filed on June 11, 1997, and
incorporated herein by reference.
10.1 Manatron, Inc. 1986 Incentive Stock Option Plan.* This
exhibit is incorporated by reference to the Registrant's Form
10-K Annual Report for the fiscal year ended April 30, 1995.
10.2 Manatron, Inc. 1989 Stock Option Plan.<F*> This exhibit is
incorporated by reference to the Registrant's Form 10-K Annual
Report for the fiscal year ended April 30, 1995.
-i-
<PAGE>
10.3 Manatron, Inc. 1995 Long-Term Incentive Plan.<F*> This
exhibit is incorporated by reference to the Registrant's
Definitive Proxy Statement for its Annual Meeting of
Shareholders held October 12, 1995.
10.4 Buy and Sell and Voting Trust Agreement Concerning Stock of
Manatron, Inc.<F*> See Exhibit 9 above.
10.5 Executive Employment Agreement with Randall L. Peat.<F*> This
exhibit is incorporated by reference to the Registrant's Form
10-K Annual Report for the fiscal year ended April 30, 1995.
10.6 Form of Stock Purchase Warrant with Brent R. Nicklas, as
amended.<F*> This exhibit is incorporated by reference to the
Registrant's Form 10-K Annual Report for the fiscal year ended
April 30, 1995.
10.7 Manatron, Inc. Employee Stock Ownership and Salary Deferral
Plan.<F*> This exhibit is incorporated by reference to the
Registrant's Form 10-K Annual Report for the fiscal year ended
April 30, 1995.
10.8 Manatron, Inc. Employee Stock Purchase Plan.<F*> This exhibit
is incorporated by reference to the Registrant's Form 10-K
Annual Report for the fiscal year ended April 30, 1993.
10.9 ATEK Information Services, Inc. Stock Purchase Agreement.
This exhibit is incorporated by reference to the Registrant's
Form 8-K Current Report dated July 28, 1993.
10.10 Stock Purchase Agreement between Ronald D. Stoynoff and Allen
F. Peat dated March 15, 1994. This exhibit is incorporated by
reference to the Registrant's Form 8-K Current Report dated
March 15, 1994.
10.11 Agreement between Manatron, Inc. and Ronald D. Stoynoff
effective as of April 1, 1994. This exhibit is incorporated
by reference to the Registrant's Form 8-K Current Report dated
March 15, 1994.
10.12 Asset Purchase Agreement between Manatron, Inc. and Moore
Business Forms, Inc. dated November 11, 1994. This exhibit is
incorporated by reference to the Registrant's Form 8-K Current
Report dated November 11, 1994.
-ii-
<PAGE>
10.13 Manatron, Inc. 1994 Long-Term Incentive Plan.<F*> This
exhibit is incorporated by reference to the Registrant's
Definitive Proxy Statement for its Annual Meeting of
Shareholders held October 6, 1994.
10.14 Agreement between Manatron, Inc. and Allen F. Peat dated
October 17, 1995.<F*> This exhibit is incorporated by
reference to the Registrant's Form 8-K Current Report dated
November 13, 1995.
10.15 Employment Agreement with Douglas A. Peat dated October 10,
1996.<F*> This exhibit is incorporated by reference to the
Registrant's Form 10-K Annual Report for the fiscal year ended
April 30, 1997.
10.16 Employment Agreement with Jane M. Rix dated October 10,
1996.<F*> This exhibit is incorporated by reference to the
Registrant's Form 10-K Annual Report for the fiscal year ended
April 30, 1997.
10.17 Employment Agreement with James W. Sanderbeck dated October
10, 1996.<F*> This exhibit is incorporated by reference to
the Registrant's Form 10-K Annual Report for the fiscal year
ended April 30, 1997.
10.18 Employment Agreement with Paul R. Sylvester dated October 10,
1996.<F*> This exhibit is incorporated by reference to the
Registrant's Form 10-K Annual Report for the fiscal year ended
April 30, 1997.
10.19 Employment Agreement with Larry L. Terhune dated October 10,
1996.<F*> This exhibit is incorporated by reference to the
Registrant's Form 10-K Annual Report for the fiscal year ended
April 30, 1997.
10.20 Manatron, Inc. Executive Incentive Plan for 1997.<F*> This
exhibit is incorporated by reference to the Registrant's Form
10-K Annual Report for the fiscal year ended April 30, 1997.
10.21 Manatron, Inc. Executive Incentive Plan for 1998.<F*> This
exhibit is incorporated by reference to the Registrant's Form
10-K Annual Report for the fiscal year ended April 30, 1997.
10.22 Form of Indemnity Agreement.<F*> This exhibit is incorporated
by reference to the Registrant's Form 10-K Annual Report for
the fiscal year ended April 30, 1998.
-iii-
<PAGE>
10.23 Indemnity Agreement of Daniel P. Muthard.<F*> This exhibit
is incorporated by reference to the Registrant's Form 10-K
Annual Report for the fiscal year ended April 30, 1998.
10.24 Property Revaluation Articles of Agreement for Allegheny
County, Pennsylvania dated May 20, 1998.
27 Financial Data Schedule.
- -----------------------
<F*>Management contract or compensatory plan or arrangement.
-iv-
<PAGE>
EXHIBIT 10.24
PROPERTY REVALUATION
ARTICLES OF AGREEMENT
FOR ALLEGHENY COUNTY,
PENNSYLVANIA
Submitted By:
Sabre Systems and Service
A Subsidiary of Manatron, Inc.
9111 Springboro Pike
Miamisburg, Ohio 45342
<PAGE>
PROPERTY REVALUATION AGREEMENT - ALLEGHENY COUNTY, PENNSYLVANIA
MANATRON, INC.
TABLE OF CONTENTS
PAGE
ARTICLES OF AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . 1
I. Property Revaluation Plan. . . . . . . . . . . . . . . . . . . 2
A. Approach -- An Overview . . . . . . . . . . . . . . . . . 2
B. Time Line . . . . . . . . . . . . . . . . . . . . . . . . 5
C. Organization. . . . . . . . . . . . . . . . . . . . . . . 7
D. Staffing. . . . . . . . . . . . . . . . . . . . . . . . . 9
E. Implementation. . . . . . . . . . . . . . . . . . . . . . 10
II. Company Responsibilities . . . . . . . . . . . . . . . . . . . 45
A. Staffing. . . . . . . . . . . . . . . . . . . . . . . . . 45
B. Forms . . . . . . . . . . . . . . . . . . . . . . . . . . 45
C. Insurance . . . . . . . . . . . . . . . . . . . . . . . . 45
D. Postage . . . . . . . . . . . . . . . . . . . . . . . . . 45
E. Parcel Reconciliation . . . . . . . . . . . . . . . . . . 46
III. Board and County Responsibilities. . . . . . . . . . . . . . . 46
A. Office Space, Furnishings, Equipment, Maintenance
Utilities Expense . . . . . . . . . . . . . . . . . . . . 46
B. Tax Maps. . . . . . . . . . . . . . . . . . . . . . . . . 46
C. Forms . . . . . . . . . . . . . . . . . . . . . . . . . . 46
D. Computer Services . . . . . . . . . . . . . . . . . . . . 47
E. Existing Files/Records. . . . . . . . . . . . . . . . . . 47
F. Abatement/Exemption . . . . . . . . . . . . . . . . . . . 47
G. Sales Information . . . . . . . . . . . . . . . . . . . . 48
H. Current Information . . . . . . . . . . . . . . . . . . . 48
I. Splits and Combinations . . . . . . . . . . . . . . . . . 48
J. Tax Administration Files. . . . . . . . . . . . . . . . . 48
IV. General Provisions . . . . . . . . . . . . . . . . . . . . . . 48
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
<PAGE>
ARTICLES OF AGREEMENT
THIS AGREEMENT, effective as of the 20th day of May, 1998, is
by and between the BOARD OF PROPERTY ASSESSMENT, APPEALS, REVIEW AND
REGISTRY (P.A.A.R.R.) of the County of Allegheny, Pennsylvania, an
independent entity constituted pursuant to the Pennsylvania Second Class
County Code, hereinafter referred to as the BOARD;
AND
The COUNTY OF ALLEGHENY, a political subdivision of the Commonwealth of
Pennsylvania, hereinafter referred to as the COUNTY;
AND
MANATRON, INC., a corporation organized and existing pursuant to the laws
of the State of Michigan, hereinafter referred to as the COMPANY.
WITNESSETH
WHEREAS, the Company has received, reviewed, and understands fully the
nature and implications of the Request for Proposal for property
revaluation and assessment administration for Allegheny County,
Specification 2822, hereinafter referred to as the RFP which is Exhibit A;
and
WHEREAS, the Company, pursuant to the letter from Melvin J. Trumble, Senior
Vice President, Real Estate Operations, of Sabre Systems and Service, a
Subsidiary of Manatron, Inc., submitted the response of the Company to the
RFP, hereinafter referred to as the SUBMISSION; and
WHEREAS, the parties have each had numerous discussions with respect to the
range of services to be provided by the Company and the compensation,
therefore, to be paid to the Company by the County; and
WHEREAS, the Company does hereby represent and warrant to the Board that it
is skillful, experienced, and competent with respect to the provision of
the services described below and that it is capable, both financially and
operationally, of performing said services in accordance with the terms
hereof while recognizing the importance of the timely and competent
provision of those services to the Board and to the public; and
WHEREAS, the parties in order to comply with the Orders of Court of R.
Stanton Wettick, Jr. in the case of Miller v. The Board of Property
Assessment, Appeals and Review et. al., GD96-7312 said Orders having been
issued on April 18, 1997, May 22, 1997 and January 15, 1998, do hereby
enter into the following Agreement.
1
<PAGE>
WHEREAS, all inquiries of the Company to the Board have been responsively
answered to the satisfaction of the Company, and the Company represents
that it fully and completely understands the critical nature of the timely,
complete and competent performance by the Company of the services herein
below described;
NOW, THEREFORE, in consideration of the covenants herein and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto, intending to be bound legally, agree as
follows:
I. PROPERTY REVALUATION PLAN
A. APPROACH -- AN OVERVIEW
1. STEP I: SYSTEM INSTALLATION. Since and expanded CAMA system
shall be necessary in order for the Company to properly
value property, the Company shall install its CAMA system,
subject to approval of the Board, at the beginning of the
revaluation project so that the data gathered in the field
effort may be inventoried and edited as the property data
base is expanded.
The data base is refined through the field effort, with the
new data being loaded into a new computer system installed
in the Company's offices which shall be used for the
valuation process. The system's capabilities shall include
software capable of providing new values based on the
updated data base and sufficient in terms of capacity to
allow access by both the public and for internal use. The
approaches to value shall include the cost, market, and
income. Subject properties shall be checked in field to
ensure that the new values are statistically within
established tolerances as set by the State and International
Association of Assessing Officers (IAAO) standards.
Regardless of the approaches utilized, the final values
shall be subject to a sales ratio study summarized by the
property type and assigned neighborhood. The sales ratio
shall determine and generate a coefficient of dispersion
(COD) for each neighborhood that shall meet the following
criteria:
- Residential parcels shall have a COD less than .15.
- Commercial parcels shall have a COD less than .20.
- Industrial parcels shall have a COD less than .20.
2
<PAGE>
- Agricultural parcels shall have a COD less than .20.
