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MaRS risks losing millions of dollars in tax breaks

The Ontario Progressive Conservative party has accused the Liberal government of secretly approving a $317-million bailout of the MaRS research centre at the corner of College Street and University Avenue in Toronto.

Galit Rodan/The Globe and Mail

MaRS will lose $17-million worth of future grants if it cannot fill 98 per cent of its troubled tower project with biomedical and scientific organizations.

In a 2011 deal with the city of Toronto, obtained by the provincial NDP and released Tuesday, the city agreed to give Medical and Related Sciences a rebate on property taxes over a decade – but only if the research incubator agreed to ensure nearly all of its new office tower on University Avenue was filled with "biomedical and scientific research and development" tenants.

A subsequent evaluation estimates the value of the deal at $17-million.

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Tim Jackson, a MaRS executive vice-president, said the organization believes it can secure such tenants.

"MaRS remains confident that we will fill the building with mission-related tenants who will make the building eligible for [the grant]. We will apply for the grant at that time," he wrote in an e-mail.

Mike Williams, general manager of economic development and culture for the city, said MaRS will not receive any money from the program until it has found tenants and undergoes a property value assessment. The grant is part of the city's Imagination, Manufacturing, Innovation and Technology program, which offers grants to cover a percentage of property taxes for development projects in some sectors, including biomedical.

The province stepped in this year to bail out the office tower after MaRS failed to attract enough tenants, leaving most of the building empty. MaRS has blamed the problem on its former private sector development partner, Alexandria Real Estate, which wanted to charge rents above market value. The government has bought out Alexandria's stake in the project.

The government is currently on the hook for $308-million in the MaRS deal, but may get some of that money back if MaRS can find tenants. However, provincial documents appear to count the $17-million as part of the value of the building.

This means that, if MaRS cannot get the grant, either the organization or taxpayers will have to plug the gap, said NDP Leader Andrea Horwath.

"It's ridiculous," she said. "It's another $17-million hole … that's a lot of money. But when it comes to MaRS, the Liberals don't really care how much money is thrown at this project."

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Added Progressive Conservative MPP Randy Hillier: "There is no market for that life sciences space … it is the field of dreams all over again, but it's a nightmare."

But Infrastructure Minister Brad Duguid said he was optimistic MaRS could find scientific tenants to move into the tower.

"From what I've seen to date, there does seem to be a good amount of interest from the innovation sector in this space," he said.

He said he has not yet decided what will happen with MaRS. One option is for the organization to find tenants and pay the government back. Another is for the government to seize the building and sell it. A third is for the government to move its own civil servants into the building and, in effect, pay rent to itself while allowing MaRS to keep ownership of the tower.

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