Canadian Manufacturing

Opposition grills Ontario Liberals on MaRS tower bill

The province gave a $224 million loan to help get a second tower built at the MaRS medical research centre



TORONTO—Ontario’s opposition parties expressed frustration after they couldn’t get Infrastructure Minister Brad Duguid to say how much it could cost taxpayers to have the government “bail out” a real estate project in downtown Toronto.

The province gave a $224 million loan to help get a second tower built at the MaRS medical research centre across the street from the legislature, and paid $65 million to buy out an American real estate company involved in the project.

Duguid spent two days being grilled by a legislative committee about phase two of MaRS, which he insisted was a good deal for taxpayers.

“I am relieved by the fact that our investments to date are equal to or less than the value of the building,” he said. “It was and continues to be a good investment on the part of the public.”

The Progressive Conservatives said the public deserves to know high big the final bill for MaRS phase two could be, noting the government is responsible for a $45.7-million operating shortfall, $106 million in fit-up costs to move in tenants, $16 million for the land purchase plus other unknown costs.

“What are we on the hook for in this,” asked PC critic Randy Hillier.

He accused the minister of touting openness and transparency while hiding facts.

The New Democrats also complained that Duguid was not being forthcoming with the public about the true costs of the MaRS office tower.

“We don’t know what we’re dealing with because he won’t say how much money Treasury Board has given him,” said NDP critic Percy Hatfield. “Right now it’s a blank cheque, so we don’t know if it’s going to double or triple or whatever.”

When pressed repeatedly about the potential size of the final bill for MaRS, Duguid insisted the province didn’t plan to spend any more money on the project than it has already disclosed.

“We have no further consideration being given to making further investments in this beyond what we’ve already done,” he said.

“The question for us isn’t what more investments to make. The question for us is what to do with the investments that we currently have and the challenges that MaRS faces.”

The government loaned the MaRS developer the money because it wanted to further develop the bio-science research cluster it helped create with the first phase, and is also paying interest of up to $7.1 million a year on the loan until an agreement on the future of the new tower is finalized, added Duguid.

“Anybody that suggests that taxpayers are at a disadvantage at this point in time is whistling Dixie right now,” he said.

An expert panel is looking at MaRS and will recommend whether or not the government should fill up part of the nearly empty office tower with civil servants instead of the medical researchers for which it was designed.

Construction of MaRS phase two was halted in 2008, when the recession hit, and resumed in 2011, but the building has had trouble attracting tenants since being completed, in part because U.S.-based Alexandria Real Estate was demanding rents the government considered too high for the marketplace.

Buying out ARE’s share of MaRS gives the province the authority to manage and operate the facility and the flexibility to set rents at a more attractive rate, said Duguid.

“They had the ability to determine what the lease rates would be,” he said. The reason why we moved forward to buy out _ it’s not a bail out in any way _ARE’s interest is so the province has some options with regard to how we move forward to address the challenges we face.“

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