Ontario's Liberal government is planning to extend a further $86-million in financial support to the struggling MaRS tower after a pair of experts recommended the province go ahead with its plan to buy out a U.S. developer's stake in the project.
The newly announced line of credit for the non-profit innovation hub brings the province's total contribution to $395-million.
MaRS is promising to pay back all but $16-million of the total once it brings more tenants to the nearly vacant showpiece tower across from Queen's Park.
Attracting tenants has been at the heart of MaRS's troubles.
MaRS officials and the Liberal government have been saying for months that the organization's hands were tied by a U.S. developer that retained a veto over lease rates in the 20-storey building.
They said buying out the developer's interest would give MaRS the freedom to reduce the rates and make deals with tenants that have already signed letters of intent to lease space in the building, including the University Health Network, the University of Toronto, Ryerson University and Synaptive Medical, a company that develops neurosurgical technologies.
Brad Duguid, the Minister of Economic Development, Employment and Infrastructure, announced in September that the province had reached a conditional agreement to buy the developer's stake and leave MaRS as owner of the building.
At the time, Mr. Duguid said an expert panel made up of Michael Nobrega, the former chief executive officer of the Ontario Municipal Employees Retirement System, and Carol Stephenson, the retired dean of the Richard Ivey School of Business, would report on what should be done with the building.
In their report released on Wednesday, Mr. Nobrega and Ms. Stephenson basically backed the government's existing plan – but asked that MaRS be lent even more money to pull it off.
They recommended the government establish a new line of credit for MaRS that would cover $21-million of a loan already extended by the government through Infrastructure Ontario; $15-million in operating costs until the building is leased up; and $55-million to help with the costs of outfitting the space for tenants.
That is on top of $224-million Infrastructure Ontario has already lent to MaRS and the $65-million cost of buying out the private developer.
The province is also planning to oversee the project by appointing an "expert supervisor" to approve all facets of leasing the building and appointing a representative to the MaRS board.
"We're very assured now that this is the right course from a fiscal perspective, the right course from a security of our loan perspective and the right course for building a strong economy and creating jobs," Mr. Duguid told a news conference after the report's release.
Opposition politicians were quick to disparage any suggestion of lending more money to MaRS.
"It's been good money after bad since day one," said Randy Hillier, the Progressive Conservative critic for research and innovation.
"Now we have an expert panel that says it's a good thing to throw good money after bad."
The report of the expert panel comes one day after Ontario's Auditor-General concluded that the original loan to MaRS was risky and that the government's actions could be perceived as a "bailout" of the not-for-profit organization.
Originally known as Medical and Related Sciences, MaRS was founded in 2000 by a group of high-profile scientists and entrepreneurs in a bid to commercialize discoveries made at the city's universities and hospitals.
With the first phase of the building full, MaRS in 2007 sought a private developer to build a second phase next door.
The winning developer, Alexandria Real Estate Equities Inc., stopped work on the project in 2008, blaming the recession.
MaRS turned to the provincial government for assistance in restarting it.