- Exempt parcels shall have a COD less than .20.
- Vacant parcels shall have a COD less than .30.
2. STEP II: DATA COLLECTION. The property characteristic
information on the County computer needs to be reviewed on a
property by property basis for all classes of properties.
There are two (2) challenges which shall be addressed:
- Existing information is incorrect due to alterations on
the properties over the years through wear and tear, as
well as remodeling.
- To achieve the results desired in the assessment
climate of the nineties, the data base needs to be
enhanced with the addition of several property
characteristics. Items such as square footage need to
be picked up through the measuring of the property, as
well as other interior information such as basement,
number of rooms, heating, etc., which need to be added
to the data base.
The work plan requires the clerical staff to route the
property record cards into a logical street order. The
Company shall then put crews of people in the field under
supervision to contact property owners and ask the questions
necessary to collect and compile the desired information on
the approved property record card. There shall be interior
observations in residential/agricultural properties and
interior observations necessary in the refinement of the
commercial/industrial data base as required by the terms of
this Agreement.
Since the total revaluation effort is going to be under
public scrutiny and the data base, therefore, shall need to
be accurate so as to provide defensible values for the
taxpayers, as well as conform to State statistical
requirements, an expansion, verification, and audit of the
County's property characteristic data base is necessary in
order to properly value and equalize assessments across the
board and then adequately defend the value to the taxpayer.
A mailing to each residential taxpayer, which contains the
main characteristics of their dwelling, shall be made in
accordance with the terms of this Agreement. Provisions
shall be made for the taxpayer to review the mailer, correct
3
<PAGE>
it if necessary, and return it to the Company for entry into
the data base. The activity, as well as the contents of the
mailer itself, shall be approved by the Board before the
data mailer is used.
3. STEP. III. PROPERTY VALUE GENERATION AND REVIEW. Once the
new data base has been entered into the new system, as
stated previously, new values shall be generated through the
CAMA system for all properties which shall need to be
analyzed and field checked to ensure the values are accurate
as required by this Agreement. This phase shall be
accomplished by experienced appraisers hired by the Company.
Any appraiser who is responsible for setting value shall
have the CPE (Certified Property Evaluator) designation.
This valuation phase shall be a combination of revisiting
the properties in the field and statistical analysis in the
office. The property owner shall not be contacted, except
if the data base appears to be in error.
4. STEP IV: REVALUATION IMPLEMENTATION. When the new values
are completed, the Board shall decide when and how they
should be released to the public. The Company anticipates
at least a three (3) to four (4) year effort to complete the
reappraisal effort. Using a method approved by the Board
and at a time the Board approves, the Company shall mail to
each property owner a "Notice to Property Owner" form
outlining the valuation process, detailing the property's
characteristics, and stating the property's assessed value.
The Company shall ensure that the new values are ready for
release in the year 2000, payable by the property owner in
2001. Prior to and during the implementation process, there
shall be an in-depth public information program which
outlines the goals of the revaluation, how and why it was
completed, and what opportunities shall be available for the
property owners to review these new assessments in
accordance with the terms of this Agreement.
The Company shall implement its programs through group
meetings and telephone communications where the property
owner obtains information by dialing a number and then
accessing information by responding to questions by pushing
the appropriate numbers on the dial pad. If the property
owner still has questions concerning the program, they can
stay on the line and talk with a "staff person" who shall
direct them in their efforts to understand what to do. The
Company shall arrange and conduct neighborhood group
meetings at prearranged times with access to the computer by
modem for improving property owner understanding. If the
4
<PAGE>
property owner comes to the neighborhood meetings, their
information can be printed off at the site and reviewed with
an appraiser standing by for such a purpose.
5. STEP V: ASSESSMENT SUPPORT. This assessment support process
includes three (3) hearing levels for the property owner:
- LEVEL 1. The Company shall provide an informal
discussion opportunity where the property owner would
make an appointment to come in and meet with an
appraiser and review the data characteristics and
valuation methods used to place a value on his/her
property. These meetings shall be located at locations
and times approved by the Board for the property owner.
No value change shall occur at this informal
discussion.
- LEVEL 2. The Company shall assist in scheduling and
participate in the formal appeals before the Board of
Property Assessment.
- LEVEL 3 is the property owner's right to a tax court
appeal, and the Company shall provide defense of values
in any cases appealed to the courts.
B. TIME LINE
5
<PAGE>
ALLEGHENY COUNTY, PENNSYLVANIA
Revaluation Project Plan
<TABLE>
<CAPTION>
Start 6 12 18 24 30 36 42 48
months months months months months months months months
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Start Up
Clerical Preparation
Data Base Purification
Data Entry - Systems Implementation
Valuation
Implementation
Support of Values
Public Information Program
</TABLE>
6
<PAGE>
C. ORGANIZATION
The Company shall assemble a management team, a proposed
depiction of which is graphically depicted in the following
organizational chart:
<TABLE>
<CAPTION>
OFFICE OF PROPERTY EQUALIZATION (OPE)
<S><C>
Revaluation DAO - Company (Chairman)
Steering Council Chairman / PAARR / or (Designee)
Chief Assessor - Board
Revaluation Manager - Company
Allegheny Operations
Director (DAO)
Public Relations Research and Technical
Coordinator / Administrative Assistance Manager /
Assistant Education Director
Revaluation
Manager
Office Residential CAMA Commercial /
Manager Agricultural Operations Industrial
Manager Manager
Clerical Data Entry Data Valuation Technical Data Valuation Technical
Staff Staff Collection Support Collection Support
</TABLE>
D. STAFFING
Following is a list of Company personnel who shall be assigned to
the Allegheny County revaluation project. Resumes of Company
personnel associated with this project are available to the Board
and County upon request to the Company. In addition, an outline
of the Company's training program is located in Section III, B,
5, h of the Company's proposal. The Board shall be notified in
writing of any changes in staffing throughout the term of this
Agreement, and such changes shall be approved unless the Board
notifies the Company in writing that the proposed change is not
acceptable within ten (10) business days.
7
<PAGE>
The steering council, as indicated on the organizational chart,
may be comprised of the following members:
1. Director of Allegheny Operations - Company (Chairman).
2. Chairman/P.A.A.R.R./County (or Designee).
3. Chief Assessor - Board.
4. Revaluation Manager - Company.
Project management and coordination shall fall under the
direction of Mr. Melvin J. Trumble, Senior Vice President, Real
Estate Operations, who is responsible for the Company's appraisal
projects execution. Mr. Trumble has been involved in the
appraisal profession for over thirty (30) years and is considered
one of the top experts in the industry.
Mr. Trumble shall be supported by Mr. Daniel Muthard, Vice
President of Midwest Appraisal Operations, and Mr. George
Donatello, Director of Allegheny County Operations. Mr. Muthard
has over twenty-one (21) years of experience in the execution of
complex reappraisal projects. Mr. Donatello has over twenty-five
(25) years of experience in the management of large reappraisal
projects and is a past president of IAAO.
- DIRECTOR OF ALLEGHENY COUNTY OPERATIONS. An individual with
vast experience in all phases of assessment administration
shall serve in this position. The director shall serve as
chairman of the revaluation steering council and shall
directly supervise all Company operations in Allegheny County.
This person shall also be directly responsible for supervising
and performing many of the public relations functions,
maintaining quality control, and training.
- REVALUATION MANAGER. The revaluation manager for the
Allegheny County revaluation project shall be responsible for
the day-to-day execution of the project and shall be the
Company's on-site representative.
- PUBLIC RELATIONS COORDINATOR/ADMINISTRATIVE ASSISTANT. A
person experienced in revaluation public relations shall be
responsible for the day-to-day coordination of all public
relations phases of the project.
- OFFICE MANAGER. The office manager shall be responsible for
all clerical and data entry functions.
8
<PAGE>
- RESIDENTIAL/AGRICULTURAL MANAGER. The Res/Ag manager's duties
include managing the data collection and valuation effort,
including land valuation, neighborhood analysis, market
modeling, and value review.
- COMMERCIAL/INDUSTRIAL MANAGER. The Commercial/Industrial
Manager's shall be responsible for the commercial and
industrial portion of the project, including complex
industrial property. He/her management duties shall include
data collection, land valuation, neighborhood analysis, income
modeling, and value review.
- FIELD SUPERVISORS. The Company anticipates the relocation of
three to five (3 - 5) field supervisors and appraisal
personnel to Allegheny County in addition to the management
staff.
- DATA COLLECTION PERSONNEL. Data collection personnel shall be
hired locally and trained in accordance with the training
outline included with this Agreement. These people shall
perform the majority of the residential, agricultural, and
small commercial property data collection. For major
commercial and industrial properties, Company personnel shall
perform both the data collection and valuation processes.
- CLERICAL AND DATA ENTRY PERSONNEL. Data entry personnel shall
be hired locally and trained to perform manual clerical
functions such as routing, quality control, data entry, etc.
E. IMPLEMENTATION
1. OFFICE SETUP. The Company revaluation office shall operate
separately from the Board assessment office.
The office functions for the property revaluation project
shall:
- Organize existing public records relating to assessment
into an order which allows analysis of available data
and routes the cards into a geographical order, using
County tax maps, which facilitates the field work by
ensuring all field personnel are working in a
systematic and orderly fashion which shall prevent
properties from being overlooked.
- Organize quality assurance procedures to ensure the
property record cards are thoroughly completed with the
desired data base which either needs to be corrected or
9
<PAGE>
collected initially; this is important when the work
returns from the field.
- Once the quality assurance steps have been completed,
the data shall be encoded to the CAMA file using the
existing parcel identifier (block and lot) as the key
number to ensure that the data is inherent to the
correct parcel. Encoding is ongoing since the CAMA
file being created is dynamic and in a constant state
of change as work from data base purification arrives
back from the field, as well as the entry and tracking
of new construction and other information required to
keep current.
A project the size of Allegheny County shall require an
office staff of up to fifty (50) people at given times;
however, by controlling the effort through timing functions
to blend in with the overall operation of the assessment
office, we can cross-train the staff as much as possible.
2. The Company shall meet with the County's MBE/WBE Director
and develop standards regarding hiring of minority and women
employees prior to finalization of this Agreement.
3. PUBLIC INFORMATION. The goal of the public information
program is to educate and inform the public about the
revaluation program and how it affects them. The Company
shall coordinate with the Board in the development of a
public information program. The Company shall identify the
media representation that shall be involved from newspaper,
radio, and television outlets in the area. After the
meeting with these individuals, the Company shall provide
them with an approved media kit that includes the following
information:
- An announcement story answering the questions why, how,
what, and when.
- A basic background sheet regarding the Company and the
contact person for the project.
- The reason and purpose for the property revaluation
project and other valuable information.
- Any additional information which the Board authorizes
on behalf of the County.
10
<PAGE>
In addition to the media, the Company shall target other
groups as well, including:
- Business and professional organizations.
- Community organizations.
- Chamber of Commerce.
- Civic groups.
- Senior citizens groups.
- Board and municipal offices.
- Consumer groups.
- Local school boards.
- Farm Bureau.
- Property owners.
It is a vital part of this revaluation project to get the
message out before final implementation of the project:
Once a public relations team is in place, the following
activities shall occur:
- Public television channel - interview with qualified
and articulate speakers.
- Use of videotape or slides explaining the different
appraisal phases and procedures taking place.
