Portion of Overpaid School Impact Fees to be Refunded

March 28, 2014
by Barbara O’Brien

The overpayment of school impact fees by developers, an issue that has been haunting town officials in Windham for nearly a year, has finally been resolved.

The resolution came following a joint meeting of selectmen, school board and planning board members earlier this month.  The discrepancy in what was paid by developers, to help offset the impact of their construction on local schools, came to light last spring.  As a result, town officials spent months researching the issue in an attempt to determine which developers had overpaid and which had underpaid the assessed impact fees.  According to Community Development Director Laura Scott, the mistakes were made because certain staff members didn’t understand the state regulations, which, reportedly, were changed a few times over the past several years.  “This is not the town’s finest hour,” former selectman Alan Carpenter commented.

The issue taken under discussion most recently was what to do about school impact fees that were overpaid.  Town Administrator David Sullivan said there were two questions to answer regarding the problem.  First, what was the extent of refunds to be made and, secondly, where would the refund money come from?

Impact fees are assessed by the planning board during the approval process and then are, subsequently, supposed to be collected by the Community Development Department when a certificate of occupancy is issued by the town’s building inspector.  That money is then placed either in an account for the school district or in a separate account designated for public safety impact fees.  Currently, school impact fees are used toward paying the bonds on the new high school or the new kindergarten building.

According to Sullivan, since the inception of school impact fees, a total of $173,541 has been over-collected from developers.  However, based on state law, there is a three-year statute of limitation on those funds.  Therefore, the town is only liable for refunding $14,265 of the total amount over-paid; fees collected during 2011, 2012 and 2013.  In addition, based on information received from Town Attorney Bernie Campbell, town officials can deduct any amount under-paid by a developer in determining how much money must be refunded.  Following these calculations, the town is currently only liable for returning a total of $10,657.  Those refunds will be made to whoever paid the original bill, Sullivan explained.

The majority of the discussion involved where the money for the refunds should come from.  Should it be from the account containing the school impact fees or should it come from the town’s own legal budget?  Attorney Campbell noted that “the cleanest way” to handle the situation would be to take it out of the town’s legal fund.  Sullivan agreed with Campbell’s advice, saying, “The safest way is to take it from the town’s legal budget.”

There was really little disagreement among town and school officials as to where the money should come from.  “I prefer to see it come out of the town budget,” Selectman Ross McLeod said.  Former School Board Chairman Michael Joanis said he was in favor of the town making an effort to refund the money that was overpaid, but preferred that the funds not come out of the school side of the ledger.  School board member Jerome Rekart said he felt the same way as Joanis, adding that he felt the issue was fairly straight forward and any refunds should be made from the town’s legal budget.  School board member Dennis Senibaldi said he felt it would “be silly” to take it out of the school district account.

A motion to follow the three-year statutory limitation and to make all refunds within a period of 60 days, taking the money from the town’s legal budget, was approved by selectmen by a vote of 5 to 0.  Voting in favor of the motion were Chairman Phil LoChiatto, Vice-Chairman Kathleen DiFruscia and Selectmen Al Letizio, Jr., Roger Hohenberger and Ross McLeod.  It was also agreed that a nominal amount of interest would be paid to those whose money was over-collected during the past three years.  Financial Director Dana Call agreed that the interest should be paid to those whose money was over-collected, but also noted that the prevailing interest rates are “as close to zero as you can get.”

LoChiatto said he feels that town officials have corrected what was amiss with previous procedures and are working to assure that these discrepancies won’t happen again in the future.  LoChiatto remarked that a great deal of work had gone into rectifying the situation and expressed the board’s appreciation to David Sullivan and Dana Call for their extensive efforts.  McLeod agreed with LoChiatto’s comments, thanking both Call and Sullivan for their “transparency” throughout the investigation.

Planning Board Chairman Kristi St. Laurent asked that more information regarding the payment of impact fees be provided to the planning board, in the future, both by the town’s administration and the community development department.  Planning board member Vanessa Nysten said that planning board members have not always been provided with the correct information on a development, making it difficult for them to calculate the correct impact fee.  Nysten said planning board members need to be able to rely on the community development department staff and be able to trust that any information they are provided is accurate.  Selectman Roger Hohenberger emphasized the importance of having checks and balances in place.  “It’s a work in progress,” Call said, but that is the ultimate goal.  Scott, who had little to say during the meeting, commented that there are checks and balances in place at the present time.