The actions of the Ontario government have many people perplexed, with many left wondering whether the decision to reinvest in certain ventures may be coming at an inopportune time. On September 23, the provincial government agreed to reinvest, in the hundreds of millions of dollars, into two large-scale Toronto projects, that all economic indicators suggest are hemorrhaging money. These bailouts are being implemented despite projecting a $12.5-billion dollar deficit for 2014-2015, at a time when some argue, the government should be more concerned with selling off assets to raise funds. Conservative MPP Vic Fedeli, is one of many MPs voicing concerns over what he labelled “dump day,” referring to the fact that a number of large bailout plans were approved in a single day, an attempt the Liberals made to “get bad news out the door,” according to Robert Benzie of The Toronto Star.
The first was the announcement that taxpayers would be left flipping the bill for an additional $74-million to be invested in next year’s PanAm Games, a project that is estimated to cost approximately $2.5-billion, 16 times what it cost to build the infrastructure needed for Winnipeg to host the games back in 1999 (read more). According to Richard J. Brennan of The Toronto Star, the bulk of $2.5-billion is being allocated towards the construction of the athletes’ village (which will house 7,666 athletes competing in 51 sports at venues in 16 municipalities), and does not include transportation and security costs, with security alone being estimated to cost upwards of $229-million. The Globe and Mail reported that the government;s additional contribution would be spent on services such as back-up ambulances, more television coverage and additional participants in the torch relay.
Second, the province also approved a $309-million to bail out the MaRS (Medical and Related Sciences) research incubator, a complex located at the corner of the southeast corner of College Street and University Avenue. Benzie notes that the $309-million figure, when broken down, is actually quite deceiving, considering the figure includes a $224-million loan that was issued to the project back in 2011, $3.61 million in debt-service payments, and $16.2 million used to initially purchase the land. Martin Regg Cohn of The Toronto Star, stated that the incubator has given birth to a “white elephant,” a real estate term that Merriam-Webster defines in two ways: a property requiring much care and expense and yielding little profit, and an object no longer of value to its owner but of value to others.
Adrian Torrow of the Globe and Mail, goes into some detail about the obstacles the MaRS complex (particularly Phase II) encountered since its development. The second tower hovers at approximately one-third occupancy, with many potential startups and businesses complaining of high rental costs for office space, effectively scaring away the business it was intended to attract. Alexandria Real Estate, the building’s developer, is being held accountable for rental costs, prompting the government to agree to pay $65-million to buy the firm out of the initial deal, which will allow MaRS to both lower rents and compel other types of organizations to use their space, such as civil servants. After the announcement was made that the government would buy out, Fadell was quoted as saying, “that’s the only ante into this gain,” implying that the government’s only course of action is to double, and invest further in order to see the project to completion, and hopefully generate a return.