Should We Thank Alabama For No Tunnel Toll Increase

I posted before that Alinda bought four toll bridges in Alabama in "The Heart of Dixie" and increased the tolls there by rather significant percentages.

• "The company, based in Detroit, said it plans to use the extra money for bridge maintenance and expansion. Gordon Jarvis, Alinda Roads CEO, said the company plans to enhance and expand all of its properties in Alabama. They would like to accelerate plans to build a $20 million additional span along the Foley Beach Express bridge to double its capacity."

In addition, we also learned that

• " The operator of the Windsor-Detroit tunnel also changed recently from Macquarie Bank of Australia to Alinda Capital Partners — a private investment firm based in New York seeking to add infrastructure to its portfolio.
  
  The change is not expected to have any impact on tolls or day-to-day operations, Belitsky said."

Note that Alinda is the "operator" here but NOT the "owner."

We know at least that:

• "In January 2001, the owners of DCTC agreed to sell their shares to Macquarie North American Infrastructure Inc. (a wholly owned subsidiary of the Global Infrastructure Fund (GIF)). The acquisition of DCTC was funded by $US53.5 million of senior debt supplied by WestLB, subordinate debt originally supplied by Macquarie Bank Limited, and equity provided by GIF."

We also know that Macquarie acted as "Detroit Windsor Tunnel Adviser for acquisition and re-financing US$70 million."

There was some corporate machinations in Macquarie on 12-May-06 involving Detroit Windsor Tunnel LLC, Detroit and Windsor Subway Company, DWT Inc,Alabama Black Warrior Parkway, LLC, Alabama Emerald Mountain Expressway Bridge, LLC Alabama Toll Operations, LLC Central Alabama River Parkway, LLC.

What all of this corporate manoeuvering means is beyond me I am afraid other than assuming that Alinda must have paid many millions for whatever it is that they bought in Windsor-Detroit.

So how are they going to pay for it?

Here is an interesting story back November, 2003:

• "U.S. tunnel toll increased; Detroit-Windsor trip to cost $4.50 Cdn;
  Doug Williamson Star Staff Reporter 11-20-2003
  
  Commuters, city officials and downtown businesses are upset over a scheduled increase in cash car tolls on the U.S. side of the Windsor-Detroit tunnel...
  
  Detroit & Canada Tunnel Corp. which manages the entire tube on behalf of its owners - - the cities of Windsor and Detroit...was turned down twice recently by the Windsor Tunnel Commission when it asked for permission to increase tolls from Windsor to Detroit.
  
  The tunnel corporation has a joint operating agreement with Windsor requiring the city's permission for increases. No such stipulation exists on the Detroit side...
  
  Neal Belistksy, executive vice-president of the tunnel corporation, said... "We are exclusively a user-pay facility and so our only source of funds is tolls," he said.
  
  TUNNEL TRIVIA
  
  * Owned by Detroit and Windsor, but managed by the Detroit and Canada Tunnel Corporation, a company owned by an investment fund of an Australian bank.
  
  * Under a joint operating agreement with Windsor, DCTC is paid a management fee for running Canadian side, but is responsible for financial operation of Detroit side."

In an Opinion piece "Tunnel fix a priority," by Gordon Jarvis and David Mcfadden of DCTC on 03-17-2005, they said

• "As the operator of this one-of-a-kind border crossing, DCTC lives and breathes the tunnel" and
  
  "The tunnel continues to look for ways to improve service in spite of declining traffic, budget cuts, increased expenses and tighter regulations on both sides of the border.
  
  In these challenging economic times, the tunnel has had to raise toll rates to meet the challenges of our changing environment and provide for the improvements necessary to maintain the tunnel and ensure its ability to serve its communities."

This long introduction is the prelude to the question of when tolls will be increased at the Tunnel in Windsor/Detroit. We are seeing toll increases at other "public" border crossings such as in the Fort Erie area and in the Sault.

The March 2007 traffic numbers are a disaster again for the Tunnel: about 85,000 less cars and trucks than in 2006.

Since 1999, it has lost over 40% of its traffic numbers and lost a significant amount of market share.

How can Alinda keep operating it without increasing tolls if:

• it has to pay the purchase price


• border traffic keeps decreasing


• its numbers are falling so rapidly every month especially after Windsor increased its price


• its border crossing market share keeps decreasing


• costs keep increasing


• its nature of it being a "unique security risk" is not dealt with.

You have to ask why Alinda got involved in the first place since it is an asset that seems to be declining rather than having a bright future. Maybe the deal was packaged as taking the good and the bad ie if you want the Alabama bridges, you have to take the Tunnel so Alinda had no choice. Perhaps they gambled that Eddie would buy them out and they would make a quick buck on the flip!

Perhaps it is our friends in the Yellowhammer State who are saving us. Perhaps it is their massive toll increases that are helping to keep ours down. So far at least. If so, we ought to thank them for subsidizing us!