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Economic Development and Infrastructure Minister Brad Duguid at the World Energy Council in Montreal on September 16, 2010. Duguid says he expects there will be significant competition for the LCBO head office, which will be up for sale.John Morstad/The Globe and Mail

The Ontario government quietly changed the rules of a public loan program expressly to give money to MaRS, underlining the effort the province made to use tax dollars to help the research incubator salvage a failing real estate deal.

In 2011, the province gave MaRS a $224-million loan, with a monthly interest rate of between 2.44 and 2.57 per cent, to save a plan to build a new office tower at University Avenue and College Street in Toronto. But MaRS did not actually qualify for the loan from Crown corporation Infrastructure Ontario. So the Liberals rewrote the rules.

"The MaRS project … was a unique situation, and the government made decisions to ensure that [the office tower project] did not collapse," Economic Development and Infrastructure Minister Brad Duguid said on Wednesday. "And part of that was making a decision as to whether we would ensure that MaRS was eligible for that infrastructure program."

Mr. Duguid said the government stepped in because MaRS could not get financing from the private sector. Private lenders, he said, wanted the project to have most of its tenants signed up before they would support it. The tower is still only about one-third full.

"It was a proposition that was very challenged," he admitted to reporters after a legislative committee hearing during which he discussed the government's rule change.

Even with the loan, MaRS's project fell apart, because the organization could not find enough tenants. The government bailed it out again this year. Mr. Duguid is considering moving bureaucrats into the building and paying MaRS taxpayer-funded rents to help it repay the loan.

In committee hearings this week, the Liberals have blocked the release of documents related to the MaRS loan and bailout. Among other things, the Grits refuse to release the business calculations Infrastructure Ontario did when evaluating MaRS's loan request. Mr. Duguid has said such calculations may not even exist.

NDP MPP Percy Hatfield accused the government of secrecy.

"If you are doing this sort of thing, you should be upfront, fully accountable, fully transparent," he said. "Tell the taxpayers: this is how we're spending your money, this is why we're spending your money in this fashion, and this is what we hope to achieve by it."

Progressive Conservative MPP Ted Arnott said the Liberals had clearly hidden some aspects of the bailout before the provincial election.

Editor's note: Monthly interest rates on the province's $244-million MaRS loan are between 2.44 and 2.57 per cent. An earlier version of this story incorrectly gave an interest rate of 4.44 per cent.