Londonderry's decision to refund some $1.2 million in impact fees to developers illustrates some philosophical as well as practical issues with such payments.
The basic issue is this: If a community charges a developer a fee to mitigate the impact of a project, then the community has an obligation actually to use the money paid on the problem it was intended to address.
Londonderry, apparently, has not been doing that. So the town will be repaying something between $1.2 million and $1.3 million to developers. The exact amount has yet to be determined.
Some of the refunds are the results of honest mistakes. But some can be attributed to poor management.
Londonderry has been grappling with its impact fees since May 2011 when a landowner assessed an impact fee thought it was too high and took the town to court. The landowner lost, but the case prompted the town to examine its collection of impact fees.
That examination found that some of the money was collected in error and a portion was not used within six years as required, according to William Hart, police chief and acting town manager.
The planning staff determined the town improperly collected impact fees for improvements made to state highways in town.
Londonderry officials also concluded the town violated the law by not spending or designating impact fees for specific projects within the six-year time limit.
Both state and local laws say impact fees must be returned if the town misses that deadline, Hart told reporter Doug Ireland.
More than $1 million of the money collected remains in the town's impact fees account. The rest will be paid from a surplus for fiscal year 2012, which ended June 30, Hart said.
It's unfortunate that the 2012 surplus must be used for this purpose when it could have been put to other uses. But the refunds must be paid.
"We have to return this money to people," Town Council Chairman John Farrell said. "If you owe people, you have to pay them back."
Moving forward, Londonderry needs to be more careful about impact fees, assessing them only where appropriate and then spending the money promptly to address the problem that requires mitigation.
And six years is plenty of time for town officials to spend the money to address any given impact. It is simply unconscionable for the town to allow a legitimate problem to languish that long unaddressed.
Hart said measures will be taken to ensure the problem doesn't happen again.
It is perfectly legitimate for Londonderry, or any other community, to assess impact fees when a proposed development places an undue burden on the community.
At the same time, communities should take care not to assess these fees simply because they have a developer "over a barrel" and willing to pay just to get his or her project approved.