Pride Toronto did not violate anti-discrimination policy when it allowed Queers Against Israeli Apartheid to participate in its parade last year, according to a report released Wednesday.

“The phrase ‘Israeli apartheid’ … does not violate the city's anti-discrimination policy as it does not impede the provision of services and employment,” City manager Joe Pennachetti wrote.

“There is no legal precedent that the phrase constitutes a hate crime under the Canadian Criminal Code. For (it) to contravene the Ontario Human Rights Code, it would have to be judged by the Human Rights Tribunal of Ontario.”

One Toronto councillor came out against the judgment.

"I am shocked and dismayed by the findings in this report," Coun. James Pasternak said in a written statement. "QuAIA is advancing a preposterous analogy of the Israeli-Palestinian question. (The group) should never be allowed to participate in a civic funded event."

The controversy erupted last year amid festival organizers’ decision to ban and then reinstate QuAIA from its weekend event, and after complaints from Jewish advocacy groups, Coun. Kyle Rae and others.

Organizations that breach the city’s anti-discrimination policy are not eligible for funding, and Pride received $123,800 last year.

Council could still decide to withdraw funding, but Pennachetti said members should consider the parade itself, not the involvement of a single group.

This year, independent officers will decide whether or not to allow QuAIA to participate and will handle any disputes that arise.