The Liberals government was aware of the risks of loaning millions to MaRS to build an office tower, Infrastructure Minister Brad Duguid says.
“There was always an element of risk to this project,” Duguid said Thursday at a cabinet retreat in Scarborough.
That risk was realized in January when MaRS told the province it could not longer make payments on the $224 million loan, leaving taxpayers holding the bag to the tune of $450,000 a month in interest payments.
“The key here is that risk was underwritten by the value of the building,” Duguid said.
The 20-storey office tower in the shadow of Queen’s Park is mostly empty with just over 30 per cent of the space leased.
On top of the outstanding loan to MaRS the government last month bought out the U.S.-based developer, Alexandria Real Estate, for $65 million bringing the total bailout to $309 million.
Duguid complained part of the reason the building is crying for tenants is the fact the company had imposed exorbitant rents in order to recoup losses in properties elsewhere.
Finance Minister Charles Sousa said he’s not letting MaRS off the hook for reneging on the loan.
“I am recovering it. All of it . . . I am getting it all back. that’s the purpose here,” Sousa told reporters.
Treasury Board President Deb Matthews said meanwhile the province is trying to get out of the real estate business.
“It is true we are getting out of the real estate business but MaRS is a hub of (scientific) innovation and now that we have removed that American real estate company from the mix we can move forward . . . as to what happens to that building,” she told reporters.
Matthews claimed the developer would have rather seen the building empty rather than lease it because of the costs associated with having tenants.
“They were a hindrance to filling it up,” she said.