- Radio interviews and discussions with the public.
Question and answer type format.
- Newspaper articles about the appraisal, what's taking
place, what areas are being appraised by the week, etc.
- Ongoing effort to address various clubs and groups
about the appraisal, including the use of videos,
slides, overheads, etc.
11
<PAGE>
4. DATA BASE REFINEMENT:
- DATA BASE DEFINITION. The refinement of the County's
property data base begins with design and approval of
the property record card (PRC). Certain portions of
the PRC shall be designed for use by Company data
collectors, clerical personnel, appraisers, and data
processing personnel. The PRC shall serve a two-fold
purpose:
- The recording and processing of property data.
- To capture data variables formatted in such a way as
to facilitate direct data entry of all significant
data variables into a computer based file.
Therefore, the PRC serves the revaluation program and
provides the basis for the Company's CAMA system.
The PRC contains all vital information affecting value,
including, but not limited to:
- Location of property.
- Use classification(s).
- Owner of record.
- Source of title
- Physical land characteristics (size, shape, etc.).
- Breakdown by front feet, square feet, or acreage.
- Unit of value by breakdown.
- Public utilities available.
- Public improvements/zoning regulations.
- Measurements of physical improvements.
- Interior construction details.
- Exterior construction details.
- Structure style.
12
<PAGE>
- Construction quality.
- Age.
- Condition.
- Replacement value.
- Depreciated values.
- Fair market values.
- Assessment value.
- SALES DATA. The Company shall review all qualified
sales that are provided by the Board, which occur
during the years of 1996, 1997, 1998, and 1999. The
sales shall be recorded by neighborhood and property
classification and shall serve as the comparable sales
data base to accommodate the application of the market
approach to value. Property inventories shall be made
for the sale properties as of the time of the sale.
- SUPPORTING DATA. The general support data to be
analyzed shall include cost data, lease data, economic
data, and sales data.
The guidelines, which shall be developed from this
analyzed data, shall include replacement cost
schedules, economic rent schedules, income
capitalization rates, comparative property sales units,
unit land values, and gross income multipliers.
- Cost Data. The Company shall obtain recent
construction costs in the County and compile, classify,
and document cost data to support the formulation of
cost schedules.
The work to be performed by the Company in conjunction
with the development and validation of the cost
schedules shall include the following procedures, with
the understanding that all are subject to approval by
the Board.
Also, a determination of actual building-in-place
construction costs occurring in the County from January
1, 1995, 1996 to January 1, 1998, shall be compiled.
The data required for analysis shall be recorded on
forms and shall include the following items:
13
<PAGE>
- Item number.
- Parcel identification.
- Property class.
- Item description; i.e., construction type, etc.
- Date of construction.
- Reported actual cost and source of information.
- Memoranda footnotes, remarks, etc.
- Average for various property class groupings,
construction types, etc.
- A copy of a completed property record card showing
the detailed description of the item, the
replacement cost computations, and the detailed
cost data available.
The construction cost analysis shall also serve as a
basis for developing and validating yield to capital
investment ratios essential to the income
capitalization process.
- Lease Data. The Company shall investigate current
leases in the County and compile, classify, and
document lease data to support the development of
guidelines for estimating the net income potential of
properties on the open market.
The Company shall request and attempt to collect
specific lease data on leased property to be appraised
with approval by the Board.
The data shall be collected and recorded on approved
income and expense forms designed to accommodate
different property classification groupings.
The income and expense forms information shall serve as
a data base from which to select comparable rents and
from which to extract, classify, and analyze general
data required to develop stabilized income and expense
guidelines for various representative property models.
14
<PAGE>
In developing income and expense guidelines, the data
obtained through specific income and expense
disclosures and recorded leases shall be supplemented
with general data obtained through the study and
analysis of actual experience reported in national
publications, as well as through interviews with local
investors, property managers, real estate brokers, and
appraisers. All data compiled shall be referenced to
source and documented in support of the guidelines
developed.
- Economic data. The Company shall make an investigation
of prevailing economic determinations and practices
underlying local property transactions and compile,
classify, and document data on interest rates, equity
requirements, loan terms, holding periods, and
investment yields sufficient enough to support the
development and validation of income capitalization
rates.
The source of the data shall be the local marketplace
supplemented by trade publications and augmented by the
experience and knowledge of Company analysts.
5. DATA COLLECTION/VERIFICATION:
- RESIDENTIAL/AGRICULTURAL. Company data collectors
shall visit each parcel to verify existing data,
correct any deficiencies to the data, and supplement
the data with other pertinent information that might
affect the value of the property. This shall include
verification of existing information of the dwelling,
garage, or other buildings on each lot and parcel.
Story heights indicated, together with notations as to
type of construction, shall be verified and recorded.
Company data collectors shall inspect the exterior and
ask to enter the property for an interior observation
unless entry is refused by the property occupant. If
the property owner or responsible adult is present
during the data collection process, that person shall
be requested to sign the data collection document to
verify the Company's contact.
- CALLBACK PROCEDURE. The Company shall develop a
callback system to be approved by the Board for all
residences visited where no one is home and the data is
nonexistent or appears to be inaccurate. The Company
shall make one (1) attempt for an observation of each
15
<PAGE>
property and, if no one is home, the data collector
shall leave a callback card with an explanation of the
Company's visit and asking the resident to call the
Company's office within seventy-two (72) hours if they
would like an interior inspection of their property.
Otherwise, the Company shall use existing data
supplemented by our observation and estimating data
information. In addition, the Company shall leave at
all properties a revaluation information card that
explains the purpose and need for periodic revaluations
and a short explanation of the procedures and methods
being followed. The data collector shall record who
the contact was, if any, and record the date and time
of his/her visit and his/her initials.
- DATA ENTRY AND DATA MAINTENANCE. After data collection
is complete, the documents shall be returned to the
office where the data shall be entered into the CAMA
system.
The Company shall be responsible for all data entry,
including data maintenance, final value conclusion, and
sales data.
- PHOTO IMAGING. A digital full color photograph of all
improved parcels shall be taken, compressed, and linked
to the parcel data bases; therefore, making it
available, on demand, with each assessment record.
- PARCEL INVENTORY MAILERS. Taxpayers can play an
important role in monitoring the quality of data
collection. Within one hundred twenty (120) days of
completion of all residential and agricultural
properties within a township, city, or borough, mailers
shall be sent to the owner of each parcel of property
in the residential and farm classifications. The
mailer shall consist of selected property description
information collected by the Company. A cover letter
shall be sent explaining the purpose and content of the
mailer, as well as the procedure whereby the property
owner can contact the Company to correct discrepancies.
Mailers returned which require response due to data
errors shall be acted on by the Company in order to
resolve the data problems. Some problems may be
handled in the office and others shall require a field
check. The option on which response is necessary is at
16
<PAGE>
the discretion of the Company. Property owners shall
be given notice that they have ten (10) days to arrange
an appointment for an interior inspection of their
property. The notice shall include that the inspection
can be scheduled for Saturdays or evenings, excluding
holidays.
The Board shall provide mailing addresses current as
the last tax bill cycle in a format that allows merging
to the CAMA file via the parcel number. The Company
shall provide the data files for information that
resides in the CAMA data base necessary for the Board
to create the inventory mailer. The Board shall be
responsible for the computer, labor, form, envelopes,
and postage.
Suggested items for inclusion in the parcel inventory
mailer are:
- Parcel identification.
- Property location.
- Property size (land size).
- Sale price.
- Sale date.
- Sale amount.
- Utilities.
- Street or road.
- Building style.
- Exterior wall material.
- Basement type.
- Heating type.
- Central air conditioning.
- Year built.
- Number of rooms.
17
<PAGE>
- Number of bathrooms.
- Number of fireplaces.
- Additional information which may be reasonable
required by the Board.
- FARM IMPROVEMENTS. The Company shall appraise all farm
improvements throughout the County. Farm buildings
shall have measurements verified and a pencil sketch
shown on the PRC.
Outbuildings shall be numbered and shown in their
relative location. Buildings shall be valued on the
basis of their size, quality of construction, extra
features, and use, with proper consideration being
given to the value their presence adds to the value of
the farm as a whole.
- OTHER PROPERTY IMPROVEMENTS DATA COLLECTION:
- Commercial Improvements. The data collection phase
shall consist of gathering information about the
buildings and land improvements of commercial
properties in the County as is necessary to enable
the Company to arrive at the true value of such
properties by applying an integrated cost, market,
and income approach to value.
All measurements and construction data shall be
carefully reviewed and buildings recomputed with the
depreciation adjusted where necessary to reflect the
current physical and economic conditions. New
rental information shall be obtained to assist in
establishing economic value and provide a key for
the value of land on which the building is located.
To assist the Company in gathering economic data,
the Company shall design and produce an auxiliary
source document (ASD) to be used for recording
specific income and expense data for commercial and
industrial classed income-producing properties.
The ASD shall accommodate apartments, offices, and
shopping centers and a more generalized form to
accommodate general mercantile, warehouse, and
service type commercial and industrial properties.
Each of the forms shall include a comprehensive
18
<PAGE>
itemization of rental income and operating expense,
along with supplementary information pertaining to
lease terms, vacancy and credit loss, net rentable
or gross leasable areas, and more detailed rent
rolls.
In addition to providing the specific property data
required in the application of the income approach
to value, the forms shall also serve to provide a
data base for income and expense analysis and
stabilization guidelines developed in the data
research and analysis phase of this program.
To further enhance this income data, an income and
expense form shall be developed and mailed to all
major commercial property owners requesting
additional information. This mailing shall be made
under the Board's name at the expense of the County.
All income and expense disclosure forms designed in
conjunction with this phase of the program shall be
approved by the Board prior to use and submitted to
the Board at completion of the program.
- Industrial Improvements. The data collection phase
shall include a physical inspection of the
properties and gathering of any/all data available
that is pertinent to the appraisal of industrial
real estate. The data collected shall include, but
not be limited to, a physical description of
property improvements, construction date (if known),
design and current usage of the various sections of
the facility, functional and economic factors
affecting the true value of the property, income and
market information, and use and condition of the
land.
Three (3) approaches to value shall be considered in
the appraisal of industrial properties. These are
the cost, income, and market approaches. Before
valuing the property by these three (3) approaches,
a separate value for land shall be developed from a
comparable analysis of recent land sales.
Major industrial and commercial properties shall be
documented in the form of a bound report. Small,
light facilities (e.g., small shops, warehouses,
machine shops, and quarries) shall be documented on
19
<PAGE>
a PRC. The bound report shall include a detailed
physical description of improvements, replacement
costs of the facility, accrued depreciation, true
value of improvements for the purpose for which they
are being utilized, and a property layout plan.
Depreciation shall be determined by utilizing the
age, life, and market abstraction techniques to
properly reflect physical, functional, and economic
depreciation. The property layout plan shall
include building improvements drawn to scale,
identified, and shown in their proper locations.
Each bound report shall also include the following:
- Summary of improvements sheet detailing, by
individual item, story heights, square foot areas
by floor level, replacement cost, depreciation,
and true value.
- Total square foot area by floor level, total
replacement cost.
- Summary of land values sheets identifying
contiguous parcels utilized in conjunction with
the industrial facility and detailing by parcel
land usage, individual unit value, and individual
appraised values.
