City of Toronto lawyers are making progress trying to collect hundreds of thousands of dollars owed by developers for community benefits after a city councillor and the media reached out to the debtors.
The progress totalling more than $200,000 comes months after the city lawyers advised councillors, in a confidential report, to write off the $700,000-plus tab as uncollectable, saying city staff had tried and failed to collect the money.
Councillor Josh Matlow said he’s glad that the city has resumed collection efforts because it needs all the revenue it can get. Also, he added, builders earning big money from Toronto’s growth need to honour agreements to pay community benefits in return for extra height and density on projects.
“I’m not going to opine on whether or not (city staff) tried hard enough to collect,” he said. “I’m convinced that they tried. My position, based on what I’ve experienced, and what I see is that it wasn’t enough.
“You don’t let developers off the hook when it comes to fulfilling agreements to contribute to our city’s most pressing priorities, including affordable housing. I’m happy to see that there are more efforts being made now to have those developers honour these agreements.”
In August members of the planning and housing committee got an update on city efforts to collect unpaid money pledged by developers under sections 37 and 45 of Ontario’s planning law. The update was triggered by a 2011 auditor general report urging city staff to do more to collect the revenue.
The public part of the report said successful collection efforts have recouped millions but just over $700,000 — pledged to help build parks, community centres, recreation facilities and other neighbourhood amenities, in return for city approvals for lucrative extra space in building projects between 2006 and 2013 — remained unpaid.
Matlow refused to reveal details of a confidential attachment that accompanied it. A source familiar with it, however, told the media that city legal first told committee members that all efforts had been made to collect the debt on the five condo projects and no further action was recommended.
Alarmed the city is owed badly needed revenue and realizing he knew one of the developers, Matlow reached out to Ron Herczeg of Soho Developments which built 359-377 Roehampton Ave.
The local newspaper also contacted Herczeg and used corporate records and other tools to identify and reach out to developers behind the other projects, some of which originally provided the city with contact information for a corporation set up specifically for that development.
Herczeg told Matlow and the media he had no idea about the outstanding $200,000 bill. “This project built by Roehampton Birch Properties was completed over 10 years ago. It is a little odd that we were made aware of this issue only many years later,” Herczeg wrote the paper in an email.
A new report that went to city council on Tuesday confirmed Herczeg is working with city staff to pay the debt, as is the firm that built 2388-2398 Lake Shore Blvd. W. and 13 Superior Ave., which owes less than $4,000 and also told the media it had no idea about its debt.
Earlier this month Joe Morano of Elm Developments told the newspaper he was unaware of an unpaid $180,000 bill for 695-717 Sheppard Ave. W. and vowed to look into it. Elm is now telling the city the development has been transferred to The Norstar Group so it should pay, the new report states.
City staff are reaching out to The Norstar Group, which did not respond to the medias request for comment.
The biggest debtor, Torbel Group, has not responded to any city inquiries over its unpaid community benefits bills of $180,000 for 695-717 Sheppard Ave. W. and $218,000 for 758-764 Sheppard Ave. W., the city report states.
The condo developer based on Champagne Dr. in North York has not responded to the medias requests for comment.
Ellen Leesti, a City of Toronto spokesperson, say city legal made “multiple efforts” to collect all the outstanding funds, including notices sent to addresses provided by developers in Section 37 agreements, and calls and emails made with information found through other research.
“The City is confident it did its due diligence in reaching out to the developers that owed funds and also recognizes the assistance from the local Councillor and the local newspaper in bringing these matters to the attention of individuals associated with the developers,” Leesti wrote.
Matlow is gratified collection efforts will continue — the legal department is reporting back in January on progress — and wants procedures around Section 37 agreements reviewed and tightened if needed to ensure developers are forced to pay everything they owe.
The councillor also has a message for those who don’t.
“The residents of Toronto need the funds that you committed toward their priorities that ensure these growing neighbourhoods remain livable, great places. Own up to your commitments.”
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