Toronto's integrity commissioner has issued a warning to all city councillors after finding Coun. Mark Grimes breached the city's code of conduct and improperly used his influence in his dealings with two developers building condominium projects in his ward.

The integrity commissioner's 17-month-long investigation was launched when a citizen filed a formal complaint after a series of CBC News reports last year. It looked into Grimes' relationship with several developers, and examined how one developer was allowed to forego paying $100,000 in community benefits after Grimes urged council to reduce the developer's so-called Section 37 contribution.

Section 37 money is paid by developers building projects that are larger than the city would normally allow. The monies are supposed to go towards community projects, to offset the increased traffic and strain on infrastructure a larger development brings.

In her report, Integrity Commissioner Valerie Jepson found that condo builder Davies Smith Developments had originally reached an agreement with city staff to pay $250,000 in Section 37 money, in exchange for permission to construct 130 suites in a development at the corner of Lake Shore Blvd. W. and Superior Ave.

The 11-storey condo development at Lake Shore Blvd. and Superior Ave. (CBC)

But less than 24 hours before the agreement was scheduled to be voted on by city council, Jepson found Grimes and the developer had worked out a deal to reduce the payment by $100,000.

Jepson found Grimes did not gain personally from the $100,000 reduction, but said he tried to work out a "verbal agreement" with the developer to make improvements to a nearby park in lieu of the full $250,000. Councillors are prohibited from trying to negotiate legally non-binding agreements.

Jepson found Grimes' actions constituted a breach of the councillor's code of conduct that could shake the public's trust in the development process.

Improper use of influence

Jepson also found Grimes was guilty of an "improper use of influence," by appearing in a promotional video for developer Empire Communities.

The company is building a pair of towers called Eau du Soleil, one of which is 66 storeys tall, along the Etobicoke waterfront. In the promotional video, Grimes touts the condos and the area, stating in part "There is just everything here. You've got transit at your doorstep, express buses running downtown ... great billion dollar views."

Grimes later asked the developer to contribute tens of thousands of dollars to two fundraising projects, one of which was in his ward.

A complaint has been filed with the city's integrity commissioner about Coun. Mark Grimes. 3:59

Jepson found Grimes didn't financially benefit, but did make a public appearance as mock cheques were presented to the fundraising groups. Grimes also asked the developer to meet with a personal friend who had a business supplying services to condos.

Jepson wrote that "no member of Council shall use the influence of her or his office for any purpose other than for the exercise of her of his official duties." According to the report, Grimes tried to finger other councillors for appearing in promotional videos for developers, too.

Jepson said Grimes "created a perception that he has a stake in the interests of the developer that he may or may not actually have.This perception can be damaging to the trust and confidence the public has in city council's decision-making processes as it relates to land use planning."

A community group in Grimes' ward has also expressed concerns over another Section 37 deal in the ward.

Grimes did not respond to questions from CBC News on Thursday.

Jepson says the Grimes investigation should serve as a reminder to all councillors that "they must act with due care when interacting with real estate development companies.As noted throughout this report, members of council exercise significant authority and influence over the planning application process."

Jepson is urging council adopt her findings at next week's council meeting, but isn't asking that Grimes be sanctioned or penalized because she found he had apologized and "the investigation has caused him to review his practices and learn from this experience, all of which will cause him to approach these kinds of circumstances differently in the future."

If you have any information about this or any other story you want investigated, contact John Lancaster at john.lancaster@cbc.ca or 416-205-7538.