The day the notice is given, any permits before that date are void. As of the day of the notice, Sections 33 and 34 of the Heritage Act apply (i.e. it's treated as if it's designated, and you can't alter or demolish without heritage approvals). There is a 30 day notice period. After the notice period if there are no objections Council can decide whether to move forward with the designation. If there are objections it goes to a Conservation Review Board hearing. After that hearing it goes back to Council for the final decision.
For 81 Wellesley the motion was:
"The Toronto and East York Community Council Directed the Acting Director, Policy and Research, to report back to the Toronto and East York Community Council on the possibility of designating the building at 81 Wellesley Street East under Part IV of the Ontario Heritage Act."
So staff were directed to look into this, but there was no formal motion by City Council with an intention to designate. After the motion for staff to look into this, the developer applied for an received a building permit through the normal process. Building staff are required to issue the permit if it complies with the Building Code and applicable law; there was no formal notice of intention to designate under the Heritage Act in this case that would prevent them from issuing a permit. By the time the Councillor heard about this the building was half down. They are supposed to be having a new internal process system where all demolition permits applications are circulated to the local councillors.