City of Toronto seeking $700,000 in unpaid bills from condo developers

Thestar.com
Oct. 10, 2019
David Rider

Phone calls from a city councillor and the Toronto Star appear to be helping City of Toronto efforts to recoup money owed by developers for unpaid community improvement commitments.

A report to city council updates city efforts to get unpaid funds pledged by developers under sections 37 and 45 of Ontario’s planning law. More than $700,000 promised in return for city approvals for lucrative extra height and density on building projects remains outstanding.

That’s way down, the city says, from $3.3 million in unpaid funds first identified by a review of the total $486.5 million Toronto builders agreed to pay community investment funds -- spent on parks, community centres and other neighbourhood improvements -- between 2008 and 2017.

City staff have failed to get payments, due between 2006 and 2013, for five condo projects: 920-922 Sheppard Ave. W. ($100,000); 359-377 Roehampton Ave. ($200,000); 695-717 Sheppard Ave. W. ($180,000); 758-764 Sheppard Ave. W. ($218,000); and 2388-2398 Lake Shore Blvd. W. and 13 Superior Ave. ($3,387.44).

At city council last week Councillor Josh Matlow (Ward 12 Toronto--St. Paul’s) convinced his colleagues to have city staff keep bugging developers for the money. The issue was deferred until the Oct. 28 council meeting.

In an interview Matlow said he was alarmed the city is owed badly needed revenue and he realized one of the sites, on Roehampton, was in his ward before 2018 boundary changes. After making sure city staff approved, he reached out to the developer, Ron Herczeg of Soho Developments.

Herczeg told him he was unaware of the $200,000 bill and pledged to pay if it is indeed owed, Matlow said. In an email to the Star, Herczeg wrote: “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.

“All fees to the city are always paid at the time of building permit issuance. One has to go back a long time to find out what happened here but we are in discussion with the city and rest assured, if there was an error made by the city or perhaps ourselves it will be rectified shortly.”

The Star researched developers behind the projects, sometimes listed under corporations set up specifically for one development, and contacted them about the unpaid bills.

Ian Smith of Davies Smith Development Partnership told the Star he knew nothing about the $3,387.44 owed on the Lake Shore/Superior project. After the Star told the city about his reaction, he heard from a city official.

It turns out the small amount outstanding is for the inflationary increase in the amount from the time it was pledged until it was paid, he said, but “nobody mentioned that when we paid. We’ll review the info that the city sent and, if correct, we’ll clear the small amount still outstanding.”

Joe Morano of Elm Developments told the Star he was unaware of an unpaid $180,000 bill for 695-717 Sheppard Ave. W. and vowed to look into it.

Operators of Tor-Bel Group, which built the other two Sheppard Ave. condos, did not respond to the Star’s requests for comment.

City staff made diligent efforts to recoup the money, reaching out to each developer “multiple times,” Ellen Leesti, a city spokesperson, told the Star.

“All parties were contacted by the City at the addresses provided by the parties on the Section 37 Agreements,” Leesti said. “In total, 19 developers were contacted and 14 have made payments ...

“The City would welcome the opportunity to communicate with any developers who owe Section 37 funds to ensure the receipt of any outstanding monies,” she said, adding the city has “improved business practices” to ensure full payment since 2011 when the auditor general raised concerns.

Matlow said he can’t explain the apparent miscommunication. He hopes city staff keep seeking the funds and developers pay Toronto all the money they pledged in order to build their desired condos.

“Seven hundred thousand dollars is a lot of money -- many Torontonians don’t see that in their lifetime,” Matlow said.

“With pressing priorities like affordable housing, Toronto can’t afford to lose a single dollar that can help improve our city, and developers who agreed to pay those funds have a responsibility to pay up.”