Thinking Big (Distraction) With Windsor Airport

The propaganda machinery is in motion. Why we can be just like Hamilton and London airports we are told. A Star Editorial claimed that with the new Blue Skies policy "Windsor Airport...is ideally situated to take advantage of international traffic."

Oh sure we can. Let's take a look at our recent aviation history to see how good our position is now:

• Serco Aviation Services Inc., one of the major players in the airport mangement industry just pulled out of Windsor because they could not make money and had to borrow around a million dollars from the City.


• It was said that Serco never made a profit although I thought one year they were in the black by a few thousand dollars


• "Sunquest Vacations was among charter flight companies that cancelled all their Windsor flights this year... there's little advantage to flying out of Windsor over Detroit...a lack of passenger demand."


• "overall success at Windsor's airport is a nearly impossible task given close proximity to Detroit....but with the decline to just a 15-cent advantage, Detroit's flight prices have become difficult to compete with"


• "Detroit-Toronto-Vancouver return flight can be cheaper at $610, taxes included, than a Windsor-Toronto-Vancouver flight at $916, plus taxes"


• Remember Westjet..."it had been losing money on its Windsor route for eight months when it announced the cancellation in June [2005]. While flights were pretty full during the summer, numbers dropped off as the weather became cooler. ... Company spokeswoman Gillian Bentley said there are no plans to return, but added: "Never say never. "It's not feasible at the moment for us, but it will always be on our radar."


• When Westjet left, "Serco is developing a marketing plan to try and draw another discount carrier to Windsor." It did not happen


• Conquest Vacations, Air Canada Vacations, Signature Vacations and Skyservice Airlines were here for awhile


• In 2003, when Westjet numbers were lower than expected, it was said "So many carriers come to Windsor for a short time and then they leave," says Cindy Kassab, owner of Travel Cuts at the University of Windsor.

Windsor airport did well when "Business at Windsor Airport has skyrocketed as more and more Michigan business travellers take advantage of its convenient location, easy access and high exchange rate on the U.S. dollar. "

Windsor airport has one main airline, Air Canada, which is a non-jet feeder operation to Toronto. Interestingly, it also lands in Detroit so why would Americans want to cross the border to fly through Windsor. (Northwest and United also have flights to Toronto).

Compared with Windsor, Hamilton has 5 airlines, both regular and charter, flying within Canada, the US and Europe. London has 4 airlines including Northwest.

Now let's get real... What is this all about? Windsor airport is going nowhere for a long time. We are being fed the THINK BIG dream again so that taxpayers can be conned into developing "shovel-ready" land around the airport for some developers if they ever choose to come here. Why should Eddie be Mayor when he can play entrepreneur-developer with our taxpayer money.

He wants to copy what London does. It's as simple as that. This is his goal:

• DEVELOPMENT OPPORTUNITIES
  
  With over 1,500 acres surrounding the taxiway and runway infrastructure, London International Airport is an ideal site to locate your business. Rail, road and air transportation links makes London Airport a multi-modal asset. Currently over 44 businesses are located at the London International Airport.
  
  Skyway Industrial Park
  Skyway Industrial Park is the current land development at the Airport and involves a co-venture agreement with the City of London. The 300 acre property is adjacent to the Airport with 43% owned by the Airport and 57% owned by the City.
  
  Skyway Industrial Park Property Lots
  Land available for both long-term lease and purchase
  Serviced and unserviced land
  Variety of lot sizes
  Access to the taxiways and runways
  Outstanding road access to Airport Road and 400 series highways
  Less than a two hour drive to either Detroit and Toronto
  150 million people within a radius of 500 miles

Oh and this is why, along with the arena, we cannot afford the capital cost of parks and recreational facilities in Windsor! And do not forget the $75M Tunnel deal too (but it may have a happy ending!)

Polling The Mayor

I found this survey on an ad on the Windsor Star Online. Interesting results don't you think!

I wonder how many votes the Chicken Suit would get today!


