Other financial fish to fry, Miller says
The City of Toronto didn't move earlier to maximize interest earnings on developer contributions for community projects because city officials were preoccupied with other financial issues, says Mayor David Miller.
This week, Toronto council approved procedural changes, suggested by finance officials, that will garner about $1.5 million in interest this year on money paid by developers in return for being granted greater height or density for their projects.
Currently, the city is holding about $42 million the developers paid under Section 37 of Ontario's Planning Act, which is allocated for community benefits such as recreation centres or playgrounds.
Chief financial officer Joe Pennachetti insisted that all the funds did earn some interest, but couldn't provide the exact amount yesterday.
That interest didn't necessarily go to community improvements; some of it was used to balance the city's operating budget. Now, all of it will go toward the Section 37 funded projects to help offset rising construction costs.
Miller said the issue could have been addressed earlier except for the fact the city has been addressing huge financial shortfalls and other problems, including the MFP computer leasing scandal, that monopolized the time of finance officials.
"Let's look at the city finance department: Amalgamation, downloading, a tax freeze, MFP," the mayor said. "You know, I inherited a government in 2004 that was financially unstable, that the province wasn't paying its fair share, and was just coming through this corruption crisis. Finance bore the brunt of that.
"I think it's fair – they should have found a solution faster. But they've been working on an awful lot of solutions to an awful lot of problems."
Miller also said the Planning Act didn't specifically say that Section 37 monies could be placed in interest-bearing investments while the money was being held by the city, waiting for projects to get underway.
"There's a statutory problem that staff has been studying to try and find a way around," he said. "I think it's because the Planning Act prescribes how you can use the money, and it doesn't say you can use it to gain interest."
A provincial official said that, in fact, the legislation is silent on what municipalities should do with Section 37 funds on hand.
Most Greater Toronto Area municipalities contacted by the Star yesterday said they do not receive Section 37 funds because density and height exemptions don't apply in their areas.
An exception was Burlington. The city has collected several hundred thousand dollars in Section 37 contributions over the past three years, said Bruce Krushelnicki, director of planning for Burlington.
"We have a guy in the finance department whose job it is to invest money that we have sitting in reserve funds ... and that money earns interest," Krushelnicki said.
City treasurer Steve Zorbas said Burlington currently has $216,000 in Section 37 contributions in an interest-earning account. The money is earmarked for public art.
With files from John Spears
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