The chairman of the board of MaRS, the Toronto business incubator whose struggling second phase is being lumped in with past Liberal spending scandals, says it is "ridiculous" to liken the troubled project to the cancelled gas plants.
Gordon Nixon, one of the country's best-known business leaders and the former chief executive officer of Royal Bank of Canada, says MaRS will pay back every cent of the public money it borrowed to erect a 20-storey tower that sits nearly empty across from Queen's Park, costing taxpayers $450,000 in interest payments every month.
"A lot of people think that somehow the province of Ontario is going to write a big cheque here," he said. "It's not a cheque, it's debt … it is, ultimately, a loan."
Mr. Nixon has stepped forward to defend MaRS, which the charitable organization itself has done only tepidly since news of Phase 2's financial woes leaked during the election campaign last spring.
"To compare it to the gas plants, I think is absolutely ridiculous," he said of the Liberal decision to cancel two gas-fired power plants at a cost of $1-billion.
Mr. Nixon's defence, delivered in an hour-long interview in his office on the 29th-floor of Royal Bank Plaza, is full-throated: The first phase of MaRS, he said, is a smashing, if poorly understood, success, and the second phase will be too. Tenants are ready to sign leases once the province and MaRS finalize a deal to buy out the U.S. developer who set high rents that scared off the companies and research organizations the building is intended to serve, he added.
"I'm the first to admit if there wasn't a problem, we wouldn't be here, right?" Mr. Nixon said. "Having said that, the loan was done to facilitate the building of an incredible building at an incredibly important location associated with an incredibly important institute and mission for the province."
The Opposition would take issue with that.
The Progressive Conservatives and the NDP have flayed the Liberals for, among other things, giving MaRS Phase 2 a $224-million loan from Infrastructure Ontario (IO) in 2011, and refusing to turn over documents detailing the business case supporting it.
The IO loan – which required a regulation change that the Liberals kept quiet until this month – revived a project that the U.S. developer, Alexandria Real Estate Equities, Inc., essentially abandoned because of the recession in 2008-09 with only the basement dug and first floor built.
The province announced last month that it has agreed to buy Alexandria's stake for $65-million, which, along with the price of the land and debt servicing costs, brings its outlay to $308.8-million – all of which Mr. Nixon said will be repaid. In the worst-case scenario, MaRS would sell the building to make good on the loan, he added.
The troubles at Phase 2 have raised questions about whether MaRS has exaggerated its success in helping to create and grow companies.
Mr. Nixon said the board recently ordered an internal audit of the boasts on the MaRS website and elsewhere and is satisfied they are accurate.
"I know there's been some skepticism. Does MaRS create the value it says it does? We've looked at that rigorously as a board, and it's incredible what does happen within the confines of the MaRS infrastructure," he said.
Asked to name one "big, successful" company birthed by MaRS, Mr. Nixon paused. "There are a lot of companies that have been incubated by MaRS," he said. "Now, 'big, successful,' is a tough one. How many big successful companies have been incubated by Canada in the last 25 years? …The problem is, people want to say, 'Why has the next [Blackberry] not come out of MaRS?' We've had one in the last 30 years in this country."
He also defended the organization's long-time CEO, Ilse Treurnicht, whose salary of more than than $528,000 has drawn criticism.
"Yes, she is well-paid," he said. "But again, look at Ilse as well. Here you've got a Rhodes Scholar, a PhD in chemistry who has built her own company, her own fund and was recruited into MaRS to basically take what was a nascent entity with nothing there and build it into what MaRS is today ... When you go through a challenge, it doesn't necessarily mean that that falls on the shoulders of one person."