Parker Gallant Looks at Infrastructure Ontario
Infrastructure Ontario: Charitable Financing Ontario Style
Ontario Infrastructure Projects Corporation (Infrastructure Ontario or IO) is a Liberal creation established in 2005 designed to “provide financing for municipalities, universities and other public bodies in the Province of Ontario.”
IO's March 31, 2010 annual report shows accumulated debt of $3.5 billion and a deficit of $196 million. All of their debt is borrowed or guaranteed by the Province. In June 2011, IO merged with Ontario Realty Corporation, another crown corporation but retained their name and the March 31, 2011 consolidated statements magically made that $196 million negative net worth disappear. Note 13 of the audit report shows that IO had a debt restructuring and states “ During the year, Infrastructure Ontario was granted a remission of $200 million on the Province of Ontario loan,” (my emphasis). This loan was for $1 billion at an interest rate that averaged less then 1% and a maturity date of 2053. As of March 31, 2011 the balance sheet shows a small positive net worth and debt levels of $4.2 billion. An exchange with IO enquiring about the merger and staffing levels (191 on the “Sunshine List”) generated a response that said the merger “is generating $5 million in savings to the province this year as a result of its merger”. Forgiving $200 million of debt enabled them to generate $5 million in interest savings but the taxpayers are now on the hook for that debt and interest cost. The Minister of Finance in March 2011 announced he was scrapping a “a dozen redundant agencies” and the press reported this as follows: “The Liberals’ elimination of the 13 obsolete agencies — including melding the Stadium Corporation of Ontario, which managed the province’s interests in the SkyDome, into a previously announced hybrid of Infrastructure Ontario and the Ontario Realty Corporation — will save only $200,000 a year.”
Instead of saving $200,000 this merger cost taxpayers $200 million.
Infrastructure Ontario's Vision statement announces they want “To be recognized as world class in the modernization of public services” but how they go about this task should be a concern to the taxpayers of Ontario. One example is their financing of a 173,000 square foot courthouse in Belleville at a cost of $270 million or $1,500 per square foot. To put that in context Scotia Plaza with 2 million square feet is expected to sell for just over $1 billion or $500 per square foot. The Drummond Commission report had this recommendation in respect to the section on the Justice Ministry: “Recommendation 14-8: Have the justice sector continue to work with Infrastructure Ontario to use alternative financing and procurement to assist in replenishing its capital infrastructure.”
Mr. Drummond apparently feels that $1,500 dollars a square foot is serving justice and the taxpayers.
IO also have a GreenFIT program which connects vendors with the Municipal, academic, schools and hospitals (MASH) sector in an effort to contribute to the “greening” of that sector. One of those IO loans was made to Bancroft Light & Power Corporation (BLPC) owned by the Town of Bancroft. BLPC has just gone into receivership because they failed to qualify for the FIT program when they refurbished their 100 year old dam on the Madawaska River. They had expected to qualify for a FIT program that would pay them 13 cents per kWh but got caught up in bureaucratic red tape and found they would have to sell the power at wholesale rates which averaged only 3.15 cents for 2011 and would be insufficient to cover the costs of debt servicing. IO will need to write this loan off in the current year and it will be the Ontario taxpayers who will wind up with the bill.
IO are also committed to financing a 20 story expansion of the MaRS Discovery District a charitable institution which is heavily entrenched in “Cleantech” (renewable energy as seen through the eyes of the Ontario Ministry of Energy). MaRS is basically a glorified real estate company heavily subsidized by the province and has lost money since its creation in 2002. A review of the CRA filings indicates MaRS has received over $150 million of taxpayers dollars since they opened their doors. With this financing of $230 million for the new MaRS building IO seems to have stepped out of the MASH financing sphere and into the financing of charities.
Should the taxpayers next expect to see IO financing wind and solar projects for the likes of Greenpeace, Environmental Defence, Pembina, Tides Canada, OSEA or the David Suzuki Foundation, or will this reckless spending push the Province to Greek status and force the government to stop the madness?
April 8, 2012