Ontario taxpayers hit with $450,000 mortgage...
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Oct 09, 2014  |  Vote 0    0

Ontario taxpayers hit with $450,000 mortgage payments for MaRS

Ontario taxpayers are paying nearly half a million dollars a month to cover loan payments on MaRS Discovery District’s tower, newly released documents reveal

OurWindsor.Ca

Ontario taxpayers are paying nearly half a million dollars a month to cover loan payments on MaRS Discovery District’s new — but virtually empty — 20-storey tower, newly released documents reveal.

Since February, taxpayers have been covering about $450,000 a month in interest payments on a $224-million government loan that MaRS has been unable to make because the organization couldn’t find tenants for its new “Phase 2” tower, according to heavily censored government records obtained by the Toronto Star.

The Liberals say the interest payment tally to date is $3.61 million, but that could reach as high as $7.1 million by the end of the year, making the monthly payments much higher.

While the documents show how much money taxpayers are paying to keep the nearly empty building open, the government is keeping the interest rate on the loan secret, leaving Ontarians to wonder if they got a bad deal.

“Talk about a colossal screw-up,” said MPP Percy Hatfield, the NDP’s infrastructure critic, adding that the government’s financial commitment to the second phase of MaRS is “skyrocketing into the stratosphere.”

“Seriously, $450,000 a month is being flushed down the toilet, a total waste of public money. It’s just another Liberal (spending) scandal or déjà vu all over again. You go back to eHealth, ORNGE air ambulance, the gas plants and now this.”

The Ontario government announced last month that it was planning to purchase the troubled tower for $309 million.

Infrastructure Minister Brad Duguid defended the government’s decision to make the purchase, saying the deal is a good one. “I have heard absolutely no disagreement that that is not a wise decision to make on behalf of taxpayers,” he said.

In August 2011, Infrastructure Ontario, a provincial Crown corporation, loaned MaRS $224 million to finance the construction of a new state-of-the-art medical and research tower at the southeast corner of University Ave. and College St.

Contained in the newly released documents is a heavily censored copy of the original terms of the government’s “debt service guarantee.” The guarantee shows that the Ministry of Research and Innovation agreed to make the interest payments on the loan — up to $7.1 million per year — if MaRS defaulted.

The records show that on Jan. 31, 2014, MaRS wrote to Infrastructure Ontario to report that it would be unable to make its monthly debt payment.

As a result, the Ministry of Research and Innovation began covering the payments, which average about $450,000 per month. All references to the interest rate on the loan were blacked out by the government before the documents were released to the Star.

Late last month, the provincial government announced that it had entered into a conditional agreement with Infrastructure Ontario and the tower’s American developer, Alexandria Real Estate, to purchase the building for $309 million. The move would effectively erase the original $224-million loan and pay off Alexandria’s $65 million interest in the property.

But until that deal is finalized, the province will continue to be stuck with the interest payments, Duguid acknowledged Wednesday.

“It is an ongoing tab that runs month to month at this point in time that we are very conscious of,” Duguid said.

He stressed the money the government loaned MaRS and paid to Alexandria “is equal to or less than the actual value of the building.”

“So anybody that suggests that taxpayers are at a disadvantage at this point in time is whistling Dixie,” said Duguid shortly after appearing before a legislative committee.

The committee is probing, among other things, the nagging questions left in the wake of the secretive plan to bail out MaRS that was first exposed during the recent provincial election.

The Star reported in May that the government’s proposal to purchase the Phase 2 tower could cost as much as $477 million over the next three years when renovations, operating shortfalls and other costs are taken into account. Originally built with the goal of housing private science and technology companies, the state-of-the-art tower has stood nearly empty since its completion earlier this year.

Duguid said the government will decide whether to sell the building, rent it out, or fill it with bureaucrats after hearing from a panel of real estate experts.

“We will make a decision as to how we will move forward that is in the public interest from a taxpayer perspective and is in the interest of ensuring that we continue to create jobs and build a strong bio-science cluster here in Toronto,” he said.

Toronto Star

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