Markham arena’s special development tax could be unenforceable

Looks like even if Markham, Ontario gets around the little problem of not having a team for its new arena, it could be facing a new dilemma: The city’s plan to pay for its half of the $325 million arena cost by levying special fees on developers could be illegal. Or actually worse than illegal, unenforceable, as several local officials and tax experts say that since the development fee didn’t go through the usual public approval process, developers could sign on to it and then just refuse to pay it:

“It can be unwound, if someone goes and challenges it. Even if you pay it now, you can run back after the fact — ‘I shouldn’t have paid it because I was compelled to pay it and I want to get out of this deal,’ ” said [John] Mascarin, who was an in-house town solicitor for Markham a decade ago. “And it could happen that Markham would be ordered to pay them back. It could be very precarious.”

Markham city investment manager Mark Visser told the Toronto Star that he wasn’t concerned about anyone suing to get out of the special tax levies, and added, “If we are slightly off our assumptions, we will have to deal with it at the time.” Now that’s reassuring.

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