TORONTO – Ontario’s Liberal government announced Wednesday that it would provide an $86-million line of credit to the MaRS office project in downtown Toronto to help attract tenants and protect the province’s original investment.
The government was already on the hook for a $225 million loan to MaRS for the second office tower at the site designed for medical and research labs, plus another $65 million to buy out an American real estate company’s interest in the project.
The line of credit recommended by an expert panel set up by the Liberals would bring the province’s total investment in the MaRS expansion to $395 million.
“This is a good business decision that ensures that we protect the public investment that’s been made in a loan that will be repaid with interest,” said Infrastructure Minister Brad Duguid.
“This is the best and fastest way to make sure that gets done, while at the same time continuing to invest in our innovation sector, creating jobs and economic opportunities here at MaRS.”
A big part of the problem in attracting tenants to the MaRS Phase 2 tower, which is only about 30 per cent full, was high rents demanded by the U.S. real estate company that is no longer involved in the project.
There are many would-be tenants who have signed letters of intent to locate in MaRS, including the University of Toronto, which wants four floors in the building, said MaRS board chair Gord Nixon.
“If the building is leased up the cash comes in. If the cash comes in the loan gets paid down and the province gets repaid,” said Nixon. “So the key is really leasing.”
The opposition parties complained that many of the would-be tenants for MaRS appeared to be public-sector agencies funded by Ontario taxpayers and not from the private sector, but Duguid dismissed that argument.
“How do you have an innovation hub without scientists, and scientists are often part of organizations that are in some way connected to government, either through funding or maybe even through (provincial) agencies,” he said.
“If you want to grow a healthy innovation hub, you need to have partnerships and that means government and private sector and the non-profit sector as well.”
The Progressive Conservatives said Duguid should think twice about providing the line of credit for MaRS because there is no guarantee the money will be repaid.
“It’s been good money after bad since Day 1, and now we have an expert panel that says it’s a good thing to throw more good money after bad,” said PC critic Randy Hillier. “The taxpayers are at even greater risk today and these people are in their field of dreams.”
The New Democrats wanted to know why the government is putting more money into MaRS when it still hasn’t provided a business case for the original $225-million loan to the charity that operates the complex across the street from the legislature.
“There was no effective business plan presented to the people of this province, and you have the minister going to some lengths to justify investing additional money in MaRS,” said NDP finance critic Catherine Fife. “It’s almost like in for a penny, in for a pound.”
But Duguid said the line of credit will protect the public money that’s already been invested in MaRS and help the stalled project get back on track.
“We’re very assured now that this is the right course from a fiscal perspective, the right course from a security of our loan perspective, and the right course for building a strong economy and creating jobs,” he said.
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