MaRS scandal shows Ontario Liberals haven’t learned a thing

Contrary to what Premier Kathleen Wynne has been telling us, her government’s potential bailout of the MaRS II Tower — with over $400 million dollars of public money at stake — is no simple real estate deal. In fact, it’s totally unnecessary.

On the MaRS II deal, the intention of the Wynne government was to use public money to make a scandalous transaction go away — to keep it out of the public eye and protect the Liberal brand in an election year. Sound familiar?

We all know the McGuinty government left taxpayers on the hook for as much as $1.1 billion to cancel two politically-unpopular gas plants. Less well known is the fact that Dalton McGuinty spent about $210 million dollars on the plant closures unnecessarily.

According to an Ontario auditor general’s report, the McGuinty government was on several occasions given the option by its own advisers to protect taxpayer dollars by: defending itself publicly and vigorously in court against a hedge fund lender, and; terminating the contract of a defaulting gas plant developer and fighting the developer in court.

In both cases, the McGuinty government instructed its outside counsel, Rob Prichard, to pay off these complainants and make these problems go away quietly.

Similarly, with the MaRS II Tower debacle (according to government documents, now publicly released), the Wynne government was faced with the option of saving $234 million dollars by foreclosing on the very expensive MaRS II Tower — 70 per cent empty and located on some of the costliest land in Canada, the College/University Avenue area in downtown Toronto.

MaRS, a private federally-incorporated charity, has to date received from the McGuinty/Wynne governments $162 million for program funding and $71 million in capital funding grants.

The Wynne government views MaRS as a key delivery partner for a range of innovation programs. The $71 million was to help MaRS develop Phase 1 and purchase lands for the MaRS II office building.

As in the gas plants scandal, the Wynne government chose to protect its own interests, its brand, its reputation and the reputation of its flawed MaRS program at taxpayers’ expense.

It has been reported that development of the MaRS II Tower was put on hold in 2008, due to the project’s inability to obtain committed tenants and traditional bank financing. Although the commercial leasing and banking markets signalled that a second tower at this location would not be commercially feasible, MaRS and the Wynne government went ahead with the construction of MaRS II, using a $234 million construction loan from Infrastructure Ontario in 2011.

Normally, the Ministry of Infrastructure and Infrastructure Ontario make low interest loans to municipalities for infrastructure projects. This $234 million loan to a private entity for the construction of a downtown office building seems very suspicious; it’s now under investigation by Ontario’s auditor general.

Due to the failure to attract tenants, the $234 million loan to MaRS and its partner, a private American group involved with the construction and leasing of this MaRS II Tower, is in default.

One of the options presented to the Wynne government was for Infrastructure Ontario to foreclose on its loan and take over ownership of the property. That would allow the government to sell the building and recover the taxpayers’ investment.

But, as in the gas plants scandal, the Wynne government chose to protect its own interests, its brand, its reputation and the reputation of its flawed MaRS program at taxpayers’ expense.

Until the election was called, the Wynne government was proceeding quietly and secretly to pay the unnecessary sum of $70 million to MaRS’ American partner for its equity interests, which the Wynne government had the legal right to foreclose on without payment. Another $100 million in public money would be required to fix up the building for new tenants and carry its operating losses for the next several years.

When confronted by this very embarrassing secret deal, Wynne tried to pass off the deal as a means to consolidate Ontario government office space downtown.

In the recent leaders’ debate, Wynne publicly apologized for the gas plant scandal. She said that the public good had been sacrificed for partisan Liberal purposes and she vowed it would not happen again.

Well, that vow didn’t last very long.