City of Vaughan won't say why it refunded $11M earmarked for parks to developer

Millions of dollars paid under protest by Royal 7 Developments, a subsidiary of well-known developer Mario Cortellucci’s company Cortel Group, was refunded by the City of Vaughan in a confidential settlement. (Patrick Morrell/CBC - image credit)
Millions of dollars paid under protest by Royal 7 Developments, a subsidiary of well-known developer Mario Cortellucci’s company Cortel Group, was refunded by the City of Vaughan in a confidential settlement. (Patrick Morrell/CBC - image credit)

The City of Vaughan is refusing to say why it quietly refunded more than $11 million to a developer despite having fought in court to keep the money for taxpayers and public parks.

Royal 7 Developments paid the Toronto suburb $11 million as a condition of approval for its Expo City condo project. It also gave the city an adjoining parcel of land, to be turned into a city park.

Vaughan, like some other Ontario cities, requires developers to give it land, cash, or both as a condition of approval for new developments. Royal 7 paid the $11 million in lieu of a larger parcel of land.

But city council gave the money back in 2018, and also agreed to let Royal 7 build a parking garage underneath that parcel, according to documents unearthed by local activist Richard Lorello.

"It's really disappointing that the city is not revealing why they gave this money back when it could clearly have been used for parks and recreation centres," said Lorello.

"If it was such a good deal, why can't we know the terms of the agreement?"

Nicole Brockbank/CBC
Nicole Brockbank/CBC

Lorello discovered the $11 million refund in hundreds of pages of documents he received through a freedom of information request about the Expo City project.

Four of its five condo towers on Highway 7 near Highway 400 have been built. Construction is underway on the fifth and on the underground garage.

Royal 7 is a subsidiary of well-known developer Mario Cortellucci's company, Cortel Group.

Lorello has been trying to find out what, if any, benefit the city saw by returning those millions and allowing Royal 7 to build the garage underneath the intended parkland.

He says the city shouldn't be able to write off millions that could have gone toward park facilities without explaining to the public what it got in return.

"This shouldn't be allowed to stand," he said. "If this was OK, then we could do everything like this, right? We could approve things in public sessions of municipal council and then go into closed sessions and basically undo everything without the public's knowledge."

Patrick Morrell/CBC
Patrick Morrell/CBC

Paid under protest

Royal 7 paid the $11 million under protest and argued Vaughan wasn't entitled to ask for it because the requirement differed from a previous Ontario Municipal Board (OMB) decision about a proposed development on the same property.

In that decision, the OMB ruled the city would only get parkland from the previous owner as a condition of development. Royal 7 took its fight over the $11 million to Ontario Superior Court.

The city retained an external law firm which argued it was entitled to both the parkland and the cash-in-lieu.

"Royal 7 attempts to rely on a technical and narrow interpretation of the Planning Act … to shirk its obligations and thereby obtain a windfall at the expense of the taxpayers," reads a court filing. "It should not be permitted to do so."

Justice Robert Charney dismissed the case in January 2018, deciding it was more appropriate for the OMB to hear it.

But the case never made it there because, that September, Vaughan city council, in a session closed to the public, approved a settlement under which the city would refund the money and Royal 7 would drop its case.

Lorello is still fighting to see the city council's minutes through an appeal of his freedom of information request.

Patrick Morrell/CBC
Patrick Morrell/CBC

As his own "sanity check" he hired David Donnelly, an environmental and municipal lawyer, to review the documents he had obtained.

"I've never seen a situation where a municipality has surrendered the right to collect both land and cash in lieu," said Donnelly. "There's a long line of cases that have said you can have both parkland — actual physical land donated — but also cash in lieu. That's been the [OMB] position for years."

CBC Toronto asked the city why it agreed to refund the cash.

In a statement, the city said it entered a confidential agreement with Royal 7 to "settle an appeal that satisfies the cash-in-lieu of parkland, including the dedication of parkland."

Work on the park above the garage is being co-ordinated with other work connected to the fifth condo tower and landscaping is expected to be finished by the end of the year, the city said.

The park will include "recreation facilities including a natural playground, an ice-skating loop, a splash pad and a pavilion" for public and private events, it said.

A lawyer for Royal 7 says his client has paid all the required charges for the development.

"My client is providing a strata park ... and is delivering a four-level underground public parking garage for use by the city as part of the settlement," said lawyer Quinto Annibale.

In an email to Lorello, reviewed by CBC Toronto, city staff said the garage includes parking for the public and commercial and residential visitors for three of the Expo City towers. The city also said the developer will own the garage, while it owns the park.

In his report to Lorello, Donnelly concludes that, if the city refuses to provide more information on the settlement, his client should report council's decision to the Ontario Provincial Police for further investigation.

"Why did they give the money away? There doesn't seem to be a logical explanation," said Donnelly.

"If there are documents, or there's something that we don't have that would explain the situation, then the police can very easily come to the bottom of that and the file will be opened and closed."

Patrick Morrell/CBC
Patrick Morrell/CBC