** Please note that these survey results are of website visitors who voluntarily take the survey. These results are not necessarily representative of the larger population. As of 8:35 PM on April 19, 2007

Profit Is A Four Letter Word

Dan Stamper at one of the Bridge Co. open house sessions said that the DRIC plaza drawing will be the key page out of the thousands of pages of paper produced by DRIC. The public hearings served a purpose. He understands now what he is up against where he did not seem to understand it before.

I am posting above a rendering of what the Bridge Co. says is all the land they need for their project.... not 80-120 acres in Sandwich that can destroy the Community as in the DRIC conceptual drawing of a plaza but their existing footprint! The significance of this drawing will become obvious as you read on below. The Bridge Co. just changed the rules of the game that will make their plaza size perfectly acceptable and puts another nail in wasting billions of taxpayer dollars on a DRIC bridge!

It's really quite a lot of fun watching the opponents of the Bridge Co. spit out the fact that the Company wants to make a dollar. Just like the headline of the Star the other day:

• "'Bottom line' called bridge's only interest"

I did not know that, in Windsor, making a profit was a sin. On that theory, we should be thrilled that the Tunnel is doing so poorly and will cost the taxpayers money as its dividend disappears.

Have you heard anyone complain during the border debate that the Citys' tolls are higher than that of private company in Windsor? Why not? Does that mean that carrying on business and losing money, which will require a tax increase, is "acceptable" merely because it is "public?"

I would have thought that a commuter who uses the bridge ought to be happy to save a few dollars a week in tolls. I would have thought that taxpayers would be pleased that the private company would spend its money on a bridge crossing and not require government financing. Really, explain to me why a P3 bridge where a private company builds it and operates it for 75-99 years is all that different than a "private" bridge. Didn't you know that it is worse: P3s generally require Government not to build facilities that compete with them, a true monopoly.

I thought about this when I heard the Bridge Co. make a rather breath-taking announcement at its public session at the Caboto Club the other night. You will have to take my word for it because again the Star could not send a reporter to cover the event!

On April 1, the Bridge Co. opened a processing centre on the US side of the river to help truck drivers process paperwork for the cross-border trip. A Canada Customs agent was stationed there to assist--no, not reverse customs yet, but a start as far as I am concerned:

• "Starting April 1, 2007, all commercial importations entering Canada at the Ambassador Bridge will be required to use one of the Canada Border Services Agency’s (CBSA) existing line release clearance options...
  
  The initiative also builds on the existing CBSA security measures to ensure an appropriate level of border security and improved control of vehicles reporting to the CBSA commercial offsite facility. The number of vehicles required to report there will be significantly reduced, allowing for enhanced monitoring and convoying of vehicles that are referred to the offsite facility.
  
  Carriers/Importers who fail to comply with these requirements will have their shipments returned to the United States...
  
  the Ambassador Bridge has established an Advanced Border Processing Center in Detroit,Michigan. The CBSA will provide a resource person at the Center to provide additional assistance and guidance to carriers and Importers during the initial phase of implementation....
  
  Only commercial importations that are not able to use line release clearance options, such as those subject to other government department requirements, will be processed at the offsite facility. This small percentage of vehicles with these shipments will travel to the offsite under new, strict monitoring procedures."

What does all of this mean...Very simple...the number of trucks that require secondary inspection in Canada has already dropped from about 700 per day to about 100 per day and is expected to drop even further. This parallels what has been going on with trucks entering the US.

So what is the significance of this:

• it means that the Bridge Co.'s 40 acre plaza above is large enough to handle whatever needs to be done on the Canadian a side (the joint Canada-US plaza at the Peace Bridge proposed to be built in Canada for "Shared Border Management" would only be about 17 acres larger!)
• there is no need for DRIC designed plazas of up to 120 acres which would impact Sandwich
• it means that there will be, in effect, pre-clearance so that a truck can be cleared in 15-30 seconds rather than the 2 minutes or so required now
• it means that the Ambassador Bridge capacity has sky-rocketed upwards since more trucks can be processed during the same time period, up to 4 times as many
• it means that paperwork will not need to be done at counters at the border thereby freeing up Customs officers who can be postioned outside at customs booths to help clear trucks
• it means secondary inspection does NOT have to be done at the border since the few trucks involved would move in convoys to the Bridge's secondary inspection site. And that means a 80-120 acre plaza is not needed. Forty acres is more than sufficient!
• traffic on Huron Church southbound is improved because trucks will only need to use one lane since trucks have already been cleared and do not need slow down to make a right turn to go to secondary inspection.

