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A TTC streetcar takes on passengers in Toronto on Nov. 17, 2009.

There's a new streetcar line under construction in Toronto, the first in more than a decade and a surprising development during the tenure of a mayor who is outspokenly opposed to light rail.

The tracks are being laid this year along the northern portion of Cherry Street, where they will operate in a dedicated right of way. When it enters service after 2015, this small stretch will provide transit to new West Don Lands neighbourhood and the Distillery District.

The project is under the aegis of Waterfront Toronto, the tri-government agency charged with redeveloping the lakeshore, and is separate from the $8.4-billion scheme to build light rail lines in the suburbs. As such, it avoided the messy battles at city hall that pitted LRT proponents against the anti-streetcar administration of Mayor Rob Ford.

However, the preoccupation with bringing transit to the outer reaches of the city has meant that little attention has been paid or funding committed to servicing the new developments rapidly sprouting up in the eastern waterfront.

Waterfront Toronto's plan calls for the Cherry Street line to eventually extend south of the Gardiner Expressway into the Port Lands and an LRT to run from Union Station down Queens Quay east of Bay Street.

But there is no money to pay for the majority of this proposal and Metrolinx, the provincial agency overseeing the suburban light rail projects, is keeping its distance.

The full Queens Quay East line would cost roughly $300-million to build, said Waterfront Toronto CEO John Campbell. His agency has only $90-million for the project.

"Our mandate is not just to develop real estate, it is to revitalize the waterfront, to build the city, to curb sprawl," he said. "To do all of that, you need transit."

One major hurdle is the tunnel to Union Station. The loop doesn't have the capacity to accommodate the number of light rail vehicles needed to service the new line. There's also a sewer at Queens Quay and Bay Street that will make it hard to build an eastern portal to bring the tracks to the surface.

Waterfront Toronto has hired HDR, an international consulting firm, to study interim solutions – such as building a dedicated corridor for buses – that would plug the gap for a decade or more, until the full line can be built.

The fate of southern Cherry Street, meanwhile, is up in the air: after Mr. Ford's brother tried to take control of the Port Lands away from Waterfront Toronto last fall, city staff were tasked with finding ways to speed development in the area. Their report, which has been delayed until the fall, could rewrite the current plans.

A solution of some kind will certainly be needed. George Brown College's waterfront campus is set to open this fall; several apartment and condominium complexes on Queens Quay East and in the West Don Lands will follow over the next few years. When all is said and done, there will be roughly 20,000 residential units in the area, plus 8,000 jobs and 3,500 students.

It all makes the suburban-centric bent of light rail discussions somewhat absurd, argues transit activist Steve Munro.

"The focus of all the transit debate has missed the largest development that's happening on our doorstep. I can see these buildings, but there's nothing going to them," he said. "Everyone seems to be looking the other way and they completely missed the waterfront."

The promise of new streetcar lines was also part of what enticed developers in the first place.

"Transit is extremely important to us and we feel it's also important to the proper development of the city," said David Gerofsky of Great Gulf, which is building the Monde Condominium complex at Queens Quay and Sherbourne Street. "Our residents are looking for sustainable development, they're looking for alternatives to the car and they're looking for connections to Union Station."

But they can't look to Metrolinx for those streetcars. The agency's job is to plan and fund regional transit, and it considers the project a local concern for the city and the TTC, spokesman Malon Edwards wrote in an e-mail.

So, for the time being, the eastern waterfront will have to make do with buses – and a few blocks of track on Cherry Street.