Shovels are in the ground for a new west-end development that was heralded as the first condominium project to be linked to a Toronto GO station.

It resembles many other construction sites around the city now but it began as possible model for planning of the future — planning that connects the public and private sectors and provides intensification in older communities like Mimico.

It hasn't turned out that way.

A CBC News investigation reveals that a key partner bailed on the deal and the project has been mired in lawsuits and financial troubles.

The proposed condominium — called "On the GO Mimico" — on Royal York Road was originally supposed to share space with the neighbouring Mimico GO Transit station.

City Council rezoned the land so that a condo tower could go up. In exchange, the developer had agreed to build 141 underground parking spots for GO commuters. The proposal was part of a key Metrolinx goal to foster private sector development on transit hubs. On the GO Mimico has received support from city council and from the local councillor, Mark Grimes, who appeared in an online video with the developer.

Coun. Grimes told CBC News he supported the development because it included contributions toward a park and heritage building and because it proposed density at a transit location.

The developer continues to advertise that the planned tower will be "directly connected" to the GO system. But any official link to GO was severed in 2012 after the developer used the land to secure millions of dollars in mortgages and, according to a credit union, allegedly defaulted on the loans.

The developer, Louie Santaguida, told CBC News he owns the land. But the financial complications were enough to cause Metrolinx to back out.

Metrolinx told CBC News the deal dated back to 2008, when the transit authority signed a memorandum of understanding with Santaguida's company, Terrasan, which owned the property at 327 Royal York Rd., next to the Mimico GO Station.

But in 2011, three companies associated with Santaguida went bankrupt with millions of dollars in liabilities. That caused Brantford City Council to walk away from an agreement that would have seen Terrasan take on a big industrial redevelopment in that city.

Santaguida said that the bankruptcies don't affect the property at 327 Royal York Rd. He wrote in an email, "None of those companies had an interest in the Mimico project, and the bankruptcies do not impact any of our current developments, including On the Go Mimico."

Metrolinx said they backed away from the deal to partner with Terrasan in 2012. A spokesperson said that "some information had come to our attention that made this a less than desirable agreement to enter so we pulled out of that agreement [that year]."

The transit authority is still looking for private partners to build on GO transit hubs, a key part of its Five Year Strategy. But the spokesperson said the collapse of this first deal was a disappointment. "I don't believe we've lost hope, though, with finding another agreement that we could reach with another developer perhaps."

The connection to a transit hub was a part of the Mimico project Coun. Grimes had highlighted when he urged the city to move forward with the plan.

In a 2012 letter, Coun. Grimes had asked the city's Committee of Adjustment to approve the developer's application to add extra storeys to the planned tower.

"The need for increased parking at the GO station is pressing and our desire is for the project to progress as soon as possible," he wrote.

A year later, after the deal with Metrolinx fell apart, Coun. Grimes wrote again to the committee, this time to encourage members to approve the removal of the 141 parking spaces for transit riders that had been part of the original plan. He wrote that the changes "will not adversely impact the surrounding community."

When asked about the letters, Coun. Grimes said in an email, "It is my understanding that Metrolinx chose not to pursue the partnership because they were moving forward with their own expansion plans for the GO station, including the addition of more parking spaces."

Metrolinx has confirmed that it made its own plans to renovate the station and build extra parking spaces after the deal with Terrasan ended. Those publicly-funded upgrades are expected to be ready in 2018.

As for the property next door, the Committee of Adjustment refused the proposed changes to the condominium project, but the Ontario Municipal Board (OMB) later ruled that Terrasan could go ahead without the extra parking spaces.

Losing Metrolinx wasn't the end of the company's problems. In 2013, a contracting service, Petrosan Contracting Ltd., filed a lawsuit against Terrasan, alleging it hadn't been paid for preliminary work and materials provided to the developer in relation to the Royal York Road property.

Santaguida said those obligations "were satisfied in February 2013." He also said that the condominium is over 75 per cent sold.

Originally slated to have 20 storeys, On the GO Mimico is now approved as a 27-storey tower.

CBC News asked the city whether a developer's track record can affect the approval process. In an email city planner Gregg Lintern said that a developer's reputation "is important, but not technically an issue" that City Planning uses to vet development applications.

Coun. Grimes said he supported the Mimico development based on its planning merits. "The development was consistent with the City's Official Plan, and with the Province's Policy Statement and Growth Plans," he said.

Coun. Grimes appears in a video posted to YouTube last year, discussing the On the GO Mimico project. "We're on the platform of a GO station. So, out your back door you walk one minute to the platform," he said in the video. "So, people who don't have a car, this is the place you want to buy."

Coun. Grimes spoke, he said, not knowing he was being filmed for promotional purposes and said it was edited and used without his knowledge or consent. He told CBC News that the video "was shot at the groundbreaking event, where many media outlets were present."

He continued, "At no time did I intend to, or actually advocate that someone should purchase anything."

By attending the groundbreaking, he said, "I was helping to promote development in ward 6, not the developer."

Do you have more information about this story?

If you have any information on this or any other story you would like investigated, please contact CBC Toronto's investigative unit: