Moray Council has been accused of “pouring cash down the drain” after it emerged it will be charged nearly £50,000 in interest for money it held for 15 years.
The local authority was handed £168,000 by Springfield Properties in 2003 as part of conditions for a development in the south of Elgin.
But last month the council was forced to hand the money back after it emerged it had failed to use the money within the timeframe.
Now it has emerged the cash-strapped council will have to pay an additional £47,700 in interest.
Yesterday, Highlands and Islands MSP John Finnie called on Audit Scotland to investigate why the cash had not been used.
The money was given to the council with rules that it could only be used to pay for transport improvements in Elgin.
It was originally destined to help pay for the Western Link Road project. When that was scrapped two years ago, the authority considered using it to convert Moss Street into a one-way system with extra space for cyclists.
However, further studies revealed the project would not deliver the necessary improvements and officers ran out of time to come up with an alternative.
Green MSP Mr Finnie said: “This is the latest example of Moray Council once more letting its citizens down.
“Local Greens were critical of the Link Road project for a long time, with the original deal focusing only on the rise of the motor car and ignoring the need to reduce road traffic and improve active travel links.
“Council finances are under severe pressure though. Moray Council doesn’t have £50,000 to pour down the drain and folk will rightly be angered by this complete, unnecessary waste.”
Moray Council declined to comment yesterday.
Previously, the local authority said it was “regrettable” that the money could not be used on the Link Road project.
The council, which slashed £6million from its budget this year, stressed the money had been ring-fenced since it was handed-over from Springfield and returning it would have “no impact” on its financial position.
Councillors voted to scrap the £11million Link Road project in March 2016 after projections showed spending the authority’s budget was unsustainable.
Current Moray MP Douglas Ross, who was a Fochabers Lhanbryde councillor at the time, joined SNP members to vote against progressing the plans.
Yesterday, he said: “There was a lot of opposition to the road and we knew that the A96 Aberdeen to Inverness road was going to be dualled, which would eventually bring a proper bypass for Elgin.
“No link road didn’t mean we couldn’t have transport improvements in Elgin. Transport officers should have focussed on the town’s pinch points where smaller improvements could have been made to use the money, without the need to construct the whole road with a cost that was unsustainable.”
Other money allocated to the Western Link Road project from developers was reassigned to convert the South Street and Hay Street junction from a roundabout into a crossroads.