EagleTribune.com, North Andover, MA

January 9, 2013

Judge finds Londonderry 'lackadaisical' in handling impact fees

By Jo-Anne MacKenzie

---- — LONDONDERRY — Rockingham Superior Court Judge Marguerite Wageling ruled recently the town has been “at best, lackadaisical in their handling and documentation of impact fees.”

The ruling, issued Dec. 31, was in response to a request from the town to the court. Londonderry officials were seeking guidance with regard to refunding more than $1.2 million in impact fees either collected erroneously or not spent within the required six-year timeframe.

In June, the town announced it would make “significant” changes in the way it would handle impact fees collected from developers and other property owners.

That announcement came shortly after former Town Manager David Caron resigned, effective July 20. But Caron had been on leave since June 18 and the impact fee problem came to light during his leave.

Town councilors have never directly blamed Caron for the mess, but Chairman John Farrell said at the time circumstances “rendered it advisable for Mr. Caron and the town to sever their relationship.”

Since then. police Chief William Hart has been serving as interim town manager. He is not a candidate for the permanent post. Councilors are in the process or reviewing applications and interviewing candidates.

On July 2, Hart announced the town would refund more than $1.2 million in impact fees.

Twenty-five property owners were owed refunds of at least $5,000. But the town also owed refunds of lesser amounts to owners of more than 400 properties.

The town had more than $1 million in an escrow account and the rest of the refunds would come from a surplus account, Farrell said earlier.

When the town escrowed the money last summer, officials escrowed enough to satisfy all obligations, including interest, Hart said yesterday.

Without blaming Caron for the impact fee imbroglio, Farrell said earlier Hart had made changes in accounting and record-keeping to correct the problem.

Now, the town has hired an independent auditor, which Wageling directed officials to do, to audit impact fee collections and expenditures dating all the way back to 1994.

The town has no intention of appealing Wageling’s decision, according to a press release issued yesterday.

“Londonderry brought the matter to the court’s attention, seeking guidance to correct a situation it discovered had been mishandled ...” the statement read, in part.

Much of Wageling’s nine-page decision is devoted to numerous motions to intervene, specific to individual property owners’ requests for relief. Succinctly, the judge found whoever paid the impact fees, either collected, spent in error or not spent within the legal timeframe, is the one who will receive the refund.

But that won’t happen until the independent auditor completes a full audit of the 18-year period.

“The court sees a full accounting of the impact fee program to be the only solution to the town’s widespread misfeasance,” Wageling wrote.

The town hired an independent auditor Monday

Hart said the town will use Melanson Heath and Co. of Nashua, the firm that ordinarily handles the town’s auditing.

“For two primary reasons, one is the company has handled our audits for the last four or five years, so they had familiarity,” he said yesterday. “Two, they have a forensic accounting department, an investigative audit department. We wanted someone familiar with forensic auditing.”

No refunds have been issued, nor will any until the court order is final, Hart said yesterday.

Barring any motions for reconsideration or appeals of Wageling’s decision to the state Supreme Court, he said, it likely would be 45 days before that order was final and refunds could be issued.

“We appreciate that the judge gave us some guidance going forward,” Hart said. “We have taken immediate steps, as we have from the genesis of this back in June, to cure it and satisfy our obligations both to taxpayers of the town and to the individual folks to whom the obligation has accrued.”

Caron, meanwhile, has been serving as acting town administrator for North Hampton since early September.

But, it was recently reported, that community has chosen another candidate for the permanent job there.