- Summary of values sheets itemizing by parcel the
appraised land and improvement value of the
contiguous parcels and total appraised value of
the industrial facility.
- Cover sheet indicating the parcel identification,
property owner, and property occupant.
The bound reports shall be delivered to the Board in
duplicate, along with an alphabetical and numerical
index.
6. VALUATION METHODOLOGY:
- VALUATION OF LAND. The Company shall supply the services
of our qualified appraisers to establish land values in
the County for all parcels to be appraised. All factors
affecting the market value of lots and parcels, such as
location, size and shape of parcel, topography, new
developments, and other factors, shall be carefully
considered in the final field inspection and review.
20
<PAGE>
All land shall be appraised at its true value in money as
of the taxable status date of the year in which the
appraisal is made, including the appraisal of all
unplatted land.
Standard depth tables shall be developed for platted
residential and commercial land. Special table shall be
developed for pricing triangular or odd shaped lots.
Land value maps shall be prepared for the entire County,
and units set by the Company for each classification of
property being appraised shall be entered on the maps and
submitted to the Board upon completion.
The Company shall work on a Countywide basis in order to
ensure uniform appraisal of farmlands throughout the
County. All farm acreage shall be broken down and
classified as to use such as tillable, permanent pasture,
woodland, and wasteland. The Company shall consider
location, type of soil, drainage, and other salient
factors that affect market value in establishing acreage
values.
- ACTS 319 AND 515 VALUATION. The Company shall provide
the services of qualified appraisers to establish land
values in addition to market value reflecting Acts 319
and 515. The Board shall provide to the Company the
current soil types for Act 319 values.
To determine the base value from the income approach, the
Company shall do a complete study of farm rental
information within the County, as well as commodity
income studies such as corn, alfalfa, pasture, woodland
type, etc. Income information used to determine net
income and capitalization rates shall be based on
information within the County so that they are as close
to the actual economic conditions within the County as
possible. The Act 319 value shall be based on the
individual farm's capability to produce agricultural
commodities.
The agricultural use market approach requires a complete
farmland sales study of all properties that have sold in
recent years. Sales must be classified according to use
and must include only sales that have been made from farm
use to farm use or woodland to woodland use.
All Act 515 properties shall reflect development
restrictions and land values, in addition to market
value.
21
<PAGE>
- NEIGHBORHOOD DELINEATION/PROFILES. During land
valuation, the Company shall delineate neighborhoods that
reflect a high degree of homogeneity in governmental,
social, economic, and physical characteristics, usually,
but not necessarily, outlined by boundaries, either
natural or man-made, creating large areas of homogeneous
groupings of properties providing the Board the ability
to develop neighborhood profiles and unique neighborhood
identification numbers which shall ultimately be recorded
as a characteristics for each parcel situated therein.
Neighborhood delineations shall be approved by the Board.
The Company shall provide one (1) set of Board furnished
tax maps identifying the neighborhoods as established by
the Company.
A neighborhood may be defined as the immediate
environment of a subject property which exerts a direct
impact on its value.
The Company shall determine neighborhood delineations
throughout the County and collect and record specific
data for each neighborhood so delineated, providing a
unique neighborhood profile, including, but not
necessarily limited to, the following:
- Identification.
- Characteristics.
- Amenities.
- Restrictions.
The Company shall develop a characteristic profile
indicating the following descriptions:
- Type. Referring to a general description
classification such as single family, two family,
multiple family, residential/apartments
residential/commercial.
- Trend. Referring to a position in the life cycle of
the area which is most characteristics such as
declining, transitional, static, improving.
22
<PAGE>
- Desirability. Referring to the composite judgment of
overall desirability based on amenities arising from
the location.
- Location. Referring to the specific area in the County
such as inner-city, urban, suburban, village, rural.
- Amenities such as acceptability in terms of distance to
such things as regional and community shopping centers,
expressway interchanges, central business districts,
schools, etc.
- Stratification of residential property value ranges and
quality grade factors.
- RESIDENTIAL IMPROVEMENTS VALUATION. A field review of
each residential property shall be made by Company
appraisers upon completion of the computations. This
field inspection and review shall be made block-by-block
to eliminate errors in data entry, judgments, and
computations, which might have occurred, and to determine
the general quality and grade of construction, together
with the condition, desirability, and usefulness of each
building. In arriving at a final value estimate, the
Company shall use the market approach to value on all
properties appraised within the County, integrated with
the cost and income approaches to value, as they are
applicable.
- FARM IMPROVEMENTS VALUATION. The Company shall appraise
all farm improvements throughout the County. Dwellings
shall be valued in the same manner as residential
property. Buildings shall be valued on the basis of
their size, quality of construction, extra features, and
use, with consideration being given to value their
presence adds to the value of the farm as a whole.
- COMMERCIAL/INDUSTRIAL VALUATION:
- Integrated Approaches to Value. In the commercial and
industrial property valuation phase, the Company
proposes to use the integrated cost, market, and income
approaches to value, with the cost approach used on all
properties and correlated with the comparable sales
and/or income approach whenever applicable.
- Estimate of land value based on the analysis of
market data of comparable properties incorporating
23
<PAGE>
the proper adjustments for variable features or, in
cases of insufficient sales, but known capital
investments for improvements, the capitalization of
the residual net income imputable to land.
- Estimate the replacement cost new for all
improvements.
- Estimate of total accrued depreciation as a measure
of effective age and estimated remaining economic
life.
- Deterioration and normal obsolescence based upon
observed condition relative to age for specific 15,
20, 30, 40, and 50 year life property improvements.
- Obsolescence as determined by the capitalization of
potential net income of the subject property
substantiated by the economic rent and operating
expense experience of comparable properties and/or
the loss of value indicated from recent leases of
comparable properties.
- Specification Application. Correlation of the cost
approach with the comparable sales approach based on
the analysis of selling prices as compared to projected
economic gross rents as translated into gross rent
multipliers applicable to types of properties for which
a sufficient number of sales are available.
- The smaller multifamily residential properties
(twenty units or less).
- The smaller general commercial properties ($100,000
or less).
Correlation of the cost approach, with the capitalization of
estimated economic net income applicable to properties generally
associated with real estate investment market or properties for
which a sufficient number of economic rents are available:
- The large multifamily residential complexes.
- Multipurpose and single purpose commercial and
office facilities.
- Hotel and motel accommodations.
- Service type industrial properties.
24
<PAGE>
- Multipurpose industrial properties.
- Single purpose and special purpose commercial and
industrial facilities able to, through conversion
and redevelopment, compete in the rental market.
The capitalization technique/income approach to be
utilized shall be provided through mailing and
collection of actual operating statements. With
information from these statements, a set of net
income guides shall be established. Should actual
operating statements not be available, the Company
shall develop and select the proper income guides
for the property based on use, size, condition, age,
and location.
The Company shall develop capitalization rates
and/or select a proper rate based on similar
criteria as mentioned above. The technique
generally used is the processing of net income
through the use of an overall rate obtained from the
market that reflects the motivations of typical
purchasers in the marketplace for this type of
property and in its market area.
Correlation of the cost approach with the
comparative sales approach based on the analysis of
comparable sales incorporating adjustments for
variable features applicable to types of properties
for which a sufficient number of sales are
available:
- Vacant and unused land.
- Single purpose and special purpose industrial and
commercial properties, which have more or less
exhausted their economic usefulness for which they
were created and, therefore, made available to the
market for acquisition and redevelopment.
Cost approach incorporating the value of the land
based upon selling prices and capital investments in
comparable sites, plus the depreciated value of
improvements based on replacement cost new and
estimated remaining economic life applicable to
those single purpose and special purpose commercial
and industrial properties which have not exhausted
their economic usefulness for which they were
25
<PAGE>
created and for which, because of their special
economically inconvertible design, lack sufficient
numbers of representative sales or economic rents
required to justify an income or market data
approach to value:
- Medium to heavy single purpose manufacturing and
processing facilities.
- Special purpose testing, manufacturing,
processing, and related administrative and service
facilities.
- Fast food restaurants.
- Service stations.
- Subsidized multifamily residential properties.
- Funeral homes.
Note that in these instances, correlating the cost
approach with the capitalization of estimated economic
net income may be done, but does not really constitute
a second approach to value in that the economic rent is
predicated on the initial capital investment required
rather than a product of the competitive action of
investors.
- Final Review - Commercial/Industrial Properties. A
final review of each commercial and industrial property
shall be made by Company appraisers upon completion of
office computations. This review is to be made block-
by-block to eliminate mechanical errors in computations
which might have occurred and to ensure the accuracy
and quality of the grading and the establishing of
depreciation allowances.
In arriving at the final estimates of value, the
Company shall use the cost, market (comparable sales),
and income approaches on all properties appraised
during this phase. At completion of the review phase,
the cards shall be returned to the office for final
value encoding to the computer.
7. SUPPORT OF VALUES. The Company shall support, defend, and
explain values at four (4) levels: informal discussions
which shall be conducted by the Company, formal Board of
26
<PAGE>
Appeals hearings before the Board of Assessment Appeals,
formal hearings before the Court of Common Pleas, and to any
higher State court.
- INFORMAL DISCUSSIONS. The Company shall notify each
taxpayer of their new appraisal value upon completion of
the project and shall give the taxpayer the opportunity
to discuss their appraisal with Company personnel. The
Company shall conduct informal discussions at up to five
(5) different locations to be provided by the County.
The Company shall provide adequate opportunity for the
taxpayer to ask questions through use of a telephone bank
and scheduled appointments. No value change shall occur
at this informal discussion. The Company shall provide
this informal support for fifty thousand (50,000)
informal discussions at no additional cost to the Board.
All additional support requirements shall be conducted in
accordance with the "Additional Appraisal Services
Schedule" as listed below.
- FORMAL APPEALS - BOARD OF PROPERTY ASSESSMENT. The
Company shall also have appraisers available on-site for
the Board of Property Assessment during Board hearings.
The Company shall provide support for eight thousand
(8,000) formal Board hearings at no additional cost to
the County.
All additional support requirements shall be conducted in
accordance with the "Additional Appraisal Services
Schedule" as listed below.
- ADDITIONAL APPRAISAL SERVICES SCHEDULE. The Company
shall provide the following appraisal services as
requested:
- Senior Appraiser $400.00 per diem
- Staff Appraiser 350.00 per diem
- Data Entry Support 160.00 per diem
- Clerical Support 120.00 per diem
- FORMAL HEARINGS - COURT OF COMMON PLEAS. The Company
shall provide support for defense of values associated
with Common Pleas hearings filed as a result of hearings
held before the Board of Assessment Appeals. Company-
27
<PAGE>
provided support shall include, but not be limited to,
the preparation of a written appraisal report utilizing
the three (3) approaches to value, prepared by an
appraiser qualified to render an expert opinion in the
Court of Common Pleas of Pennsylvania, and the appraisers
appearance and testimony in court.
Appraisal support at the court level in the preparation
of defense and appearance before the court shall be on a
basis of FIFTY DOLLARS ($50.00) per hour plus actual
expenses.
8. TECHNOLOGY:
- APPLICATIONS. In a broad sense, four (4) major
components comprise the property-based applications:
- GIS (Geographic Information System). The automated
mapping for the property data base with supplemental
data from other applications.
