A sign touts a building site as 'the future home of Vaughan's first hospital.' ((Dave Seglins/CBC))

Two Conservatives have quit their own riding association in Vaughan north of Toronto, accusing incumbent candidate Julian Fantino and the Conservative government of handing $10 million in public funds to a private non-profit group involved in a major health-care development.

Richard Lorello, the local Conservative candidate in 2008, says he resigned because a federal grant, announced in March just before the election was called, is earmarked for the Vaughan Health Campus of Care (VHCC), which has two of Fantino's fundraisers as prime backers.

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"The optics look really rather strange," said Lorello, "that the same people who helped Fantino are the same people [whose non-profit group is] receiving $10 million in government funds."

Developer Michael DeGasperis is chair and construction insurance man Sam Ciccolini is a director of the VHCC, which is a private, non-profit volunteer group that is involved in developing health-care facilities adjacent to a proposed new provincial hospital. The pair also served as fundraising co-chairs in Fantino's successful November 2010 byelection campaign.

"The VHCC is a private organization ... not for profit," Lorello told CBC. "I think that it's inappropriate that this money was given to a not-for-profit private organization which is primarily made up of prominent individuals who supported Fantino in his campaign."

On March 16, newly elected MP Fantino was on hand as Gary Goodyear, minister of state for the Federal Economic Development Agency, announced a grant of $10 million to VHCC.

'The federal government made this [VHCC] grant as a reward for getting Julian Fantino elected,' said local Liberal MPP Greg Sobara ((John Nicol/CBC))

Fantino would not respond to requests for an interview with the CBC, but his campaign spokesperson Stephen Lecce said in an email: "This investment will benefit Vaughan families, seniors and the region's economy. Mr. Fantino is proud the federal government delivered for this critical community-based project for families in Vaughan that is being widely supported by volunteers and donors."

The VHCC was established in 2007 to further the cause of bringing a hospital to Vaughan, a growing city of 300,000 just north of Toronto. The independent non-profit group had to acknowledge York Central Hospital was in control of the project because hospital construction is a provincial concern. The VHCC then adopted a goal of bringing ancillary health services to a 35-hectare parcel of land purchased just north of Canada's Wonderland amusement park.

York Central Hospital said it will benefit indirectly from the federal grant, which will provide for site preparation needed for any new hospital, but they were quick to point out that no money was "being directly contributed from the federal government for the planning and/or construction of the hospital," said president and CEO Altaf Stationawala.

"This $10 million from the federal government is not to build a hospital," said Greg Sorbara, the Liberal MPP for Vaughan, "and the people of Vaughan need to know that."

Sorbara said that during last November's byelection, Fantino boasted he would get money to help build a hospital, and even at the time the idea of $10 million was floated, even though the cost of a hospital is in the $800-million range, and hospitals are a provincial concern.

"There's a lot of political capital if you can associate yourself with the ambitions of the people of Vaughan for a hospital," said Sorbara. "But the fact is the federal government made this grant as a reward for getting Julian Fantino elected.

"Stephen Harper, I do not think, wants to get into the business of building hospitals across Canada. If he does, I've got a long list of hospitals he should be looking at."

To avoid the issue of provincial jurisdiction, the grant went to the VHCC in its dream to create health-related facilities in a "life sciences cluster" around the hospital, which it says is currently approved in Vaughan's official plan, or perhaps to pay for sewers and roads for the project.

The problem with the VHCC, says Lorello, is that it is not publicly accountable, it does not have expertise for the task at hand and it is heavily laden with development-minded people who have secured a sweetheart deal with the city. Vaughan taxpayers put up $80 million to purchase the hospital lands, and then the city handed control of half the property to the discretion of the VHCC.

A VHCC spokesperson, Jey-son Edwards, insists any profits from the property will "be reinvested into health services in Vaughan," and VHCC has a request for proposal to develop a comprehensive business plan.

Another Vaughan resident put in a complaint earlier this month to the auditor general to review why $10 million in taxpayers' money is going to an independent group.

The other long-time riding association member to leave has been Tracey Kent, who didn't like the direction Fantino is taking on several fronts. In addition to the reasons she posted in an open letter online, she told CBC News: "My personal reasons for resigning also include the federal money being given to the Vaughan Health Campus of Care. I had voiced my concern privately, but was discouraged by executives on the board from speaking further about it."

Lorello says he and Kent remain Conservatives.

"But we basically believe what's wrong is wrong — if the Liberal Party was doing this, we would be jumping up and down," he said. "Because the Conservative Party is doing this, it's no exception to us."

Sorbara says it will be another two or three years before the hospital is approved, and he doesn't know how the VHCC could be putting in sewers if they don't know where the hospital will be built.

"I think you have to keep a careful watch on what that money is actually being used for," he said.