Attorney Questions Impact Fee Ordinance Proposal

Attorney Patricia Panciocco, who has consistently raised concerns about Londonderry’s use of impact fees, was back at the Planning Board to question proposed changes to the impact fee ordinance.
She also sought confirmation that the town would “clean up the mess” that exists with its earlier implementation of impact fees.

A Superior Court decision dated Dec. 31, 2012 found that the impact fee program in place in Londonderry since 1994 had at times been illegal and that refunds were due to parties who paid the illegal fees. The decision stated, “The court sees 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 the program’s creation in 1994.
In January 2013, Melanson Heath and Company was hired to conduct a complete forensic audit of the impact fees. Its findings were released last month.
As a result of the audit findings, the town is in the process of amending the impact fee ordinance to reflect current state statute.
At the board’s meeting Wednesday, Sept. 11, Panciocco said that while she lives in Auburn, she owns considerable property in Londonderry.
Noting that the forensic audit found that money that came in as impact fees funded work on Page Road at Route 28, Panciocco referred to the vesting statute and noted it reads, “All impact fees shall be assessed at the time of Planning Board approval of a subdivision plat or site plan. When no Planning Board approval is required, or has been made prior to the adoption or amendment of the impact fee ordinance, impact fees shall be assessed prior to, or as a condition for, the issuance of a building permit or other appropriate permission to proceed with development. Impact fees shall be intended to reflect the effect of development upon municipal facilities at the time of the issuance of the building permit.”
“I’d like to suggest (words) towards the end of that paragraph: ‘under no circumstances shall any revenue accrue either directly or indirectly to the general fund,’” she said.
Currently the amendment reads that all funds collected “shall be properly identified and promptly transferred for deposit into individual Public Capital Facilities Impact Fee Accounts for each of the facilities for which fees are assessed, and shall be special revenue fund accounts and under no circumstances shall such revenue accrue to the General Fund.”
“The reimbursements from the state came back and went into the General Fund so the town made a profit and that’s how it looked initially, but there was some sort of transfer made after this was brought to the town’s attention,” Panciocco said.
Board member Tom Freda, who also sits on the Town Council, asked how the money could go “indirectly” to the General Fund.
“Because all the money expended by the town on any work on the Page Road intersection came out of impact fees,” she responded. “There was no voter appropriation contributing to that intersection. When the state funds came back, they exceeded the amount taken out of the impact fees, so the town got the excess of the funds.”
Freda said the ordinance reads that the money cannot go into the General Fund and Panciocco agreed, but said the problem was the right hand didn’t know what the left hand was doing.
She read from the ordinance. “‘Impact fees imposed upon development for the construction of or improvements to municipal road systems may be expended upon state highways with the Town only for improvement costs that are related to the capital needs created by the development.’ That’s inconsistent with the statute,” she said. “The statute says that the impact fees can only be spent on capital facilities owned or operated by the town. The town does not own state roads.”
Panciocco noted she had been before the board two years ago and informed the board at that time that the town could not collect impact fees on state roads.
She said both the court and the audit showed mismanagement of private citizen money that was supposed to be held in trust until an appropriation by the voters.
“The expenditures went beyond in many cases the Town Council orders that approved them,” she said. “In other words, they were spent on things that they weren’t collected for.”
She added that state road fees were used to settle lawsuits with other developers.
“They were funding offsite improvement costs for single developers at intersections where the town wanted to encourage growth,” Panciocco said. “They paid for traffic studies to assess more impact fees on developers and they funded studies and designs for Pettengill Road.
“There is no Pettengill Road impact fee ordinance,” Panciocco added.
She also said the studies on which those impact fees were assessed were “replete with flaws” and were inconsistent with letters she had from the school district.
Panciocco noted local school enrollment has been in decline for the past few years yet there is a $9,000 impact fee for schools with no growth. “We are now leasing the space to outside students,” she said, referring to the influx of tuition students from Hooksett to Londonderry High School.
“My question is, What does the board have planned to deal with the study and cleaning up the mess that is behind you, before moving ahead with a new ordinance,” Panciocco said.
“We can’t do everything all at once. We’re taking it a step at a time. This is only the first step. We want to be consistent with the statute and also the process the Town Council goes through. This is not the end of it,” Chairman Arthur Rugg responded.
Panciocco said she represented several builders, including her husband, in the court case against the town and talked about trying to reach an agreement with the town.
“We can’t do that in good conscience without knowing that this is going to be made right going forward,” she said.
She said many of the builders had a future interest in the town and felt “grossly disrespected” by what the audit revealed.
“For that reason I have been asked to pose that question,” she said. “You may not have an answer tonight, but how the town moves forward has a very heavy impact on how we move forward in a situation the town attorney knows very well. I know the town is trying to make things right, but we need to know that it is going to be made right.”
Panciocco said more is required than just acknowledging what happened, putting it behind them, moving forward and hoping for the best.
“We just can’t do that,” Panciocco said.
Panciocco, an attorney with the Baroff Professional Association in Bedford, said that in her lawsuit, she is requesting the town return all impact fees to her client, Mesiti Development, builders of the Sugar Plum Hill and other developments in Londonderry.
She said she is critical of the town for its past procedures, and as part of the lawsuit, is asking for more information and money for her clients.
“I don’t think it was so much the ordinance but the way the impact fees were assessed and spent,” Panciocco said.
“With all due respect, since you are involved in the litigation, you should be addressing that to the appropriate body, which is not the Planning Board,” Freda said, referring her to the Town Council.
“You control the future interests, with all due respect, as to what is an important part and important consideration for my clients moving forward,” Panciocco said.
She said her clients had no desire to hurt the town, but needed to know trust will be restored in their government.
Rugg said the Planning Board had not been involved in the audit, which was still in the hands of the town counsel.
“There are two very separate issues here,” Town Attorney Mike Ramsdell said. “What has gone on in the past and what is being litigated in Rockingham Superior Court is not in the purview of the Planning Board at all. However, how to amend the statute and whether additional studies need to be done is in the purview of the Planning Board.”
He said he didn’t think adding the words “directly or indirectly” as Panciocco suggested would change the implementation of the statute.
He also noted that some of the complaints involved people who had not followed the ordinance, which he said is not the fault of the ordinance.
Resident Thomas Murray questioned how the yearly audits could miss so many errors over such an extended period of time, and asked whether the auditors hold responsibility for the errors.
“I was a professional auditor for 20 years with a Fortune 500 company,” he said. “It befuddles me that they can go through audit plans and audit processes and not pick up – maybe one error they miss, that’s fine – on a process going on. Somebody should have picked up on that. It wasn’t looked at.”
Ramsdell asked the board not to answer that question as the matter is in litigation.
“Claims have been made and additional claims may be made and I don’t think it is proper for the Planning Board to comment on a matter that is in litigation,” Ramsdell said.
Murray asked if there were a way to find out what the financial impact to the town was, and Freda said that his recollection was that they thought it was “immaterial.”
Rugg said Freda and Murray should discuss “offline” the questions Murray had, as they were not the subject of the meeting.
The board unanimously agreed to continue the matter to the Oct. 2 meeting.

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