- Computer-assisted Mass Appraisal (CAMA). The
application that establishes the true land and
improvement value. This data base is the residence for
property characteristics, both objective and subject,
used in the establishment and support of the true
value. The CAMA system is the application of the
valuation methodology using property characteristics,
economic influences, and information gathered from the
market.
- Assessment. Maintenance of the data base with
ownership, legal description, parcel splits, parcel
combinations, applying any value credit to the true
parcel value, Act 77, notices, and assessment roles.
- Collections. The tax extensions, billing, and
collections of property tax for County levies.
- CAMA. The technology committed to and addressed in this
Agreement is for CAMA only. GIS, assessment, and
collections are referred to above and explicitly not
included in this Agreement. System and system components
included are:
- CAMA application software.
- System/networking software.
28
<PAGE>
- Hardware.
- Installation.
- Data base creation through:
- Conversion.
- Field Process.
- Maintenance.
- Application population.
- Valuation.
- Appeals software.
- Software/hardware support through December 31, 2000.
- TECHNOLOGY DISCIPLINES. Technology base in a
client/server using Pentium clients and a Digital Alpha
server. Layer products include:
- Digital Alpha NT Server - processor operating system.
- Microsoft SQL Server - data base.
- Visual FoxPro - OOP language.
- Windows NT Workstation 95 - client operating system
- PRODUCT DESCRIPTION:
a. Sabre FoxPro (Sabre Market Data Analysis) 2000
Product Profile. This product description was
originally for SMDA and has been updated to an
extent to describe SMDA 2000. An updated product
description is in process and would replace this
describing the enhancement.
The version of SMDA 2000 proposed is written in Visual
FoxPro with SQL Server and more improved functionality.
The SMDA 2000 system is written in the Microsoft FoxPro
Relational Data Base Language. The system has design
features like a mouse and supports event-driven
interface, user-defined tables and codes, and easy to
create queries and reports, all modifiable by the
29
<PAGE>
support staff. Additionally, the FoxPro based SMDA
2000 system provides:
- Interactive processing and valuation.
- Separate residential and commercial data.
- Appraisal value reporting.
- Sales reporting.
- Statistical sales analysis.
- Unlimited sales history.
- Cost approach with table-driven cost and
depreciation schedules.
- Market valuation approach.
- Comparable sales.
- Income approach.
- Interactive sketch input.
- Data integrity and security with complete audit
tracking of changes.
- Instant updating and verification of data.
- Multiple access paths to data.
- On-line help.
b. SMDA 2000 System Detail. The FoxPro SMDA 2000
system is a computerized appraisal software system
capable of producing uniform and valid appraisals of
residential, farm, commercial, and industrial
property (land and improvements). The following are
the major features and functions of the FoxPro SMDA
2000 system:
- Easy to use, event-driven data maintenance screens
which support over 150 individual data elements.
- Comprehensive CAMA system providing value
estimations of both residential and commercial type
properties.
30
<PAGE>
- Support of the following approaches to value:
- Residential:
Replacement cost approach.
Comparable sales (with dissimilarity function).
Multiple regression analysis.
Adaptive estimation procedure.
- Commercial:
Replacement cost approach.
Comparable sales.
Multiple regression analysis.
Adaptive estimation procedure.
Income approach.
- Sketch maintenance of improved parcels in an on-
line, interactive fashion, as well as the ability to
print a solid line scaled sketch.
- Taxpayer information inquiry displays data typically
requested by the property owner from the appraisal
data base.
- The following are highlighted functions of the system:
- Data entry, conversion, edits, and other similar
applications as part of the on-line data entry and
maintenance functions of the appraisal system.
- Inquiry capability on all parcel information for
assessment administration and value estimates.
- The ability to create and maintain an independent
sales data file for the purpose of sales listing,
comparable sales selection/listing, and sales ratio
study. Multiple sales for a parcel shall be
maintained, as well as multiple years.
31
<PAGE>
- The ability to load sketch information for improved
parcels through an interactive application software
package.
- The sketch application has many desirable
characteristics, such as:
- Rapid data entry.
- Input and immediate display of sketch information.
- Deletion of incorrect entry.
- Position and definition of additions,
outbuildings, and identification of the major
components indicating the square feet of each of
the components.
- Simple command structure for data input.
- Dwelling description included for each component
of the sketch.
- Fast and efficient display of sketch providing for
immediate verification and edits.
- Automatically computes area calculations during
sketch entry.
- Capability of full maintenance of a stored sketch:
Deletion of entire sketch.
Deletion of any components.
Deletion of specific component descriptions.
Reentry of a component or component descriptor.
Ability to produce the sketch, component areas,
and descriptors on a high-speed printer-
automatic scaling takes advantage of the area
available on the hard copy medium such as the
appraisal review card for residential and
commercial properties.
- The ability to calculate a replacement cost new and
replacement cost new less depreciation estimate of
value for all improved properties.
32
<PAGE>
- The ability to select and print or display comparable
sales for a subject property.
- The ability to print an appraisal review work card on
continuous form paper for each residential/agricultural
and commercial/industrial property.
- The ability to create a predicted market value for
residential properties from all value indicators
provided as part of the system - cost, market, and
comparable sales.
- Comprehensive and detailed sales reports are generated
by both neighborhood and property type. This assists
the reviewing appraiser by providing documentation for
defense of values.
- The ability to calculate and print a sales ratio study
showing the common level of appraisal to sales prices
and the degree of dispersion about that common level.
- The ability to print several types of final value
appraisal abstracts.
- The ability to print value impact analysis.
- The ability to provide taxpayer inquiry by ownership,
location, account number, and parcel identifier and to
display property characteristics and valuation data.
- Provides parcel parent child relationship.
- Provides for expansion of other features that shall be
added in the future.
- User, technical documentation, and on-line help
screens.
- Direct access to parcel files via multiple keys such as
owner name, street address, account number, and parcel
identifier.
- Ability to flag parcels to identify activity such as
building permits, incomplete construction, and other
special conditions.
33
<PAGE>
c. Property Valuation Processing:
- Annual Revaluation. SMDA 2000 provides on-going annual
revaluation capabilities.
- "What If" Analysis. SMDA 2000 has the ability to do
"what if" analysis.
- Value Override. SMDA 2000 permits value override for
any supported valuation methodology.
- Valuation Using the Cost Approach:
- SMDA 2000 includes data management of cost valuation
components for commercial, industrial, and
residential properties. It produces a cost
valuation document showing the cost calculations on
each property, the appraiser's adjustments, and
final value determination. The module accesses a
maintainable table of replacement cost rates,
associated factors, and depreciation schedules which
are keyed to a structure code and support
interpolation between cost tables. It provides for
correlation of the cost approach with the market
approach through the use of economic condition
factors, as well as standard depreciation for age,
condition, and functional obsolescence. This
approach may be executed individually or in a batch
mode.
- The cost estimates are integrated with the market
approach module to develop reports to study
depreciation schedules, land rate schedules,
neighborhood factors, date of sale adjustment, and
certain cost adjustment factors.
- The cost approach module computes value estimates
based on standard appraisal methodology (acceptable
to the International Association of Assessing
Officers) with documentation for non-automated value
computations and defense of values.
- The residential cost approach module uses a standard
set of cost tables. Base rates per square foot are
based on use/class code, quality, number of stories,
etc. The component costs are easily understood in
34
<PAGE>
terms of cost and depreciation. The Company shall
initially install a copy of its current cost table.
- The commercial cost module incorporates the Marshall
& Swift valuation engine using an export and import
utility provided by the Company.
- SMDA 2000 provides on-line update of the data
management file with cost estimates. This includes
the capability, in the years following the
revaluation, of pricing any additions or new
outbuildings through the cost approach.
- SMDA 2000 is adaptable to time and location
indications, as well as neighborhood adjustment
tables. The depreciation tables are developed on a
neighborhood basis using comparable sales and
observed condition methods.
- SMDA 2000 permits cost schedule additions without
program modifications. SMDA 2000 allows the
addition of new codes by updating cost schedules and
data management tables.
- Valuation Using the Market Approach:
- The market approach module appraises individual
properties and can be used as a mass appraisal tool.
Weights, percentages, assigned dollar amounts, and
selection criteria are user-definable. The Company
shall assign typical weights, etc., at the time of
installation. This valuation pricing may be
executed individually or in a batch mode.
- SMDA 2000 is able to produce comparable sales
reports for viewing on-line and via hard copy.
- Valuation Using the Income Approach:
- The income approach supports the mass appraisal of
commercial, industrial, and multifamily properties,
as well as individual properties.
- SMDA 2000 provides for capitalization of income
properties. It provides the rate extraction,
maintenance of income and expense data, units of
comparison analysis, and the separate treatment of
excess land in the income approach.
35
<PAGE>
- Valuation of Land. The land valuation module includes
all classes of properties. SMDA 2000 has the
capability to value a single parcel with multiple land
types and zoning types. SMDA 2000 provides land tables
for residential, commercial, industrial, multifamily,
and agricultural land using units of comparison found
in acceptable appraisal practice (i.e., square foot,
front foot, depth factors, etc.), size adjustments,
other factors that influence values, site value, and
multiple values per parcel. Pricing of land may be
executed individually or in a batch mode.
d. File Requirements:
- System Design. SMDA 2000 minimizes data redundancy and
provides efficient and accurate data retrieval.
- Field Modification. User-defined fields are modifiable
by the user. SMDA 2000 has the capability to specify
numerical, character, and logical field types.
- Table-driven. Field definitions are table-driven. If
descriptions are changed, these changes are reflected
automatically on all screens and documents.
- Sales File. SMDA 2000 supports a separate sales file
that, in addition to sales data, maintains a summary of
a property's characteristics (land and building) at
time of sale. The sales file identifies ownership
information at time of transfer, assessment data, deed
book and page, transferee, and purchase price for the
property.
e. Data Elements Requirements:
- User-defined Fields. User-defined fields are available
within the fields, and the system provides space for
twenty (20) user-defined data elements.
- Notes. SMDA 2000 accommodates storage of public and
confidential notes on a parcel by parcel basis.
- Image Technology. SMDA 2000 has the ability to store
and display photo images of all buildings.
- Multiple Buildings. SMDA 2000 accounts for multiple
buildings with multiple classes of improvements on one
parcel. Values are shown and summarized for each
building. All partial assessed values are indicated.
36
<PAGE>
- Multiple Land Types. SMDA 2000 accommodates multiple
zoning and land types for the same parcel.
- Sketch. SMDA 2000 has a building sketch module that
stores a sketch of all buildings and improvements. It
is capable of executing arcs and angles. It also
displays labels and section descriptions. Area and
type download into the valuation module automatically.
f. Data Access, Update, and Entry:
- Update of Multiple Files. Data entered in all screens
is automatically updated in all appropriate files.
- Multi-user. SMDA 2000 is available to multiple users
for concurrent operation of the system. SMDA 2000 has
built-in file and record locking capability to prevent
simultaneous updating of records.
- Copy Function. SMDA 2000 has the ability to copy
portions of the data base.
- Sketch. SMDA 2000 provides a state-of-the-art method
for the data entry of sketch dimensions directly from a
data entry form. An on-line and computer-printed
sketch of all structures, edited to ensure perimeter
closure, with automatic area computations written back
to data records, is generated with dimensions and label
coding.
- Edits and Cross Edits, Batch and On-line. All data
entered into SMDA 2000 is validated by the system using
user-defined criteria. This includes class of data,
required elements, relationship of elements, and
specific contents where defined. Critical errors are
updated to the file.
