Inadequate communication and failure by city staff to enforce the terms of a deal between a developer and an Etobicoke community group caused efforts to restore a historic building to break down, according to Toronto's ombudsman.

The ombudsman's office ultimately made nine recommendations following its probe into a now-defunct project to rehabilitate the Mimico train station on Royal York Road.

In February 2011, a developer looking to build a 26-storey condominium on land opposite Coronation Park, where the century-old building sits, entered into a Section 37 agreement with the city.

Section 37 agreements allow a developer to contribute money to a community project in exchange for permission to add height or density above and beyond what zoning bylaws allow.

In this case, the developer — Terrasan — agreed to renovate the 1,200-square-foot historic station at a cost of about $650,000.

The deal was negotiated with the Mimico Station Community Organization (MSCO), a grassroots group that started an ambitious project in 2004 to fully restore the building for its centennial in 2016. The hope was that it would eventually become a public railway museum and community meeting place.

More than seven years after the Section 37 agreement was reached, the train station "sits empty and is structurally unsafe." MSCO has been dissolved — a decision its members blamed on countless delays and frustrations — and the land set to be developed was sold after Terrasan went into court-ordered receivership.

"Our enquiry revealed several problems with the way the city handled the [Section 37] agreement," wrote Toronto ombudsman Susan Opler.

First, the report found that key details of the agreement were unclear and not communicated to city council. Namely, there was confusion about whether the developer was obligated to restore the entire building, or only its exterior.

Moreover, this issue was exacerbated by two things:

City staff didn't give MSCO a copy of the final agreement until nearly two years after it was signed.

The developer never submitted a detailed strategy for rehabilitation of the station, which it was supposed to do.

The Section 37 deal dictated that without a plan, the city would not issue a site approval for the condominium. However, in July 2016, it issued the approval anyway.

Construction on the condo that was supposed to be built ground to a halt in 2017 after the developer went into court-ordered receivership. (John Lancaster/CBC)

"Had the city been more active in requiring the developer to provide a rehabilitation plan in a timely manner, the station might have been rehabilitated, if not in time for MSCO's planned centenary celebrations, then perhaps by now," the ombudsman's report said.

Similarly, the agreement allowed the developer to use the station as a sales office and presentation centre for two years before it was returned to MSCO's control. In doing so, however, the developer removed original hardwood flooring and a host of other design features that were, in MSCO's understanding, supposed to be preserved.

In a CBC Toronto investigation into the restoration back in 2015, members of MSCO called the work a "betrayal" of the entire community.

What's more, the ombudsman asserts that throughout the process, city staff failed to enforce the terms of the agreement.

"Simply put, the essential premise on which a Section 37 agreement is based — that is, a developer can be required to provide community benefits where a proposal for added height and density is deemed appropriate — is rendered meaningless if the community does not receive the promised return," the report said.

In her recommendations, Opler said the city needs to improve co-ordination between departments when developing, drafting and implementing Section 37 agreements. Further, staff need to communicate more effectively with community organizations and "create a checklist or other tools to aid in ensuring that it enforces all requirements" of these kinds of deals.

The report also urges Toronto's parks department to "develop a detailed plan for the station" to be presented to city council at the beginning of 2019.