TORONTO -- A provincial tribunal sided with a developer over the City of Toronto in its bid to build Rail Deck Park, saying the city should not have rejected a proposal by the developer to build a stretch of buildings in the space it sought for the park above a major rail corridor.

In a ruling released Wednesday, the Local Planning Appeals Tribunal (LPAT) said that the City of Toronto was wrong to reject a proposal by Craft Acquisitions Corporation and PITS Developments Inc., to build a 6.5 hectare “mixed use community” of towers dubbed ORCA above the open rail space south of Front Street and between Bathurst Street and Blue Jays Way.

The City of Toronto rejected an amendment to its official plan by the developers in 2018, two years after city staff privately told representatives of the developers not to proceed with their proposal.

The rejection of the developers’ proposal was then upheld in an earlier ruling by the LPAT that allowed the city to designate the areas of the rail corridor as parks and open space areas.

The City of Toronto said the developers’ proposal did not comply with its planning standards, but the developers, who own most of the air rights necessary to facilitate construction, contested the real reason they were rejected was to preserve the prospect of building Rail Deck Park in its place.

But the Tribunal said the City has done little to advance that plan over the last five years.

“The City has also not taken any substantive steps over the last almost 5 years since then to negotiate the purchase of the CRAFT Property - or to commence expropriation proceedings to acquire it,” the panel said in its decision. “Thus, little has happened since 2016 with respect to the actual creation of Rail Deck Park.”

The most recent city estimate to build the park was about $1.7 billion. The latest LPAT decision changes almost of all of the area the city sought for Rail Deck Park to “mixed use” zoning, allowing CRAFT and its partners to develop it with residential buildings and retail.

Toronto Mayor John Tory said Wednesday he was deeply disappointed with LPAT's decision

"Although I respect the Local Planning Appeal Tribunal's decision today, I am deeply disappointed by it and the possible impact on the future of Rail Deck Park."

"City staff are reviewing today's decision and I don't want to say anything that would jeopardize future actions the City could take on behalf of the people of Toronto."

In its latest row over the future of the rail corridor, the city argued it was “wrong” from a policy perspective to allow a private development in the area, given the immense need for a new park in the city’s downtown.

The Tribunal pointed out that owned air rights are exempt from the requirement that some of them be devoted to parkland, and that weighing the need for a park in downtown Toronto was not its concern.

Last year, CRAFT President Robert Sabato sent Toronto councillors a letter in which he offered to sell the air rights needed to build Rail Deck Park for $340 million, lease the rights for $25 million per year or allow expropriation of the rights at a price set by city real estate agency CreateTO.