The list of towns wondering if they are being underpaid by Time Warner Cable is growing.
You may remember, that audits uncovered that Time Warner Cable owed local municipalities hundreds of thousands of dollars. While more towns begin to investigate, officials are learning there is a catch. Performing audits can be hard and costly.
Amherst Town Supervisor Dr. Barry Weinstein said that the Town of Amherst has wanted to audits on Time Warner Cable for some time, as the town has done with other utility companies.
Weinstein said that the town has an extra push after it received a note from Time Warner Cable that the cable company sent money owed to West Seneca to Amherst by mistake. Time Warner Cable requested the money back.
According to Dr. Weinstein, the Town has not put up a fight in paying the money back. However, it has emphasized that, "they do make errors and we should be doing an audit."
Officials said the errors were highlighted by errors in other municipalities that revealed that Time Warner Cable owed Cheektowaga $420,000 in franchise fees and at least $123,000 to the City of Buffalo.
Franchise fees are paid to local communities by utility and telecommunications companies so those companies can use utility poles, right-of-ways and other property owned by the local governments.
"Typically, we do an audit on a contingency basis where if they find nothing, it costs us nothing," Weinstein explained.
However, due to a clause in the contract between Time Warner Cable and the Town of Amherst, an audit could be very expensive. That clause states that Amherst cannot do a performance based contract, which would be free. Instead, it has to hire an auditor. Current estimates to town officials have an audit priced at about $5,000 a year.
Weinstein said he believes the contract was signed before 2008.
"These (audits) usually cost anywhere from $15,000 to $25,000," said Thomas Ranallo, the President of Troy & Banks. Audits typically cover a few years.
Ranallo said that the clause is in many municipalities contracts, and has sent out nearly 200 letters to cities and towns with warnings about underpayments from cable companies.
In the last 15 years, Ranallo said that he has recovered more than $4 million from different cable companies in underpayments. He added that clauses, such as the one in Amherst, could be costly.
"We are advising municipalities that if new franchise agreements are coming across your desk, make sure you look at them very closely."
Amherst will put out an RFP to find an auditor. That will go before the Town Board on Monday evening. However, the Town Board will not need to vote on the issue until a contract is drawn up with an auditor.
