A man walks across a second-floor bridge in the MaRS building in Toronto.Matthew Sherwood/The Globe and Mail
Officials at the MaRS innovation centre gave the province just four days' formal notice that they would not be able to make the interest payments on their government loan, sparking a last-minute scramble to reverse an electronic payment from MaRS and have a separate government department wire the money instead.
The details of what happened at the beginning of February when MaRS could no longer meet its loan obligations are contained in heavily redacted documents obtained by The Globe and Mail under freedom of information laws.
In an e-mail sent Feb. 3 – the day MaRS was scheduled to make an interest payment of $452,593.71 – an official at Infrastructure Ontario, the government agency that made the loan, sent an e-mail to six colleagues explaining the "next steps" after MaRS sent a letter Jan. 31 saying it couldn't make the Feb. 3 payment.
"IO [Infrastructure Ontario] could not reverse the programmed MaRS Feb 3rd payment (not enough notice) and electronically debit[ed] the MaRS account today for the monthly $452,593.71 interest only payment," Steve Rohacek, the senior vice-president of municipal business development and lending at Infrastructure Ontario, wrote. "To accommodate the MaRS DSG [Debt Service Guarantee] request, IO and MRI [Ministry of Research and Innovation] will need to waive their respective DSG notice periods. IO/MRI legal to discuss tomorrow."
MaRS was supposed to provide "no less than 30 business days' notice in writing," if it couldn't make the payments, according to an outline of a debt-service guarantee that the Ministry of Research and Innovation provided to backstop a $224-million loan to MaRS for the construction of a 20-storey research tower that is sitting mostly vacant across from Queen's Park.
Tim Jackson, MaRS's executive vice-president for corporate and community relations, said by e-mail Thursday that despite the tardy formal letter, "all parties had lots of notice," that MaRS would not be able to make the February payment.
A spokesman for Brad Duguid, Ontario's Minister of Economic Development, Employment and Infrastructure, echoed that.
MaRS says it has had difficulty attracting tenants to its showpiece laboratory and office building because an American developer involved in the project insisted on high lease rates. The provincial Liberal government is set to buy out the developer's stake for $65-million. Its total financial support to the project could reach as high as $395-million, all but $16-million of which MaRS has promised to pay back once tenants move in.
Kelly Grant