$1.5M expected this year from developers’ money
The City of Toronto has been sitting on millions of dollars in contributions from developers that have been earning little or no interest.
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Rookie Coun. Adrian Heaps made the discovery last year, and this week city council quietly approved procedural changes to ensure the funds — some $42 million as of Dec. 31 — will earn interest from now on, an estimated $1.5 million this year alone.
The money is from contributions developers paid under Section 37 of Ontario’s Planning Act, meant to subsidize neighbourhood improvements such as community centres.
"There would have been minimal interest earnings on those accounts before," conceded chief financial officer Joe Pennachetti.
Heaps became aware of the situation after learning money meant for a new community centre in his ward wasn’t accruing any interest.
The move was applauded by a member of the independent panel that recently reported on the city’s finances, urging among other things an overhaul of the section 37 program.
Pennachetti said from now on, all section 37 money will go into reserves that bear interest.