Cost To Town of Impact Fee Audit in Six Figures

The forensic audit of impact fees on the town’s books since 1994, the result of an order issued by Superior Court Judge Marguerite L. Wageling in a December 2012 ruling, will cost $209,385.27.
The audit was ordered because the court found that the town’s impact fee program had at times been illegal and that refunds were due to parties who paid the illegal fees. The court also said “a full accounting of the impact fee program (would) 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.

The audit was completed by Melanson and Heath in August, according to Londonderry Finance Director Susan Hickey.
Asked about legal fees to the town resulting from the audit matter, Hickey responded, “The fees from Attorney Michael Ramsdell are $60,082, which include other matters not related to impact fees. The fees relating to the impact fee audit from Melanson & Health are $209,385.27. The total of both are $269,467.27.”
Hickey said the money will be paid from the town’s general fund.
According to Hickey, the cost of legal fees regarding the audit could not be extracted from the total billing of Town Attorney Michael Ramsdell. While his fees totaled $60,082, that sum is not exclusively related to the impact fees. Ramsdell does not send itemized billings to the town, Hickey said.
“They don’t break it down, they submit the bill as what they billed for work in that billing cycle,” she said. “They don’t give us a step by step breakout of their time.”
The firm of Melanson and Heath, the same firm that conducts the annual town audit, albeit a different branch of the firm, was chosen by then Acting Town Manager William Hart.
Hart said at the time that he chose the firm because of its familiarity with the Town of Londonderry and the forensic audit process. He noted its forensic accounting department is completely separate from the regular audit department, and said the company had done a number of forensic audits in the past.
“The reason why we hired them so quickly, unlike many towns, governments, private agencies or people who choose to deal with the embarrassing situations that they confront behind closed doors, this council in a rare display of courage said that, “we are going to do this out front in front of everybody and we’re going to be as open as we possibly can with it,’” Hart said.
In March, Ramsdell recommended to the planning board that all impact fees be suspended until the completion of the audit, and the town did so.
Currently, the Planning Board is looking at amending the impact fee ordinance to “bring it into more compliance with state statutes,” according to Ramsdell.
Ramsdell said the definitions section of the amended ordinance would define what impact fees are according to state statute. He said the amendment also addressed alternative payment schedules and corrections to procedures that were previously in the ordinance – for example, the previous ordinance referred to the Treasurer, but should have been referring to the Director of Finance.
Town Manager Kevin Smith said that because the issue is still in litigation, he could not comment.
The impact fee ordinance amendment was to be discussed again at the Oct. 2 Planning Board meeting, after the Londonderry Times went to press.

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