The city of Surprise will use loans from a number of its accounts to cover shortfalls resulting from the misapplication of $73 million of impact fee revenues.
The development revenue was earmarked for infrastructure projects related to population growth, but the Phoenix suburb instead used it to build a new $61 million city hall, police and fire headquarters, and park facilities.
Surprise officials stipulated several years ago that revenue from impact fees paid to it by developers would only be used to cover half the cost of the city hall complex, which opened in 2009. However, new finance director Scott McCarthy said the entire cost of the complex was paid for from the capital improvement fund.
Using impact fee revenues for non-authorized projects is illegal, but McCarthy said there was no criminal intent by the former city officials who approved fund transfers for questionable projects. He said sloppy accounting was the culprit.
Without the fee revenues, he said, the city would have had to issue bonds to complete many of its projects.
A study by an outside firm found Surprise repeatedly shifted money between project accounts from 2000 to 2009, regardless of how the efforts were to be funded. City officials earlier this year ordered the study, which found that most of the transactions were not recorded correctly.
Future impact fees will repay monies from other funding sources that were used to pay for growth-related infrastructure costs associated with certain city projects.
