Windham businesses undercharged for impact fees
WINDHAM — Calculation errors on the part of Windham’s building department are to blame for the town’s failure to cash in on more than $9,000 in public safety impact fees in recent years, according to Town Administrator David Sullivan.
During last week’s meeting of the Board of Selectmen, Sullivan shared results of a recent review of the town’s impact fee collection process.
The review, conducted at the request of selectmen this past fall, focused on the fee process surrounding the issuance of commercial building permits, Sullivan said.
Collecting public safety impact fees in Windham began in early 2008, according to town officials. By definition, impact fees are charged to owners of new development to help fund municipal needs — in this case, the police and fire budgets.
Sullivan said the fees are supposed to be determined on an individual basis, based on the building’s usage categories. With eight categories ranging from retail to industrial to institutional, fee prices vary as each category has a different cost per square footage.
Consequently, several businesses were undercharged as building staff familiarized themselves with the process, Sullivan noted.
Since early 2008, Windham issued 25 commercial building permits, though 14 permit holders weren’t assessed an impact fee.
Sullivan said most of the permit holders who weren’t charged a fee were those owning existing structures and therefore were rightfully not charged.
Of the 11 permit holders that paid fees, eight of them had underpaid on account of “either miscalculations of overall square footage or wrongful categorization,” Sullivan said.
For instance, the new CVS pharmacy on Route 111 was wrongfully categorized as a commercial establishment, which has a lower rate than a retail establishment.
The result cost the town over $630, Sullivan said.
The town manager noted that little could be done about the miscalculated fees for the majority of those properties, since all but two had already been given an occupancy permit.
“Still, there are those two properties that haven’t reached that status, so its very plausible we could still collect on those,” Sullivan said. “But going forward, we’re putting a process in place to make sure we avoid any future problems.”
Windham Building Inspector Michael McGuire, who was on vacation and did not attend Monday’s meeting, made an honest error as he calculated the impact fees based on Building Officials and Code Administrators (BOCA) codes rather than building classifications and therefore charged fees set for “general commercial,” the town manager stressed.
“There’s nothing in the review to indicate this was a purposeful act,” Sullivan said. ” No one was overcharged but 11 business owners were undercharged.”
Planning Board member Vanessa Nysten, who was sitting in the audience at Monday’s meeting, said she didn’t feel it was fair to place the blame entirely on McGuire, noting he wasn’t there to defend himself.
“In the past, whenever someone came in asking for a building permit, he’d go to a staff member to ask what numbers he should use,” Nysten said. “So we can’t necessarily put him at fault. There’s been mass confusion and major disparities.”
Selectman Phil Lochiatto said the recent errors are proof that the town needs to begin collecting impact fees at the time occupancy permits are issued.
“I think this clearly points that out,” he said, wondering whether the fees might even be paid somewhat earlier.
“Sometimes it’s even better to have (impact fees) paid up front,” Lochiatto said. “A lot of residential builders prefer to pay at the very beginning if they can.”
Other board members voiced similar concern.
“It’s hard to understand why this wasn’t done correctly,” Selectman Kathleen DiFruscia said. “It’s very concerning because this is money we can’t get back.”
“I guess it’s good news no one was overcharged, but as a selectman I hear it as bad news,” Selectmen Ross McLeod said. “Because overcharges can be returned but undercharges sometimes can’t be collected.
“This is a problem that’s been happening since 2008,” he added. “I’d like to make sure there’s another audit next year so we know we’re making progress.”
Sullivan said a public workshop with town officials (including McGuire), the Planning Board and selectmen would be scheduled this spring to closely examine the impact fee collections process.
“We need to make sure everyone is on the same page moving forward,” he said.