Did Brian Masse Kill Eddie's Tunnel Dream

Poor Eddie. With a friend like this, who needs an enemy!

According to the Administration Report, Eddie's plan is to transfer the City's asset, half of the Detroit/Windsor Tunnel, to a new Company to be incorporated. That Company would also be the new operator of the Tunnel. That's about all we know. For a US$75M transaction! How shameful!

Now I don't know about you, but I don't think the City has US$75M lying around in a slush fund somewhere that it can use to do the deal. I also do not know how Windsor can operate the Tunnel, or its half, since it has never done this before.

Accordingly, there must be more behind this deal than we know including some partners for the City who can put up the dollars or put up cash with the Tunnel revenues as security.

Actually, I hope the Feds put up all or part of it. Then we will see some real fun as the two Governments will be involved in the Tunnel as a competior of the Bridge Co. and as its regulator as well! That is almost a virtual cinch to allow the Bridge Co. to get its Enhancement Project approved or to be able to start a massive lawsuit for unfair competition!

And the Bridge Co. would then be able to go back to the Senators in Ottawa for help. Here is what the Senate said in their Bill C-3 observations:

• "On the question of the federal government’s potential involvement in future international crossing projects, your Committee heard suggestions that the provisions in the bill that allow the Minister of Transport to recommend to the Governor in Council whether or not to approve a project would lead to a substantial conflict of interest for the Minister.
  
  On this point, officials noted that Transport Canada currently does not own or operate a single international bridge or tunnel. The existing federal structures belong to Crown corporations, which are autonomous even if the Minister of Transport is responsible for them. To quote an official, “the Minister has absolutely no authority over the day-to-day activities of these organizations, including those dealing with safety and security.”
  
  Therefore, given the autonomous ownership and operational arrangements established for existing federal structures, your Committee is confident that the Minister of Transport will not be in a position of conflict of interest in the future.
  
  However, the Minister of Transport should be particularly sensitive to any situation where the federal government is in a situation where there is an appearance of conflict, especially when the interests of a private enterprise are at stake."

However, it may that Eddie has lined up a pension fund or a private equity investor to help him out or perhaps a bunch of local guys who have some dollars and want to invest in infrastructure to diversify their investment portfolio.

Now here is where Brian Masse comes in. He takes credit for helping to bring Bill C-3 in. That Bill provides:

• CHANGE OF OWNERSHIP, OPERATOR OR CONTROL
  No person shall, without the approval of the Governor in Council,
  
  (a) purchase or otherwise acquire an international bridge or tunnel;
  (b) operate an international bridge or tunnel;
  
  Approval for anything referred to...may only be obtained by submitting an application to the Minister for approval by the Governor in Council.
  
  A person who submits an application shall provide the Minister with any document or information that is required under guidelines issued by the Minister and any other document or information that is required by the Minister after receipt of the application.
  
  The Governor in Council may, on the recommendation of the Minister, approve an application referred to in section 24 subject to any terms and conditions that the Governor in Council considers appropriate.

Transferring the City's Tunnel asset to a new Company which is also set up to operate the Tunnel would trigger the need to get approval from the Feds. Unfortunately, the Feds do not have any guidelines respecting what is needed in an application yet as far as I know and the Regulations are supposed to take a year or two to draft.

So does this mean that Eddie's deal is in limbo thanks to Brian and the Feds?

The Feds will have to act in proper fashion to review the application. Remember when the Bridge Co. tried to do a deal with Kwame and both Eddie and the Feds got involved to try and stop them. The Feds would accordingly have to act in good faith or else the Bridge Co. could argue that they were discriminated against improperly.

So I wrote the other day to Transport Canada seeking an answer but so far, I have not received one:

----- Original Message -----
From: Ed Arditti
To: Mark Butler
Sent: Tuesday, June 05, 2007 2:35 PM
Subject: International Bridges and Tunnels Act

According to a Report to be presented to Windsor Council:

"Windsor considers it necessary and desirable to transfer ownership of the Canadian Tunnel and the assets used in association therewith to a corporation that is wholly owned by Windsor that will have the purpose of acquiring, owning, operating, managing, repairing and maintaining the Canadian Tunnel with power to subcontract all or part of such purposes. In addition, Windsor considers it to be in Windsor’s best interest to acquire from Detroit the right to control and operate the US Tunnel to permit it to operate the Canadian Tunnel and US Tunnel as a unitary and integrated tunnel after the end of the term of DCTC’s lease."

Will you please advise

• if this transaction is subject to the International Bridges and Tunnels Act with respect to transfer of ownership and with respect to the transfer of its operating, managing, repairing and maintaining


• would any subcontract be subject to the same provisions


• what is the procedure that the City must go through for approval


• what time period would be involved


• will public hearings be undertaken

I would assume that no action will be taken in the near future based on the following comment:

• Transport Canada officials... are aware that the proposed provisions dealing with governmental approval of sales and transfers affecting ownership or control may cause concern to stakeholders. They expect, however, that these stakeholders will be active participants in the regulations consultation process, and that their concerns will be dealt with at that time. "

I would appreciate an answer today since I intend to write a BLOG on this matter tomorrow morning."

Of course there are other hurdles that have to be overcome, especially a huge one in Ontario Legislation that does not yet seem to have been considered. But that is for another time.

So if Kwame is in a hurry to get his money, then he better hope that the deal with Eddie can be completed in a timely fashion. He also should NOT make an enemy of Alinda...just in case!