Over the past four years the city has been hiking water rates to cover increased costs of delivering the service, and to add new infrastructure.
A group of Vaughan ratepayers is demanding Mayor Maurizio Bevilacqua and City Councillors repay $217 million they allege was misdirected to cover deep discrepancies in the city's budgets.
The City of Vaughan could annually running deficits in excess of $100 million, which contravenes Ontario's Municipal Act.
Vaughan and its council members now have 30 days to respond. If they fail to do so, the matter will proceed to Ontario Superior Court, he said.
Elected officials who voted to misuse the surplus could be prohibited from holding public office for two years.
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