MaRS facility
Taxpayers on the hook for another $86 million,
Ontario taxpayers are picking up another $86 million for the new MaRS tower in downtown Toronto as costs associated with the troubled building continue to balloon.
The additional money is covering the cost of a state-of-the-art infectious disease laboratory and is separate from the provincial government’s proposed bailout of the MaRS innovation hub that would cost taxpayers as much as half a billion dollars.
The lab, operated by Public Health Ontario and set to open this fall, will occupy the top four floors of the brand new 20-storey MaRS “phase 2” tower and is classified as a “containment level 3” facility, meaning it handles airborne, life-threatening human pathogens and requires strict controls to prevent the release of infectious organisms.
Public Health Ontario is one of only two tenants to have signed a lease in the new building with MaRS, a registered charity that aims to foster innovation and research. The other confirmed tenant is the Ontario Institute of Cancer Research. Both tenants receive provincial funding.
Construction of the new public health labs was originally budgeted at $54 million, but that increases to $86 million when other costs — such as laboratory equipment, permits, architectural and engineering fees — are factored in, according to Infrastructure Ontario.
Bill Moore, a spokesman for Infrastructure Ontario, said the cost of the new lab is being funded by the Ministry of Health and Long-Term Care and that the $86-million budget had been approved. When asked where the additional $32 million was budgeted, he did not say.
Progressive Conservative candidate Vic Fideli, his party’s finance critic before the provincial election campaign, said the increasing costs associated with the new MaRS tower were reminiscent of those associated with the relocation of the gas plants in Mississauga and Oakville.
“I’m shocked at the amount of money that’s starting to add up here, but I’m not surprised,” he said.
The additional costs for the new lab are not included in figures contained in confidential cabinet documents that reveal the provincial government was nearing a deal to purchase the virtually empty building at the corner of College St. and University Ave. from MaRS and a U.S. developer.
The documents showed that the proposed deal came about when MaRS became at risk of defaulting on a $234-million provincial loan made in 2011to finance the construction of the building. Rental income was supposed to cover MaRS’ loan payments, but 70 per cent of the building remains vacant.
A Star analysis of the documents found that taxpayers would be on the hook for $477 million, which includes the $317-million price tag of the building and land, $106 million in renovations and $54 million in oper- ating shortfalls. The Star also found that the tower will operate at a loss of $36 million over the next decade. Ontario’s auditor general, Bonnie Lysyk, revealed last week that a probe of Infrastructure Ontario’s loan program includes a look at the loan made to MaRS. The documents propose that after purchasing the building, the government explore the idea of filling 10 floors with public servants, bringing the province’s occupancy to just over 50 per cent. However, when lab space occupied by Public Health Ontario, a Crown corporation, is factored in, the amount of space that would be occupied by government rises to 72 per cent. It’s a far cry from what proponents of the tower envisioned just three years ago. A government insider involved in the decision to loan MaRS the $234 million back in 2011told the Star that the original plan was to fill the building with high-quality private sector companies. In fact, the source said, several high-profile pharmaceutical companies were slated to become anchor tenants in the new tower. But the plans to move in fell through due to the “unpredictable” nature of the pharma industry. Public Health Ontario spokesman Michael Gibbs said the new MaRS tower research space will replace the agency’s aging labs on Resources Rd. in Etobicoke, where they have been since 1964. He noted the relocation plan has been in the works for more than five years. “The new location will also strengthen PHO’s links to academic, health-care and research partners, fostering more collaborative research, practice and knowledge exchange with the health research community,” Gibbs said. That may be so, said a real estate broker whose firm was involved in trying to lease space in the building, but when potential clients learn about the infectious disease research happening on the top floors, many aren’t keen on moving in. “I suspect you’re going to have a tough time getting a large, private sector client in there,” said the broker, who spoke to the Star on the condition of anonymity.