Tunnel Mystery Revealed

I wrote the other day “There are too many strange Tunnel stories coming out in the media all of a sudden. There is something happening behind the scenes. It will come out soon I am sure.”

It did. The Today’s Trucking article on "a group of United States Congressmen and Senators seeking clarification on Homeland Security's apparent plans to expand commercial traffic processing at the Detroit Windsor Tunnel" and my reader who asked a question about the Tunnel helped me figure it out. He asked me another question:

• "So why do we have to use up our paper one's by September. (says right on the paper) Why can't we exchange coin for paper ones?"

I just hate it sometimes when readers send me questions to try and answer. It makes me stay up half the night trying to figure out what is going on.

I am sure that there is a very simple explanation for it eg not to let people hoard paper tokens to keep their costs down and deprive the Tunnel of needed revenues. However, I have learned that with this Mayor nothing is obvious on its face. One always has to look deeper.

In the Star recently, we see that Eddie and DCTC are fighting over the Tunnel, again. It seems that

• "the city of Windsor's tunnel commission has been opposed to adding more commercial vehicles at the tunnel and has remained at odds with DCTC over its truck plans. The city owns the Canadian side of the tunnel."
  
  "From the tunnel commission's perspective, we want the tunnel to be commuter- and car-friendly," said Mayor Eddie Francis, chairman of the tunnel commission. "We are focused on that."

Of course that statement is utter nonsense if one looks at the new Tunnel Plaza plans. That plan includes truck lanes and an "on-site Canada-bound truck secondary inspection area."

So here is Eddie picking a fight with DCTC. The final proof of my theory.

Now, as I have demonstrated, Eddie is a known procrastinator---why take action when you can study something to death instead. And he hates to make a decision because he could be wrong. But this September deadline bothered me.

If I am like Eddie, I work backwards from key dates to plan a strategy. Obviously the key date for him now is November 13, election day. Eddie obviously wants something to happen by the end of September so that he can use the event to boost his re-election bid.

The answer I think is that Eddie is hoping to conclude a deal on the Tunnel by that date. Exactly what that deal is to be and with whom is still unclear. But it does have to do with owning/operating/managing/financing the Tunnel, probably with the City of Detroit. He has to have it done by that date. What if he is no longer Mayor after November 13!

I have learned that, around the end of June, representatives of the City of Windsor met with Derrick Miller and other City of Detroit representatives, including someone from the consulting firm of Goldman Sachs, to began discussions about the Tunnel. The discussions were preliminary since both sides are in their information gathering mode re the operations of the Tunnel. There is no set timetable to determine what the best arrangement should be between the cities but it is for a joint operation of the Tunnel.

Since Windsor's deal with DCTC ends 2007, the City of Windsor is extremely interested in determining the best solution. I thought Detroit's DCTC deal ended in 2020. [And no wonder Eddie is fighting with DCTC...Let them know it will be years of hell working with him while they are running the Detroit side. Since he controls the Windsor side, he can make sure few trucks can be cleared by Canadian Customs if he chooses to minimize truck lanes in the new Plaza]. If so, obviously then, it would seem that Windsor is pushing the deal but clearly Detroit needs the money too. Detroit Councillors were reminded that the topic of the possible joint Detroit/Windsor management agreement was on the agenda at the joint meeting of the Detroit and Windsor City Councils in February.

I also am told that Windsor has hired PriceWaterhouseCoppers to assist in determining the value of the Windsor tunnel. The City of Detroit is using Goldman Sachs to assist in determining the value of the Detroit tunnel.

In my opinion, this is all part of the Eddie Plan to own/operate/lease or even sell the Tunnel to generate what he thinks will be huge dollars for his other ambitious Plans, whatever they may be. Just like his friend Mayor Daley in Chicago. Or it may be "securitizing revenues the City of Detroit receives from the USA side of the tunnel" as Detroit's Administration proposed last Fall along with Windsor revenues. Remember the infamous Agenda Item #5 when the Mayor and Council cut and ran after many citizens groups appeared as delegations to oppose what the City wanted to do! That was to give Eddie the legal justification to do what he wanted to do.

Eddie has obviously been trying to do an end-run around the Mayor of Detroit since he had signed a deal with the Bridge Co. respecting the Tunnel, which deal has been tabled. Why else would it have been Council President Ken Cockrel, Jr attending at Eddie's State of The City speech? Why else were the West End activists and politicians allowed by the Mayor to have the bus tour of Sandwich with the Detroit people? Make friends with Detroit Council and let THEM pressure the Kwame's office when required. Let them do Eddie's work since he was just a "snowplower" to Kwame.

The fact that the Derrick Miller is involved is an interesting point. Has Kwame given his blessing? Have the two Mayors made up now that Kwame co-hosted the Mayor's summit? I wonder what the Windsor Councillors know of this initiative. Probably nothing or the barest minimum.

An official in Detroit had conversations with City of Windsor officials about the potential benefits of a joint Detroit-Windsor management agreement regarding the operations of the Tunnel. After all, Windsor receives around $6.6 million in net revenue from the Canadian portion of the Tunnel and the City of Detroit receives about $700,000 in lease revenue. In fact, Windsor may be receiving even more than what they told Detroit since it has paid off its loans and has all of that extra interest money that it no longer pays out. It was suggested that a joint management agreement between the cities of Detroit/Windsor is worth exploring because joint marketing efforts of the two cities could further maximize revenues of the Tunnel for the cities to jointly benefit from.

It would seem to me that in any deal, Windsor is going to have to share in some of its income with Detroit or there will be no deal. After all, Detroit's population is 10 times ours yet we make 10 times the revenue.

How will this loss of income to Windsor be explained? It won't!

Probably the way it will be done is to work out a ratio and if the entire Tunnel is leased out together (in this case a whole is worth more than the two halves) we will only be told the big number and not how much this "sharing" with Detroit has cost us. As an example we will be told we have "X" per cent of some huge multi-million dollar amount. Few will ask how the amount was calculated and did it make sense. How can one argue against this huge influx of money? We will be told that the "X" amount is so much greater than Windsor could have achieved on its own that we should be overjoyed at our Mayor's brilliance.

It is not going to be an easy slam-dunk. Clearly before this deal will be done, both sides and their advisors and any potential finance source will have to undertake their due diligence to value the Tunnel assets and its potential revenue stream over a good number of years, probably 50-75 or more.

And with some of the doubts that are coming out over the Tunnel in the media….It should be interesting to see who may bid or whether anyone will.

If I were a betting man, I would not be surprised to see Mike Hurst involved in this before the deal is done. Remember what the Schwartz Plan proposed about a Tunnel.

Did Schwartz's concept signal something that we should have picked up long ago? That got me to wondering about what has really been going on for the past few years since so many things do not make sense. I have this theory...But that is for another BLOG.