Earth to Ontario: Life on MaRS is Not Sustainable

Earth to Kathleen Wynne’s Liberals: it’s time to get off MaRS and come back home.

Over 14 years of costly exploration into this mysterious entity, the province has spent nearly half a billion dollars. It turns out there hasn’t been too much life spotted around high-priced, empty real estate.

On behalf of the taxpayers of Ontario, the premier needs to cut her losses over the unmitigated disaster that has been the MaRS Discovery District. Thursday’s news that the Liberal government will inject an $86 million “repayable line of credit” to the embattled public and privately funded charity can only spell more bad news for an Ontario public that’s sunk nearly half a billion dollars into the project.

The bill is the latest among several highly-publicized cheques MaRS already cashed: $309 million, which includes the controversial $224-million loan in 2011, $65 million to buy out the building’s U.S. developer, Alexandria Real Estate (ARE), $4 million in debt-service payments, and $16 million used to buy the land. As of August, Ontario has committed $470 million to MaRS.

Just a year ago the building was nearly empty, mainly because the average medical and science-related startup companies the charity was targeting can’t afford the rent prices. Thus, MaRS ended up targeted other publicly funded institutions, like university research departments, such as Ryerson’s and the University of Toronto’s. To that end, the building is just 31 percent occupied.

Wednesday Auditor General Bonnie Lysyk blasted Wynne’s Liberals for the use of private money to bankroll new hospitals and transit, targeting MaRS. If the public sector could better manage projects like MaRS, she said, taxpayer money could be saved—about $8 billion of it.

Specifically, Lysyk took exception that a rule change that the Liberals implemented four years ago. Then, MaRS’ U.S. developer partner on the project failed to fill the building. Ontario took advantage of the new rule, saving the charity with a $224-million loan to keep it afloat.

“The lack of transparency regarding the policy objectives and outcomes to be achieved from this loan create the perception that this transaction was a ‘bailout’ of a non-government organization,” she said.

And while Infrastructure Minister Brad Duguid or the Chair of the MaRS Board Gord Nixon struggle for answers amid non-stop criticism, the outcome remains the same. The government’s involvement in failed, risky and outrageous real-estate deals like MaRS have cost the people of Ontario immensely.

Those who started the project all those years ago certainly didn’t see it happening this way. No one envisioned that a massive centre of innovation would ultimately embody everything that’s wrong about irresponsible public spending.

Amid the dot-com bubble, the founders saw the need for innovative Canadian research to see the light of day. The infrastructure wasn’t there for so many bright ideas falling to the wayside.

Thus, MaRS was founded in Toronto in 2000 to commercialize publicly funded medical research and other technologies. Over 14 years Canadian talent and ideas have multiplied and evolved, as has Canada’s startup community.

On a macro level, the public fury directed at MaRS represents a failed real estate deal. On a micro one, the tight-knit Canadian startup community that MaRS so clearly targeted as an avenue to its commercialization success was always divided over just how much value it was adding. 

Over those 14 years that same startup community took lessons from Silicon Valley, the mecca of startups. PayPal, Facebook, Twitter and DropBox didn’t happen in government-sponsored office space. They happened in dorm rooms, parents’ basements and otherwise in the presence of mentors who had previously sold companies.

In Ontario, innovation was spurred in places like Waterloo. There, ex-BlackBerry employees and graduates of the University of Waterloo kept pumping more money into the school’s engineering, mathematics, nanotechnology and quantum computing programs. Student-led startups continue to grow from experienced mentorship at the school’s incubator, VeloCity, while the broader community has seen Google and Square move into office space.

Back on the eastbound lane, the results achieved by MaRS’ resident accelerator Jolt, to put it mildly, have been heavily questioned. As a whole, MaRS said it created over $3 billion in economic activity in Canada, a claim the charity couldn’t back up when pressed.

Over the past years, mistruths have surfaced. What was supposed to be over 2,000 events happening at MaRS every year was inevitably clarified as “’stakeholder meetings, conferences and workshops’ that it hosts as events, along with events put on by its tenants, government and private partners, and community organizations.”

Amid all the noise, the best technology programs in Canada hired ex-Twitter employees, serial entrepreneurs who had lived and breathed success in Silicon Valley, and people who put their own money into the investments they made into startups. They certainly didn’t pay someone over half a million dollars, such as MaRS’ CEO earns on a yearly basis. That’s just a bit higher than the $450,000 that Ontario taxpayers pay every month in interest payments for the office tower that no one wants to work in.

Ask the founders of Y Combinator, Google and Facebook about all the funding the government of California gave them. They won’t understand the question. It doesn’t exist.

Failure is celebrated in the startup world because it represents advancement. When founders aren’t seeing the success they envisioned for their idea, they “pivot,” or accept their losses. It’s time for Ontario taxpayers to band together and tell Premier Wynne that she needs to do the same.

Cut your losses, Ontario, and come back down to earth. Encourage transparent, authentic success in technology and research ventures.

Get out of the MaRS deal—now.