Time Warner Cable says Amherst must refund $971.23 that the company says should have gone to West Seneca.
But that claim has Amherst officials looking more closely at the town’s contract with the media giant. The Town Board agreed Monday to move forward with plans to hire a third-party auditor to comb through Time Warner’s books.
The audit could cost an estimated $5,000, but officials wonder if it will uncover money owed Amherst that exceeds that amount.
“I don’t mind putting $5,000 into it,” said Amherst Town Supervisor Barry A. Weinstein. “If they find nothing, we’ll have to reconsider a second year and a third year.”
The issue involves the cable franchise fees that Time Warner collects from its customers, a percentage of which the cable company shares with each of the municipalities in which it operates.
An audit recently netted Cheektowaga a $420,000 settlement from Time Warner. The Cheektowaga Town Board hired Troy & Banks, a local auditing firm, to examine Time Warner’s books over a three-year period.
Instead of a flat fee for its services, Troy & Banks received a small percentage of the settlement that was paid to Cheektowaga.
Amherst, however, is hamstrung by a clause in its contract with Time Warner from striking a similar deal with an outside auditor, Weinstein said.
“We’ve been wanting to do this audit of the (Time Warner) revenues for quite some time, but our contract, which predates my time as supervisor, says you can’t do an audit on a contingency basis,” Weinstein said.
That means Amherst will have to gamble by paying a flat fee for an audit, whether or not the town winds up keeping the $971.23 Time Warner says the town was overpaid or finds any money that might be owed to Amherst. Amherst will soon issue a request for proposals from auditors.
Municipal government disputes with utilities over franchise fees do pop up periodically.
“We were trying to figure out how to do it,” Weinstein said. “We just kept putting it off. Then we felt that now presented a good opportunity with other municipalities employing companies to do their audits. We think this would be a good time.”
Troy & Banks’ final report on an audit of Time Warner’s payments to the Town of Tonawanda is due soon, although that claim is expected to be much smaller than Cheektowaga’s, likely under $10,000. Citing Cheektowaga’s settlement, Tonawanda Councilman William C. Conrad III on Monday requested the town consider auditing its contract with Verizon Fios as well.
Thomas Ranallo, president of Troy & Banks, previously told The Buffalo News that going back more than a decade, Cheektowaga has scrupulously avoided having language in its contracts with utility and cable companies that would restrict the town to paying flat fees for audits.
“If you’re not an astute municipality, they sneak in their franchise agreement a clause that precludes municipalities from hiring a performance-based auditor,” Ranallo said.
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