Effectively, this new clearance system has changed everything to the point that one has to look seriously at DRIC and ask if what they are doing is relevant for a new border crossing in Windsor with the changes in technology. Do we need a multi-billion dollar capacity increase in other words? The bridge can now handle four times its traffic volume when DRIC only predicted (wrongly of course) a doubling.

That's rather complicated to understand. Here's something much simpler. It's why Government just does not get it when it is OUR taxpayer money at stake, not private dollars coming out of the owner's pocket.

Gridlock Sam Schwartz wanted to build a Horseshoe Road to prevent back-ups on Huron Church Road. Effectively, he was advocating spending hundreds of millions for a road that would really be a giant parking lot. The Bridge Co. opened up four new US Customs booths at a cost of about two million "private" dollars to keep trucks moving and solved the problem of Huron Church! They understood that the need was traffic flowing not traffic parking. Exactly the same mistake the City is making at the Tunnel now which will cost us $30M or more (It's a shame for our bank accounts that the Bridge Co. did NOT take over Tunnel operations).

Governments are building better parking lots not building a better bridge as the Bridge Co. is doing.

Frankly, the cost of all of this private enterprise initiative is a lot cheaper than building another "public" border crossing isn't it? The Bridge Co. may make a profit but why not? They can save taxpayers billions. Why shouldn't they be rewarded for their brains!

I think that this is why Dan Stamper is so angry about the DRIC designed plaza drawing. He knows there is no need for this huge plaza that was supposed to take over Sandwich. He knows that his existing plaza and secondary inspection area work. He was made the devil with horns in the Sandwich area and was kicked out of the DRIC process even though his solution is the best one and for which he has spent $500M relying on what he thought he had agreed with Government.

It was not his drawing and he objected to it. He will really profit now from that and I do not mean just monetarily!

Maybe A Story, Maybe Not

I thought I would run the relevant parts of the news story as published by the Star on line last night for you to look at. I found the language very interesting in the story. I thought you might too.

"Historic church may need up to $6 million in restoration
By Don Lajoie, April 19, 2007

• more likely explained



• it is difficult to blame the big rigs for all the damage done to the building’s structure,



• may be a significant contributing factor.



• what renovations may be necessary



• the cost of shoring up the structure... may amount to $6 million.



• may be the cause



• may “open the door”



• the age of the building and other factors undoubtedly have contributed to the situation...He acknowledges further tests are necessary to determine just how significant a factor truck vibration may be.



• may also be



• “We’re actually doing a bit of exploratory work right now



• The first stage is a capital campaign.
  

Should Windsor Sault

Does it make sense for an operator to toll as the Sault does? And given what is going on in Sault Ste. Marie respecting roads should someone in Windsor consider Sault-ing the Province for inaction here?

It's fine to pretend to be serving the public good by keeping tolls down. Take a look at this story and see what the consequences are by not tolling properly and keeping facilities ahead of the curve to meet demand. And what can happen when volumes drop!

The Ambassador Bridge learned that lesson, especially after 9/11, and that is one reason why truckers come here even if tolls seem to be higher and stoplights have to be fought on Huron Church Road.

The Bridge Co. is spending their money to allow traffic to flow more smoothly by investing in their facilities like the US Customs truck booths that eliminated Huron Church back-ups and the new booths coming into Canada. Truckers do not have to sit in a line-up at $125 an hour waiting as they do at some other crossings.

And just so you know, there were toll increases at other "public bridges" such as the Confederation, Blue Water, Peace, Rainbow, Whirlpool Rapids and Lewiston-Queenston Bridges.

Of course we learned why our Mayor and Minister Donna Cansfield were meeting to talk about transportation hubs if we read the story:

• "If Sault Ste. Marie’s multi-modal transportation concept ever becomes reality, International Bridge general manager Phil Becker would be all for it.
  
