Pinal County streets suffer from pilfered fund, sweetheart deal

Several years ago, when the Valley’s growth began pushing home buyers in droves to municipalities in and around Pinal County, local governments scrambled to impose new construction fees to pay for the burden their new residents would place on roads and services.

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Sections of unincorporated Pinal County southeast of Queen Creek received the greatest influx of new development, but instead of requiring all builders to pay an equal share for roads, county officials chose to accept negotiated contributions that varied wildly from one developer to the next. Some paid nearly $1,000 per home; others paid nothing at all.

That money was placed in an account called the Superstition Valley Transportation Fund, administered by an office secretary with no accounting experience and controlled by a former county manager who later admitted stealing nearly $500,000 from the fund.

By 2000, it became clear to some Pinal County officials that the transportation fund wasn’t collecting enough money.

But rather than impose a uniform set of development fees, the county mailed out dozens of legally specious letters to individual property owners, threatening to revoke their favorable zoning unless they agreed to pay more money, county records show.

Meanwhile, Stanley Griffis, the former county manager now incarcerated in a Florence prison after pleading guilty to a number of felonies, began using the fund as his personal checking account, taking out $427,000 to buy cars, renovate his home and enrich his family trust. He received a 3 1/2-year prison sentence in May for fraud and theft of public money.

Today, heavy congestion is a constant source of frustration for the area’s estimated 40,000 residents, as they attempt to squeeze through a handful of bottlenecks on their way to and from work, school, shopping and recreation.

Much of the traffic passes through Queen Creek, causing headaches for residents. Because most of it originates outside the town, Queen Creek is unable to charge its own development fees for roads. Queen Creek officials had to appeal to the Legislature earlier this year for a special loan to help solve the problem.

Current and former Pinal County officials say they were desperate for economic growth and could not have anticipated the explosion in demand for housing that occurred on the Valley’s southeastern edge.

The county finally imposed mandatory development fees in late 2006, but the catch is that any plans submitted under the old Superstition Valley Transportation Fund system — including projects that may not be built for years — are exempt from the new fees.

TRAFFIC CRISIS

Each weekday afternoon in Queen Creek, a slow-moving, exhaust-spewing monument to poor urban planning forms and stretches its way up crumbling and narrow Ellsworth Road, the town’s main north-south thoroughfare.

At the peak of afternoon rush hour, the plodding procession of cars and trucks can extend for miles north of the traffic signal at Ellsworth and Ocotillo roads, giving motorists plenty of time to contemplate the reasons for their plight.

One thing is certain, town community development director Tom Condit said: Queen Creek’s congestion is not Queen Creek’s doing.

An estimated 80 percent of the vehicles on town streets are being driven by residents of neighboring Pinal County, for whom Queen Creek forms a vital link to the Valley at large.

And while Pinal County residents are the primary source of Queen Creek’s traffic problem, they do not contribute any money toward solving it, Condit said.

The problem is twofold, he said, because Queen Creek is prohibited by state law from collecting its own fees to build roads that would primarily benefit outsiders.

“We can’t charge development fees for the regional pass-through traffic,” he said, adding that the town’s transportation fee of $459 per single-family home can only be used for bridges and railroad crossings.

For years, town officials have been sending letters to Pinal County leaders in Florence, asking them to curtail new development until adequate transportation corridors could be planned and funded.

It hasn’t done any good.

“We don’t have a vote in what Pinal County does,” Condit said.

A.J. Blaha, Pinal County’s deputy director of public works, also has inherited a traffic problem he did not create.

Until recently, he worked for Casa Grande, which imposed a development fee for transportation improvements — currently $983 per home — in 2001, when rapid growth began to put a strain on the area’s roads.

“I’m not sure why, say between 2001 and 2005, the county didn’t have it going sooner,” Blaha said. “We didn’t have any kind of development fee ordinance until this last November.”

RISK AND REWARD

The first developer to take an interest in the section of northern Pinal County now known as the Hunt Highway corridor was George Johnson, owner of Scottsdale-based Johnson International.

A relative unknown at the time, Johnson in 1997 proposed developing a master-planned community of affordable single-family homes that would cater primarily to first-time buyers and working-class residents.

He offered county leaders a deal: Waive all fees related to development, and Johnson would make his community a springboard for future growth by providing the roads, utilities and other necessities.

County officials happily agreed to Johnson’s terms, Blaha said, because the developer was taking a considerable risk that they believed could pay off for the entire county.

“I think a lot of people were kind of skeptical, because this was the middle of nowhere,” he said.

But the development, Johnson Ranch, proved successful, and other developers quickly drew up plans for their own nearby subdivisions.

At that point, the Pinal County Board of Supervisors hired Tucson-based consultant Curtis Lueck & Associates to estimate how much money per home the county would have to collect from area developers to fund adequate roads in the remote area.

Lueck issued a report in 1999 that recommended a fee of roughly $1,000 per home for transportation needs over the next decade.

The fee was based on area growth projections that were far too conservative — actual growth has been twice what the consultant predicted.

