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Ten Subway Levies Authorized by Law, Metro Plea to Court

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The Ontario Municipal Board’s order approving 10 annual levies against area municipalities to meet a large portion of the cost of the east-west subway is solidly based on provincial legislation, R.L. Kellock said before the Ontario Court of Appeal yesterday.

Mr. Kellock represented Metropolitan Toronto as Chief Justice Porter, Mr. Justice MacKay and Mr. Justice Roach heard an appeal by four suburbs asking that the order be set aside.

The contention of Etobicoke, Scarboro, Mimico and New Toronto, put forward by H.E. Manning, was that the OMB had no authority to commit future councils to such a pattern of expenditure as the one set forth in the subway financing plan. The only expenditure to which it could commit them was the payment of debt charges arising from the issuing of debentures, he said.

Mr. Manning said further that Metro’s sole function with respect to a TTC undertaking is the raising of money by debentures and the expropriation of land.

The proposed annual levy by Metro on area municipalities would be expected to raise over $80,000,000 toward the gross expenditure of $200,948,000.

The OMB approved a debenture issue of $113,000,000 by Metro, including more than $98,000,000 on behalf of the TTC.

Mr. Manning referred to an amendment to the Municipality of Metropolitan Toronto Act passed by the Legislature this year. This section, authorizing Metro to spend money for the expansion of rapid transit, provided for financing by debentures and by no other means, he contended.

Chief Justice Porter asked Mr. Kellock if there was any doubt that a municipality has the right to enter into contracts that will affect the mill rate for many years ahead. Mr. Kellock replied that there was none.

Mr. Justice Roach asked if there would be any formal contract between Metro and the TTC. Mr. Kellock said that he did not think one was necessary. His Lordship commented that a municipal bylaw might create authority for a contract but could not create a debt.

Even if one conceded what Mr. Kellock maintained[,] that a statutory obligation to raise money constituted a debt, said his lordship, what would happen if the TTC said after the first stage of the work it would go no further?

Mr. Justice MacKay said that while the TTC might decide not to go on, Metro would have to go along as far as the TTC did proceed.

I.S. Fairty for the TTC told the court that the advantage of a pay-as-you-go financing plan was that it helped bring lower interest rates when money had to be borrowed. Chief Justice Porter said the court was not deciding questions of policy but of law.

Mr. Manning said that the council of one year could not decide, as Metro proposes to decide, how future councils must meet a future debt.

The hearing continues today.