Funds for Surprise City Hall draw lawsuit

Surprise City Hall
Surprise City Hall

By Taylor Goldenstein | The Arizona Republic

Surprise’s immense City Hall campus continues to cause problems as city officials now must fend off a lawsuit over how they plan to repay millions of dollars that were misallocated to build it.

The complex, off Bullard Avenue, opened in 2009. At the time, city officials said they had paid for the $61 million facility in cash. Two years later, auditors discovered that although development fees were assessed to pay for the municipal buildings, city officials actually used other funds. As a result, city officials developed a plan to repay $40 million to the capital-improvement fund with future development fees.

Development fees are one-time assessments that a city charges homebuilders to cover public facilities and infrastructure for new development.

State lawmakers in 2011 banned cities from collecting “general government” development fees, or fees without a specific allocation, which was the kind of fees collected.

However, Surprise officials continued collecting that fee, banking on the hope that in repaying itself, the fee would be categorized as covering debt, which is allowed under an exception.

The Home Builders Association of Central Arizona disagreed and filed a lawsuit in January to halt collection. Association officials contend that money owed to oneself doesn’t count as debt.

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