Still, Pinal County did not come close to collecting the $1,000 per home, according to transportation fund data obtained from the county. In fact, the figures indicate actual receipts have averaged about $300 per home.

Blaha said those numbers don’t tell the whole story, because many developers received credits in exchange for significant contributions such as building roads or providing school sites.

“Most of the time they were asking us, ‘If we do this, will you give us this?’” he said.

Others have not yet paid all they owe because their communities still contain undeveloped lots, Blaha added.

Still, he acknowledged that at some point county officials realized they needed to start collecting more money.

“Eventually they started to say, ‘Well, we don’t have to give away as much,’” Blaha said.

DESPERATE TIMES

Current and former county leaders disagree today about why they hesitated to impose a non-negotiable fee, but two themes emerged: deference to a senior elected official who opposed such fees, and a regard for developers as the county’s economic saviors.

Pinal County Chairwoman Sandie Smith, D-District 2, has been the Superstition Valley area’s elected representative for 15 years. Smith said she has been a longtime supporter of development fees and even lobbied the Legislature to grant counties the right to impose them, which it did in 2000.

So why didn’t the Board of Supervisors exercise that right until six years later?

“I don’t think there was really support on the board,” Smith said.

Only one position on the threemember board has changed hands since 2000, that of former County Chairman Jimmie Kerr. The board, which now consists of Smith, longtime Supervisor Lionel Ruiz, D-District 1, and newcomer David Snider, D-District 3, unanimously approved the area’s new development fees — just under $9,000 per home — in October 2006.

Griffis, speaking via telephone from the Arizona State Prison Complex in Florence, said Kerr opposed development impact fees, and Smith and Ruiz didn’t want to challenge him.

“They wouldn’t have gone against Jimmie Kerr,” Griffis said.

But equally important was the notion, shared by all top county officials at the time, that developers were rescuing Pinal County from poverty, he said.

“We needed the development,” Griffis said. “Pinal County, economically, was dead in the water.”

That tension between the county’s need for adequate roads and desire to keep developers happy led to some desperate measures.

For instance, in early 2000 county leaders began mailing dozens of letters to area property owners whose land had been rezoned for development, demanding that they pay more than originally agreed upon in order to fast-track area road improvements.

Only by shelling out thousands of additional dollars could the landowners “eliminate the probability of (their) zoning being reverted,” stated each letter, printed on Board of Supervisors’ letterhead and signed by Griffis.

Tempe attorney David Merkel remembers those letters, because he responded to one on behalf of thenclients Randolph and Beth Gross of Tempe.

Merkel said he indicated in his written reply to Griffis that the county had no legal authority to make such demands, and that his clients would not agree to pay the extra $2,520 he was demanding.

His clients never heard from the county after refusing to pay.

“As far as I know, they just forgot about it,” Merkel said. “One can only speculate about what (Griffis) was up to.”

Griffis said many property owners did pay after receiving the letter, adding that the demands contained in them were probably unenforceable.

“I agree that our legal basis for those letters was shaky,” he said. “We needed the money.”

Despite the inclusion of her name on all of the demand letters, Smith insists she knew nothing about them.

“I wasn’t copied on that letter,” she said.

OTHER PROBLEMS

Griffis did not help the area’s congestion crisis when he began stealing money from the Superstition Valley Transportation Fund in 2002.

He has admitted taking about $427,000 from the fund over a period of years, using the money to pay off two vehicles, renovate his home and deposit money into his family trust.

Former Maricopa County Attorney Richard Romley, who led the criminal investigation of Griffis, has explained that the former manager had his secretary, who had no accounting experience, keep track of deposits and withdrawals from the fund in order for him to maintain control over the money and hide his crime.

Griffis, who held the county’s top administrative position for 16 years until his retirement in 2006, has given conflicting explanations for his actions — at first saying he was angry at the county supervisors for failing to recognize his hard work, and later claiming the money was offered to him as a “management fee.”

Despite Griffis’ theft and the many discounts given to developers, Blaha said the fund still collected more than $20 million, most of which has gone toward improving Ironwood Drive/ Gantzel Road, one of two north-south routes from the Hunt Highway corridor.

But widening a single road will not provide significant congestion relief to occupants of the nearly 15,000 new homes built along the Hunt Highway corridor during the past decade.

Two proposed freeways that would facilitate the movement of traffic in and out of the area are scheduled to be constructed within the coming decade: the U.S. 60 bypass around Gold Canyon and state Route 802, also known as the Williams Gateway Freeway.

However, Pinal County has not determined how it will pay for those roads.

County officials do plan to collect more money from developers based on the new, uniform development fees, but a recent slowdown in the area’s growth means it could be years before large residential developers actually have to pay those fees.

There are still at least 50,000 empty lots in northern Pinal County that fall under the old fee system.

“You still have to respect those agreements,” Smith said.

However, Smith indicated that some developers may not respect the new agreements.

“We already have people trying to challenge our methodologies for establishing the development fees,” she said.