- Paging Through Data. SMDA 2000 allows users to page
forward and backward between different parcels and
cards.
- Security. SMDA 2000 functions, such as inquire,
update, add, and delete, are controlled by a user
identification code, password, and terminal address.
Screen, field, and button level security is provided.
- Transfer of Data. SMDA 2000 has the capability to
extract, download, and upload data. This capability
37
<PAGE>
includes all or part of the SMDA 2000 data and permits
data transfer of other platforms. This information is
linked by a parcel identification number and an account
number.
- Mass Update Capability. The user has the ability to
mass update many fields.
g. Reporting:
- Ratio Reports. SMDA 2000 is capable of producing
before and after assessment/sales ratio studies, to
IAAO standards, and is available on demand. The
program calculates mean and median ratios, price-
related differentials, and the coefficient of
dispersion.
- SMDA 2000 allows studies geographically by different
land uses, class codes, property type within
subdivision, etc.
- Report Writing Capabilities. SMDA 2000 permits users
to select data elements from the entire data base and
report writing programs are able to do basic
computations such as add, subtract, multiply, divide,
and allow for multiple comparison types, including
combinations of "and/or" logic.
- Audit Reports. SMDA 2000 provides audit trail listings
and totals showing the before and after status of the
data. Audit trail listings allow selection by person
responsible and date of maintenance.
- HARDWARE. The Company shall provide the necessary Board
owned hardware as specified herein to conduct the
revaluation. With location undetermined, the installation
tasks included are limited to a location in a non-County
building. Should this equipment be required to be located
in a County building, all network and power requirements
shall be a County responsibility. The Company shall deliver
the hardware to the Board at the conclusion of the project.
- Phase 1 Computer:
- One (1) Server 400 (166 MHz), 96 MB Memory, 5.2 GB Disk
Storage
- One (1) 15" Color Console Monitor
38
<PAGE>
- One (1)8 GB SCSI Tape Drive
- Fifty (50) 8 GB Tapes
- One (1) 24 User Operating System License
- One (1) Network Cluster License
- Phase 2 Computer:
- One (1) 2100a Computer (275 MHz), 640 MB Memory, 30 GB
Disk Storage.
- One (1) 15" Color Console Monitor
- One (1) 40 GB SCSI Tabletop Tape Cartridge Backup
- Thirty-five (35) Tape Cartridges
- One (1) 9-track SCSI Tape Drive
- One (1) Unlimited Operating System User License With
On-line Documentation.
- One (1) Network Cluster and Full Function Option
- Peripheral Equipment:
- Forty (40) 17" Color View Station Package
- One (1) PrintServer 17 600 DPI, 17 PPM Duplex Laser
Printer
- One (1) PrintServer 32 600 DPI, 32 PPM Duplex Laser
Printer
- Two (2) DEClaser 3500 600 DPI, 12 PPM Laser Printer
- One (1) Line Printer 1200 1 PPM Text/Graphic
- One (1) 19.2 KBS Modem
- Two (2) Color Laser Printers
- One (1) Diskeeper (Disk Organizer)
- One (1) Public Print Module Fax Board With Software
(Four Modems)
39
<PAGE>
- One (1) HP 5si Duplex Laser Printer
- One (1) Document View and Scan Station
9. TRAINING. The Company intends to utilize formal classroom
training, informal on-the-job training, or a combination of both
techniques on the project. Training shall be conducted in
accordance with the approved training manual, which is Exhibit B
of the Submission. The success of this project is contingent on
the successful training of local personnel to perform many of the
required tasks. To this end, Company personnel experienced in
these types of training shall provide required expertise to the
project. Training shall cover two (2) separate functions:
- APPRAISAL RELATED TASKS, including such activities as data
collection of residential, agricultural, and commercial
property types. Several formal schools shall be provided
over the course of the project to train appraisal personnel.
It is suggested that Board personnel attend these courses in
addition to specific courses designed for Board staff. Most
classes are designed with both classroom and field exposure.
- SYSTEMS TASKS.
Included in the Company's approach is formal classroom and field
training to be held specifically for revaluation personnel. The
Company anticipates the following breakdown of formal schooling:
- Residential/Agricultural Data Collection 40 Hours
- Commercial/Industrial Data Collection 40 Hours
- Residential/Agricultural Valuation 40 Hours
- Commercial/Industrial Valuation 40 Hours
- Clerical and Data Entry 40 Hours
The Company shall train the Board's office and field staff during
the last year (2000) of the project. The training shall utilize
both classroom and field training procedures and techniques.
10. QUALITY CONTROL PLAN. To maintain public support for the
property revaluation project, the Board must be able to
demonstrate to property owners that the project is being
conducted in a highly professional manner. The Company shall
40
<PAGE>
implement the following quality control procedures during the
project.
- The Company shall develop a detailed quality control plan
for approval by the Board. This plan shall include, but not
be limited to:
- The Company, using its own supervisory staff, shall
recollect the data for twenty-five (25) of the first one
hundred (100) residential parcels collected by each new
data collector within ten (10) days of the date of
initial inspection.
- In addition, the Company shall recollect ten (10) of the
first fifty (50) parcels in each of the vacant land,
farm, commercial, industrial, and apartment categories
collected by each new data collector within ten (10) days
of the date of inspection.
- In all cases where an individual or group of data
collectors is collecting data erroneously due to lack of
skills, the collector(s) shall be recalled for
intensified retraining or termination. The work of those
collectors who have been retrained shall be collected at
a frequency of two (2) out of every five (5) parcels for
the next twenty-five (25) parcels within five (5) days of
initial inspection. Continued failure to collect data
properly after retraining shall constitute cause for
dismissal of the data collector. In all cases where the
reason for collection differences are based on failure of
a data collector to carry out the assigned duties, that
data collector shall be promptly terminated.
- At any time and as frequently as deemed necessary by the
Board, the Board shall have the option to investigate the
quality of the Company's data collection effort by
drawing a randomly selected sample of data collection
cards and completing their own field checks.
- Objective data which shall include qualitative, rank and
categorical factors, and percentage adjustments shall meet
the following conditions:
- No single, objective property characteristic field item
on the data collection card shall contain inaccurate or
incomplete data on more than ten percent (10%) of the
parcels in the sample.
41
<PAGE>
- No more than ten percent (10%) of all measurements
required for area calculations of improvements on the
data collection cards in the sample shall be missing or
in error by more than one (1) foot of the actual
dimensions.
- No more than twenty-five (25%) of all parcels in the
sample shall contain errors in objective data fields on
the data collection documents which shall result in more
than a one percent (1%) difference in the total
replacement cost new calculation for the improvements
affixed thereto.
- Subjective data which shall include qualitative, rank and
categorical factors, and percentage adjustments shall meet
the following conditions:
- No single property characteristic field item on the data
collection card shall contain incomplete data on more
than ten percent (10%) of the parcels in the sample.
- No more than twenty-five percent (25%) of the parcels in
the sample shall deviate in the calculation of
replacement cost new less depreciation by more than five
percent (5%) when no supporting documentation is provided
or referenced on the data collection card to indicate the
reason for departure from typical schedules, tables,
specifications, examples, and guidelines in the
application of qualitative rank, categorical factors, or
percentage adjustments.
- Upon failure of the selected sample to meet any of the
conditions, the Company shall immediately initiate the
following procedural steps to correct the unsatisfactory
quality of the data:
- All regular field work activities shall be immediately
halted and shall not resume until the Company completes
retraining of all data collectors responsible for errors.
- The Company shall have one (1) week to complete the
retraining and certify to the Board that the quality
standards set can be met.
- The Company shall maintain a high degree of accuracy in the
data entry phase of the program. All fields are expected to
be virtually one hundred percent (100%) accurate. The data
entry operator shall not assign or enter arbitrary codes for
42
<PAGE>
missing field data or adjust more than two (2) wall
measurements on any building sketch by more than one (1)
foot in order to obtain proper vector closure. All data
collection cards which contain missing field data or
measurements which can not be made to close with a single
one (1) foot wall adjustment shall be returned to the
appraisal staff for field verification and correction.
- The Company shall also select and review, on a field by
field basis, the first twenty-five (25) parcels of improved
property data entered to check the quality of each new data
entry operator's work within five (5) days of initial data
entry. An overall error rate above two percent (2%) shall
not be considered acceptable.
- In all cases where an individual or group of data entry
operators is entering data erroneously due to lack of
skills, the operator(s) shall receive retraining or be
terminated. The work of those data entry operators who have
been retrained shall have their work rechecked at the
frequency of one (1) out of every five (5) parcels for the
next twenty-five (25) parcels. Continued failure to enter
data properly after retraining shall constitute cause for
dismissal of the data entry operator. In all cases where
the reason for data collection differences are based on the
failure of a data entry operator to carry out the assigned
duties, that data entry operator shall be promptly
terminated.
- Prior to the start of the residential and income model
building phases and final review, all errors resulting from
data entry and program batch edits shall be completely
resolved.
43
<PAGE>
PROPERTY REVALUATION AGREEMENT - ALLEGHENY COUNTY, PENNSYLVANIA
MANATRON, INC.
RESIDENTIAL LISTER QUALITY CONTROL FORM
Lister ____________________ Checker ____________ Date ________ Score_______
Client __________ Personal ID ______ Routing No. ____ Card No. ____ of ____
Property Class ___________ Date Listed _______ Field Supervisor ___________
UNSATISFACTORY - NO - UNACCEPTABLE
SATISFACTORY - YES - ACCEPTABLE
PART I - Obtained from Property Contact
1. Did the lister identify himself/herself?______________________ ___ ___
2. How would you describe the lister's general personal
appearance?___________________________________________________ ___ ___
3. Was the lister courteous ___ respectful ___ considerate?_____ ___ ___
4. What kind of inspection did the lister make? None ____ Partial ____
Thorough _____________________________________________________ ___ ___
5. Did the lister request all applicable: Costs ____ Sales ____
Remodeling ____ data?_________________________________________ ___ ___
PART II - Obtained from Property Record Card
FIELD NO. LISTED ACTUAL
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
44
<PAGE>
PART III - Supplementary Data
1. Average Daily Production During the Period When This Property Was
Listed _______________________________________________________________
2. Type of Listing: Relatively ... Easy ____ Average ____ Difficult ____
Expected Production __________________________________________________
PART IV - Remarks: (if additional space is needed, use other side)
___________________________________________________________________________
___________________________________________________________________________
45
<PAGE>
QUALITY CONTROL CRITERIA FOR RESIDENTIAL PARCELS
PRC ________________________________________
___________________________________________________________________________
FIELD DESCRIPTION POINTS SCORE
___________________________________________________________________________
1 CARD NUMBER 1 _______
2 REMARKS 2 _______
3 SIGNATURE 2 _______
4 WATER TYPE 1 _______
5 SEWER/SEPTIC 1 _______
6 ROAD TYPE 1 _______
7 STORY HEIGHT 3 _______
8 STYLE 2 _______
9 BASEMENT 2 _______
10 CONSTRUCTION 2 _______
11 EXTERIOR WALLS 1 _______
12 FIREPLACE 2 _______
13 ROOFING 1 _______
14 ROOF TYPE 1 _______
15 FLOORS 1 _______
16 HEATING 2 _______
17 CONDITION 1 _______
18 LAYOUT 1 _______
19 PLUMBING 2 _______
20 ATTIC 2 _______
21 ROOMS 1 _______
22 REMODELING 2 _______
23 MASONRY TRIM 1 _______
24 FINISHED BSMT (TYPE AND SIZE +/- 10%) 2 _______
25 BASEMENT GARAGE 2 _______
26 UNFIN. AREA % +/- 10%) 1 _______
27 OCCUPANCY (DWG) 2 _______
28 DWG YEAR BUILT 1 _______
29 PERCENT COMPLETE (N/C ONLY +/- 10%) 1 _______
30 DWG MEAS. BY AREA +/- 10% 3 _______
31 SKETCH LABELING 2 _______
32 OBY: SIZE, AGE, GRADE, COND. (each) 1 _______
A total score of 4 or less is considered to be an acceptable score for that
parcel.