  Then there would likely be millions of government dollars for more bridge inspection lanes, better security features."

Thanks Minister for setting up another competitor to Windsor's economy! The City should "sault the Government!"

The road system was fixed up there too but not in Windsor. Now we can suspect why work was done on roads in other locations and not Windsor at this time. Force the Bridge Co. into capitulation even though $300M in BIF money was specifically set aside to upgrade the road to the Ambassador Bridge:

• "For years, transport trucks and American tourists exiting the Canadian bridge plaza were either dumped into a busy residential neighbourhood or left to thread through the city’s maze of one-way streets to the Trans-Canada Highway or local attractions.
  
  Last fall, when Ontario Transportation Minister Donna Cansfield opened the city’s new truck route linking Highway 17 and Interstate 75 in Michigan..."

Aw heck, read the story all for yourself. Again, it's the Government helping out a possible competitor to Windsor's crossing and at our region's expense. I bet the Bridge Co. lawyers are reading it!

• Northern Ontario Business
  
  International Bridge takes its toll
  By IAN ROSS, Monday, April 16, 2007
  
  If Sault Ste. Marie’s multi-modal transportation concept ever becomes reality, International Bridge general manager Phil Becker would be all for it.
  
  Then there would likely be millions of government dollars for more bridge inspection lanes, better security features and maybe even swipe-card technology for speedier crossings.
  
  While the federal and provincial governments are investing to upgrade border crossings at Windsor, Sarnia and Niagara Falls, very little has changed at the International Bridge since the 4.5 kilometre span opened in 1962.
  
  Since the 9/11 attacks, the U.S. Department of Homeland Security poured more concrete and installed more cameras for its inspection stations, but it wasn’t designed to handle massive volumes of international cargo that a Canadian Sault task force would like to attract.
  
  The booming global logistics market has container ports, intermodal yards and major Canada-U.S. border crossings stretched beyond capacity. Sault Ste. Marie wants to siphon off some of that traffic.
  
  Becker calls the Sault bridge facilities “totally outdated” and in “urgent need” of current technology updates, not only for better security but to attract commerce.
  
  For years, transport trucks and American tourists exiting the Canadian bridge plaza were either dumped into a busy residential neighbourhood or left to thread through the city’s maze of one-way streets to the Trans-Canada Highway or local attractions.
  
  Last fall, when Ontario Transportation Minister Donna Cansfield opened the city’s new truck route linking Highway 17 and Interstate 75 in Michigan, she called the Sault bridge the province’s ninth busiest international crossing handling more than 130,000 commercial trucks annually and under 400 trucks a day.
  
  But Becker says it’s also easily the “poorest” bridge of all the crossings between Ontario, Michigan and New York state.
  
  Truck traffic has been on the wane since 1993, when crossings peaked at 3.6 million. Trucks take up seven per cent of all traffic, but account for 50 per cent of bridge revenue.
  
  Last year, truck crossings dropped six per cent from the previous year.
  
  Most of that is attributed to a softening U.S. homebuilding market, stiffer border security measures and fewer American tourists travelling north.
  
  Even local traffic has declined with the opening of a new Wal-Mart and a Canadian casino in recent years.
  
  Like most toll facilities, the International Bridge gets no government subsidies for operations and maintenance.
  
  It forced the Joint International Bridge Authority to announce an April toll hike including a $3 US per axle increase for trucks and buses.
  
  Becker would welcome more trucks to raise money for new facilities. But more traffic also means the bridge takes a heavier physical pounding.
  
  “They (truckers) pay the higher toll because they literally take a toll on the bridge with their axle loads.”
  
  His engineers estimate the 45-year-old structure needs $115 million US for painting, replacing the concrete decking and to reconstruct the American toll booth plaza.
  
  The Canadian Sault has made incremental steps towards branding itself as an international freight-handling hub. But if the City’s vision to move container goods into the U.S. ever comes to fruition, many area bridges, rail beds, highways and streets must be beefed up to support it.
  
