Fee Payers to Get Refunds for Expired Impact Costs

In a Superior Court decision dated Dec. 31, 2012, the court found that the impact fee program in place in Londonderry since 1994 had at times been illegal and that refunds are due to parties who paid the illegal fees. As previously reported in the Londonderry Times, the court also said that “The court sees that a full accounting of the impact fee program to be the only solution to the town’s widespread misfeasance.” The court then ruled that the town employ an independent auditor to fully audit the town’s impact fee collections and expenditures since 1994.

That audit was concluded in August and found many faults with the impact fee program. Town Attorney Michael Ramsdell recommended suspension of the impact fees, which remain suspended to date.
And at Monday’s Town Council meeting, Finance Director Sue Hickey and Controller Doug Smith outlined for the Council the list of the first batch of impact fee refund recipients among the original fee payers, as opposed to the current owners. The refunds total $201,426.11 in fees plus $23,585.21 in interest, and had undergone court review.
When Hickey presented the Expired Impact Fee Summary, Councilor Joe Green asked if the current owner was verified. Hickey said they had worked with the assessing department and the current owners were correct.
The refunds go to the fee payer, not the current owner, Hickey said, and a letter will be sent advising the lot number for which the refund is made.
Councilor Jim Butler asked if this was in compliance with the court order and Hickey said she spoke with Ramsdell, and it is.
Hickey noted that the court had ruled that unless the current owner paid the impact fee by agreement with the fee payer, the fee payer is to get the refund. She said that there had been only one such arrangement and that all the other refunds were going to the original fee payers.
Smith said that if the refunds were not deliverable, the abandoned property law kicks in and the refund would eventually go to the state.
“So if we’ve attempted delivery to somebody that we can’t connect with, that starts a clock ticking relative to abandoned properties and if we are unable to identify them, then it is reported to the state,” Smith said.
Hickey noted the list will be posted online.
Councilor Tom Freda said the impact fees that had expired from the date of the meeting prior could be dispersed but after the town council meeting until Dec. 31, some have not expired yet.
“My concern is the language that says ‘the impact fees that have now expired’ when as of today forward, they have not expired yet,” Freda said.
He introduced language that would remedy the situation. The order with the amended language was approved unanimously.
Hickey also presented a 12-month summary of activity that includes what was received and the interest earned, and any deductions, with an ending balance in each account for the last 12 months. There was no comment from the council.
She then presented a summary of impact fees that would expire in the next six months, a report she expects to provide semi-annually.
Councilor Tom Dolan asked if the town had encumbered any school impact fees and Smith said they had not.
“The school, the library, the Police Department and Recreation Department have been expended during the statutory required time,” Smith said.
Freda asked if the finance department monitored the expenditures of the school district, “or do you just monitor what we paid the school district.”
“We monitor the transfer of funds to the school district,” Smith said.
Chairman John Farrell asked how the town sends money to the schools for impact fees.
“We receive an email from the school district business administrator, more recently with minutes attached to it from their school board meeting stating that they would like a withdrawal from their impact fees of X amount of dollars. We’ll find out how much is in the account and a check gets dispersed to them and we draw it off of our spreadsheet,” Hickey responded.
Hickey said the minutes are retained along with a copy of the check.
Freda asked how they would know if the school district spent the money on anything, stating that until this year the school district didn’t have an undesignated fund balance.
“What they didn’t spend went back against next year’s tax rate,” he said.
“The money that was authorized, according to the ordinance, was applied to debt service on bonds that they could take out for expansion due to increased enrollment or need for space. We know that in 99 percent of the cases, it was used for that purpose through the forensic audit,” Hickey said.
Hickey said the district provided its bond schedules and they could tell based on those schedules where the money went.
Freda said that for compliance, they should ask the schools going forward to prepare a statement when money was transferred to them regarding what it was used for because it would be the town getting sued, not the school district.
“We want accountability,” Butler said.
Hickey said that based on the way the ordinance is written and conversations with Ramsdell, the town is the assessment, collection and disbursement center.
Smith said that ever since the town has suspended impact fee collections, the town has not expended any fees. He said Ramsdell has advised that the town continue not to expend anything, as the matter remains in litigation.
Smith said Ramsdell had stated that any impact fees that would expire during the litigation would be returned.
Farrell asked the council to discuss the issue with Ramsdell in non-public session.

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