46
<PAGE>
II. COMPANY RESPONSIBILITIES
The Company's responsibilities for the property revaluation program in
Allegheny County are consistent with the duties expressed throughout
this Agreement.
A. STAFFING
The Company shall provide all staffing and supplies required to
create the data base, implement systems related to the appraisal
process, and affect a full revaluation. The Company also shall
provide staffing for the support of value phases.
The Company agrees to use reasonable efforts to incorporate SEIU
members into the Revaluation project to the extent agreed upon,
if at all, by the County and SEIU. It is agreed, however, that
under no circumstances will the Company be required to employ
SEIU members. This Agreement will be modified accordingly,
including but not limited to crediting the contract amount for
the substitution of County employees for Company employees, to
reflect any involvement by the SEIU.
B. FORMS
The Company shall provide the forms design required, such as
internal record keeping, property record cards, other taxpayer
mailers, subject to Board approval. The Company shall also
coordinate forms purchasing and control the timing of delivery of
all forms specified.
Should the Company pay for the printing of any forms used in
connection with the revaluation, such as property record cards,
taxpayer notification forms, door hangers, and brochures, the
cost associated with any forms shall be charged back to the
County as an expense at the Company's cost.
C. INSURANCE
The Company shall provide insurance coverage as specified in
Section IV, Item G, of this Agreement.
D. POSTAGE
During the program there shall be a need for mailings of various
types in addition to the notification of taxpayers at project
completion. These amounts are fairly quantifiable and would be
expended with Board permission in the case of large mailings.
The Company shall charge the County the cost of postage as an
expense item at the Company's cost.
47
<PAGE>
E. PARCEL RECONCILIATION
The Company shall work with the Board staff to reconcile the
Company's CAMA system with the Allegheny County real estate land
file and the existing maps. The reconciliation shall be
completed prior to the mailing of tentative value notices to
ensure that all parcels have been valued. The Company shall
notify the Board of discrepancies, which are found, and the Board
shall research and provide the Company with resolution. Any such
discrepancies discovered currently not on the assessment roll
shall be immediately reported to the Board within ten (10)
working days of discovery.
III. BOARD AND COUNTY RESPONSIBILITIES
A. OFFICE SPACE, FURNISHINGS, EQUIPMENT, MAINTENANCE, UTILITIES
EXPENSES
The County shall provide adequate office space, furnishings,
equipment, maintenance, and utilities for the revaluation
project. In the event the County can not provide some of the
services or items listed above in a timely, cost effective
manner, the Company shall be authorized to make such arrangements
as are necessary to procure the services or items needed. The
Company shall provide the County with written justification for
the lease/purchase and, if no question is raised by the County
within five (5) working days, the Company shall be automatically
granted authorization to take action. All charges to County for
any of the items listed above shall be at actual cost. Any
leased/purchased as a result of this clause shall become the
property of the County at the conclusion of the revaluation.
B. TAX MAPS
For the routing of cards and geographical organization of the
project, the Board would need to provide up to three (3) sets of
tax maps for use by the Company.
C. FORMS
The County shall provide all forms and paper required to perform
the revaluation. The forms shall be designed by the Company and
shall include, but not necessarily be limited to, the following:
48
<PAGE>
1. Property Record Cards (PRC):
a. Property Record Source Document (PRSD).
b. Appraisal Worksheet (AWS).
c. Final PRC.
2. Doorhangers (data collection).
3. Notice to Taxpayers (preliminary).
4. Brochures.
5. Data Mailers.
6. Income/Expense Mailers.
Invoicing of all forms shall be directed to the County for
payment.
D. COMPUTER SERVICES
The Company shall require the use of existing County hardware as
the revaluation program is initiated. Eventually the Company-
installed computer would assume the bulk of the load on the
revaluation, as well as the day-to-day assessment activities. In
the event that the Company can obtain specific equipment at lower
price than the County, all such costs shall be reimbursable under
this Agreement.
E. EXISTING FILES/RECORDS
The Company anticipates utilizing existing data base information,
to the extent possible, in order to maximize any previous efforts
made over the years. This information shall then be corrected
and enhanced by the Company.
F. ABATEMENT/EXEMPTION
The Board shall supply the Company with information regarding
properties, which have tax abatements, exemptions, and partial
exemptions. The information shall include, at a minimum, the
portion of the parcel, which is abated/exempted and the starting
and ending dates of the abatement/exemption.
49
<PAGE>
G. SALES INFORMATION
The Board shall continuously provide current valid, qualified
sales information to the Company with respect to transfers of
parcels occurring from January 1, 1996 through December 31, 1999.
The information shall be provided on a weekly or monthly basis on
a mutually agreed upon format.
H. CURRENT INFORMATION
The Board shall provide the Company any necessary corrections to
the information provided under the sections titled "Tax Maps" and
"Sales Information".
I. SPLITS AND COMBINATIONS
The Board shall process splits and combinations and forward
written change notices of these to the Company for valuation
purposes. The last of such change notices shall be delivered to
the Company by December 31, 2000. The Company shall execute a
September 1, 2000, cut-off of new construction.
J. TAX ADMINISTRATION FILES
The Board shall allow the Company access to the County's tax
accounting file throughout the revaluation project.
IV. GENERAL PROVISIONS
A. COMPENSATION AND TERMS
In consideration of the performance of such services as set forth
above in connection with the appraisal and revaluation of
property as outlined in this Agreement, the Company shall receive
a fee in the amount of TWENTY-THREE MILLION, NINE HUNDRED FIFTY
THOUSAND DOLLARS ($23,950,000) plus other fees and costs not to
exceed THIRTY MILLION DOLLARS ($30,000,000). Payment of such sum
to the Company shall be made in accordance with a schedule agreed
to by the County and the Company.
The Board shall have the right to approve with the Company its
billing report of progress. Once approved, the Board shall
submit the billing to the County for payment.
The parties acknowledge that they have entered into a contract
entitled "Assessment Administration Agreement" (hereinafter
"Management Property Contract") wherein the Company is
50
<PAGE>
responsible for providing consultation and day to day supervision
of the Assessment Department to the extent defined therein. The
parties anticipate situations where services performed under the
Management Contract will overlap with services in this Agreement.
The Company agrees to attempt to identify such overlap and
provide a credit to the County to the extent that overlap exists.
The credit will be made at the Company's actual cost, not
including profit and overhead. All credits to the County will be
applied by the County towards other costs related to this
Agreement which are not specifically accounted for in the
Revaluation Fee.
B. TERMINATION OF CONTRACT
1. For any reason or for no reason, the Board shall have the
right, upon notice to the Company, to terminate this
Agreement and, upon such termination, the sole and exclusive
liability of the Board shall be against delivery to the
Board of all books, records, and other material of the
Company with respect to this Agreement and the services
rendered and to be rendered to the Board with respect
hereto. The County shall pay to the Company, on a pro rata
basis, the fees earned to the date of termination and any
payment then due and owing to the Company.
2. For any reason or for no reason, the County shall have the
right, upon notice to the Company, to terminate this
Agreement and, upon such termination the sole and exclusive
liability of the County shall be against delivery to the
County of all books, records, and other material of the
Company with respect to this Agreement and the services
rendered and to be rendered to the County with respect
hereto, to pay to the Company, on a pro rata basis, the fees
earned to the date of termination and any payment then due
and owing to the Company.
C. The Company does hereby represent and warrant that all of its
services with respect thereto and activities with respect to the
Board have been and shall be in accordance, in all respects, with
applicable law, rule, and regulation, including, but not limited
to, compliance with all Federal, State, or local statutes, laws,
or regulations, including, but not limited to, all health, labor,
environmental, employment, antidiscrimination, safety, pollution,
zoning, and building laws and ordinances.
D. The Company covenants to provide to the Board, at any time and
from time to time, such financial information with respect to the
Company as the Board may, from time to time, request and to make
51
<PAGE>
available to authorized representatives of the Board such
officers of the Company as the Board may desire in order that the
Board may make such inquiries with respect thereto as the board
may determine to be necessary and appropriate. If any of such
information is non-public, it shall be held in confidence,
subject to applicable law, by the Board.
E. The Company does hereby represent and warrant that it has not,
directly or indirectly, made any illegal payment or contribution
in connection with the actual or prospective execution and
delivery of this Agreement and shall not make any such payment
within the term of this Agreement.
F. The Company does hereby represent and warrant that, to the best
of its knowledge, no employee or appointee of the Board has or
has had within the past six (6) months an ownership interest,
directly or indirectly, in the Company or in any entity which
furnishes or sells or desires to furnish or sell products or
services to the Company.
G. Each of the parties hereto does hereby agree to indemnify,
defend, and hold harmless the other from and against any and all
loss, cost, damage, or expense arising out of:
1. The actions or omissions of the indemnifying party or its
agents.
2. A violation of this Agreement by the indemnifying party
provided, however, that notwithstanding anything to the
contrary contained herein, the aggregate liability of the
Board shall not exceed those sums which would have been paid
to the Company by the Board in the event that the Company
had fully, timely, and competently complied with the terms
of this Agreement.
Notwithstanding anything to the contrary contained herein, the
Company agrees to indemnify, defend, and hold harmless the Board
and each of its officers, directors, agents, employees, or
representatives from and against any and all loss, cost, damage,
or expense from all claims, demands, payments, suits, actions,
recoveries, and judgments of every kind and description brought
or recovered against it by reason of any act or omission of the
Company, its agents, or employees in the execution of this
Agreement. The Company's liability in this regard may not exceed
$2,000,000. As a condition precedent to any right of
indemnification hereunder, the party seeking such indemnity shall
promptly notify the party from whom indemnity is sought of the
facts and circumstances thereof, permit the indemnifying party to
52
<PAGE>
control the defense and resolution thereof, cooperate with the
indemnifying party with respect to such defense and execute and
deliver such contracts, agreements, and/or releases as the
indemnifying party may deem appropriate under the circumstances.
In the event that a third party asserts any claim, demand, or
notice against a party to this Agreement that may result in a
loss, cost, damage, or expense for which such party intends to
assert a right of indemnification under this Agreement, the party
seeking such indemnity shall promptly notify the other party
stating, in writing to the extent known, the nature,
circumstances, and amount of the third party claim; provide,
however, that any failure by any party to provide such notice
shall not relieve the other party from liability under this
Agreement except to the extent that such failure to notify
results in the loss by the other party of a material defense to
or a material right in connection with, such third part claim.
Should a party from whom indemnification is sought fail to so
defend, indemnify, or hold harmless the party seeking
indemnification and should the party from whom indemnification is
sought ultimately be found to be in violation of this Agreement,
the party so declining to defend, indemnify, or hold harmless
shall be liable to the party who sought such indemnity, which
shall be authorized to resolve any such claims as best it may
determine in an amount equal to the product of any and all loss,
cost, damage, or expense incurred or paid by the party who sought
indemnification, including, but not limited to, fees, costs, and
expenses of counsel with respect to both the investigation and
defense of such action or actions.
H. The Company shall provide and maintain comprehensive general
liability insurance, including contractual liability insurance,
with limits of no less than $1,000,000 for all damages because of
bodily injury sustained as a result of any one occurrence and
limits of $1,000,000 for all damages or property damage sustained
by each person as a result of any one occurrence and $1,000,000
for all damages sustained as a result of any one occurrence or a
limit of $1,000,000 combined single limit; all deductibles under
any and all insurance provided for herein shall be the sole and
exclusive responsibility of the Company, automobile liability
insurance with limits of not less than $1,000,000 for all damages
because of bodily injury sustained by each person as a result of
any occurrence and $1,000,000 for damages based on bodily injury
sustained by two or more persons as a result of any one
occurrence and limits of $1,000,000 for all damages because of
property damaged sustained as a result of any one occurrence of
$1,000,000 combined single limit and public liability and
worker's compensation insurance.
53
<PAGE>
Such insurance shall be provided by reputable insurers licensed
to conduct business in the Commonwealth of Pennsylvania, and a
binder specifying such insurance coverage shall be delivered to
the Board simultaneous with the execution and delivery of this
Agreement, and said binder shall provide that the insurance
provided therein shall not be amended, terminated, or permitted
to expire, for any reason, other than upon not less than sixty
(60) days prior written notice to the Board, and the County shall
be a named insured with respect to all such insurance.
I. The relationship between the Board and the Company shall be that
of an independent contractor, and no principal-agent or employer-
employee relationship is created by the terms of this Agreement.
J. The representations and warranties of the parties contained
herein or any schedule, exhibit, document, statement,
certification, or other instrument referred to herein or
delivered in connection with the transaction contemplated hereby,
survive the termination or expiration of this Agreement.
K. Other than with respect to the indemnity, insurance, and payment
provisions hereof, the Company shall not be deemed to be in
breach or responsible for delays or failures in performance
resulting from acts of God, acts of war or civil disturbance,
epidemics, fires, earthquakes, or other natural causes. The
Company shall immediately advise the Board of the occurrence of
any event of force majeure, promptly use all efforts in order to
minimize the extent or duration thereof, timely advise the Board
with respect to all of such efforts, and seek to minimize, in all
ways, the extent, duration, and impact of any event of force
nature.
L. This Agreement shall be governed by and construed and enforced in
accordance with the laws of the Commonwealth of Pennsylvania
without regard to its conflicts of law rules.
M. This Agreement, including the exhibits and schedules hereto,
constitutes the entire agreement among the parties hereto
pertaining to the subject matter hereof and supercedes all prior
agreements, understandings, negotiations, and discussions,
whether oral or written, of the parties and there are no
warranties, representations, or other agreements, expressed or
implied, made to any party by any other party in connection with
the subject matter hereof except as specifically set forth herein
or in a document delivered pursuant hereto. To the fullest
extent permitted by applicable law, unless otherwise expressly
provided herein, no supplement, modification, waiver, or
54
<PAGE>
termination of this Agreement shall be binding unless executed,
in writing, by the parties to be bound hereby.
No waiver of any provision of this Agreement shall be deemed or
constitute a waiver of any other provision hereof (whether or not
similar) nor shall such a waiver constitute a continuing waiver
unless otherwise expressly provided.
N. All notices, consent, requests, reports, demands, or other
communications hereunder shall be in writing and shall be
delivered personally, by registered or certified mail, in each
case marked "personal and confidential - to be opened by
addressee only".
If to the Board:
Chairman, Division of Property Assessment, Appeals,
Review and Registry
Third Floor
County Office Building
542 Forbes Avenue
Pittsburgh, Pennsylvania 15219
With a copy to each of:
Director, Department of Budget and Finance
225 Allegheny County Court House
436 Grant Street
Pittsburgh, Pennsylvania 15219
If to the Company:
Melvin J. Trumble
Sabre Systems and Service
9111 Springboro Pike
Miamisburg, Ohio 45342
or to such other addressee or persons as the addressee party
shall have last designated by written notice to the other party.
Notice given by registered or certified mail or by telegram shall
be deemed to have been given when deposited in the mail or with
the telegraph company with postage or other charges prepaid. All
other notices shall be deemed to have been given when received.
O. The Company agrees that this Agreement is not assignable, in
whole or in part, by the Company, may not be hypothecated or used
as collateral by the Company, and that all services to be
rendered by the Company hereunder and all items to be delivered
55
<PAGE>
by the Company hereunder shall be rendered or delivered, as the
case may be, solely and exclusively to the Board. All documents
shall be transmitted in a secure and confidential fashion and
shall be conspicuously marked "personal and confidential - to be
opened by addressee only".
P. This Agreement may be executed in as many counterparts as may be
deemed necessary and convenience and by the different parties
hereto on separate counterparts, each of which, when so executed,
shall be deemed an original, but all such counterparts shall
constitute but one and the same instrument.
Q. The Company shall hold in confidence and Shall not disclose, in
whole or in part, either the existence or the terms or provisions
of this Agreement, unless and to the extent, required in the
written opinion of independent counsel to the Company in
accordance with applicable law. Any such disclosure shall be
made upon the latest date possible and to the most minimum extent
practicable.
R. The parties hereto acknowledge that damages would be an
inadequate remedy for any breach of the provision of this
Agreement and agree that the obligations of the parties hereunder
shall be specifically enforceable.
S. Any personal pronouns used in this Agreement shall include the
other genders, whether used in the masculine, feminine, or neuter
gender, and the singular shall include the plural, and visa
versa, whenever and as often as it may be appropriate.
T. The parties hereby agree that any legal action or proceeding
brought by any party hereunder or with respect to any document or
instrument delivered in connection herewith may be brought in the
Courts of the Commonwealth of Pennsylvania or the United States
of America for the Western District of Pennsylvania, as the
plaintiff in such action or proceeding may elect and by execution
and delivery hereof, each party submits to each such jurisdiction
and agrees that any summons or other proceeding against any party
may be served by registered mail addressed to said party
conforming to Section IV, N hereof.
U. The Company, at the request of the County, shall comply with the
objectives of the County's policies on recruitment, hiring, and
patronizing vendors who are minorities or women. The Company
shall meet with the MBE/WBE Director in order to get referrals to
minority and women owned contractors and to recruit minority and
women employees. The County's target for MBE/WBE participation
shall be twenty-five percent (25%). The projected target shall
56
<PAGE>
not be interpreted as binding upon the Company. The Company
shall retain the right to uniformly test, train, and evaluate the
work of its employees.
V. The Company agrees that it shall maintain full and accurate
records, books, documents, and other evidence pertaining to costs
and expenses in such detail as shall properly reflect all costs
of labor, materials, equipment, supplies, services, and other
costs and expenses of whatever nature which are paid for, in
whole or in part, by payments by the Board and the County under
this Agreement. The Company shall maintain such records, books,
documents, and other evidence in accordance with generally
accepted accounting principles.
The Company shall provide access to such records, books,
documents, and other evidence pertaining to costs and expenses
under this Agreement to the Chairman of the Board and/or the
County's Controller and/or County Manager upon receipt of
reasonable written or oral notice.
Within one hundred twenty (120) days of the end of its applicable
fiscal year, the Company shall have performed, at its own
expense, and audit of its operations by a certified public
accountant. Copies of the audit shall be provided to the
Chairman of the Board, the County's Controller, and the County
Manager.
The Company agrees that the County's Controller shall have the
right to perform its own independent audit of expenses under this
Agreement in accordance with Section 4.02 below.
W. The Company covenants to provide to the Board or to the County,
at any time and from time to time, such financial information
with respect to the Company as the Board or the County may
request and to make available to authorized representatives of
the Board or the County such officers of the Company as the Board
or the County may desire in order that the Board or the County
may make such inquiries with respect thereto as the Board or the
County may determine to be necessary and appropriate. If any
such information is non-public, it shall be held in confidence,
subject to applicable law, by the Board or the County.
X. The County shall have the right to sample the work of the Company
for purposes of quality control independently of any quality
control efforts of the Board. The County shall make the results
of any such quality control studies available to the Board.
57
<PAGE>
IN WITNESS WHEREOF, the Board, Company, and County have executed this
Agreement on the day and year first written above.
ALLEGHENY COUNTY BOARD OF
ASSESSMENT, APPEALS, REVIEW
WITNESS AND REGISTRY (P.A.A.R.R.)
/S/ANGELA WRIGHT /S/RICHARD P. ODATO
Richard P. Odato
Chairman
/S/ANGELA WRIGHT /S/MICHAEL J. SULEY
Michael J. Suley
Vice Chairman
/S/ANGELA WRIGHT /S/MICHAEL J. KAUFMAN
Michael J. Kaufman
Member
___________________________ ________________________________________
Kenneth R. Behrend
Member
/S/ANGELA WRIGHT /S/LOUIS J. SPARRERO
Louis J. Sparvero
Member
/S/ANGELA WRIGHT /S/ROSE HOWARD-LIPTAK
Rose Howard-Liptak
Member
/S/ANGELA WRIGHT /S/JOHN R. PURCELL
John R. Purcell
Member
/S/_____________________________________
Solicitor
58
<PAGE>
ALLEGHENY COUNTY, PENNSYLVANIA
/S/BOB CRAMER
Bob Cranmer
Chairman
________________________________________
Larry Dunn
Commissioner
/S/MIKE DAWIDA
Mike Dawida
Commissioner
ATTEST:
/S/________________________
Chief Clerk
APPROVED AS TO FORM:
/S/________________________
County Solicitor
WITNESS MANATRON, INC.
/S/________________________ /S/_____________________________________
Authorized Representative
59
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE FIRST QUARTER 1999 FORM 10-Q AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1998
<PERIOD-START> MAY-01-1998
<PERIOD-END> JUL-31-1998
<CASH> 456,890
<SECURITIES> 0
<RECEIVABLES> 7,230,756
<ALLOWANCES> 784,000
<INVENTORY> 176,718
<CURRENT-ASSETS> 11,992,656
<PP&E> 5,984,012
<DEPRECIATION> 4,739,263
<TOTAL-ASSETS> 16,677,207
<CURRENT-LIABILITIES> 10,082,218
<BONDS> 0
<COMMON> 5,570,945
0
0
<OTHER-SE> (124,417)
<TOTAL-LIABILITY-AND-EQUITY> 16,677,207
<SALES> 8,083,056
<TOTAL-REVENUES> 8,083,056
<CGS> 5,252,964
<TOTAL-COSTS> 5,252,964
<OTHER-EXPENSES> 2,493,231
<LOSS-PROVISION> 134,122
<INTEREST-EXPENSE> 12,421
<INCOME-PRETAX> 203,088
<INCOME-TAX> 0
<INCOME-CONTINUING> 203,088
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 203,088
<EPS-PRIMARY> .07
<EPS-DILUTED> .06
</TABLE>