  Ottawa and Queen’s Park are parking millions into congested border points such as Windsor’s Ambassador Bridge where one quarter of the entire trade between Canada and the U.S. takes place.
  
  “Other crossings are on major commercial trade routes,” says Becker. “We’re not there yet.”
  
  And there’s no indication if the Sault can tap into those funds including Ottawa’s $431 million pledge announced in January to improve border processing and study ways to avoid trade traffic gridlock.
  
  “We’re aware that other crossings are getting funding that we’ve not been successful at,” says Becker.
  
  The modern security systems like NEXUS and FAST (Free and Secure Trade) will be installed this spring on the U.S. side, but there’s no such plans announced by Canada Border Services Agency. “I don’t get the sense of urgency,” says Becker.
  
  However, he says the bridge authority Canadian owners -- the St. Mary’s River Bridge Company -- are “aggressively pursuing” federal money.
  
  Sault Mayor John Rowswell wants the Sault to have all the intermodal transfer yards, warehouses and value-added industries present in other major cities.
  
  He is lobbying Prime Minister Stephen Harper to be included as part of a national transportation strategy.
  
  “We’re in the centre-third of Canada,” said Rowswell in an interview last fall, “and we want to have the same opportunity as the rest of Canada to sell and receive goods globally.”
  
  The City of Sault Ste. Marie has hired a team of logistics experts to build the Sault’s multi-modal case.
  
  So far, the consultants say pursuing ‘rail-to-road markets’ has possibilities, particularly in shipping Ontario wood, pulp and paper to the U.S. Great Lakes region.
  
  In their interviews with shippers, they report many are concerned about supply chain congestion and there’s ‘strong interest’ in investigating alternative routes. Some would be willing to ship large volumes, ‘if sufficient benefits can be demonstrated, the report said.’
  
  Local businessman Jack Purvis is encouraged by what he reads and the interest shown by logistics companies.
  
  Last year, he built a 60,000-square-foot intermodal terminal in the city’ west end with rail connections to both the Canadian National and Canadian Pacific Railways. “We built the building basically on spec, hoping it would be proving itself within a couple of years, and now we have half the building utilized.”
  
  His terminal is storing and distributing paper products from St. Marys Paper, Marathon Pulp and some producers as far away as British Columbia who are shipping as far south as Mexico.
  
  This year he’s making a concerted effort to ramp up his marketing.
  
  But he knows the Sault has to prove it has the transportation infrastructure and the business plan before shippers will commit large volumes and government money will be available.
  
  He calls the Canadian bridge plaza “inadequate” and favours marshalling yards on both the Canadian and U.S. sides to queue up trucks for an unimpeded flow of bridge traffic.
  
  Many ideas are still in the grass roots stage and the task force and their consultants must still map out what’s needed.
  
  The first phase of the multi-modal study prepared by a team including KPMG says routing containers through the Sault to the U.S. could shave transit times for customers by as much as four days as opposed to shipping through other congested ports and rail yards.

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!

Crocodile Dwight Duncan

There is something quite peculiar with the geniuses at the Ontario Transportation Ministry.

There is a need to improve the flow of traffic west of London going to Windsor and the international border. Instead of building a separate, new 4-lane expressway a short distance away from the existing Highway 401 now, like a public-private Highway 407 in the Toronto area, they chose instead to add an additional lane to Highway 401 in each direction.

What kind of sense does that make?

Oh my goodness, it sounds like something the Ambassador Bridge Co. might suggest for the Windsor border crossing! Use your existing corridor (the enhancement project which adds a lane in each direction) until it is fully utilized and then build another bridge (the DRIC bridge) in a different corridor (like a "Highway 407") in a P3 deal.

We are luckier in Windsor's case. We can have a road built that will feed both bridges. It can be paid for under BIF since money has already been set aside. Accordingly, it can be done now and NOT after the DRIC process is over.

Back to the main item of today's BLOG. It is truly amazing what one can find on the Internet!

I wish I could say that all of my finds have been due to careful researching. In many cases it is true. But on others, like the story below, it was due to pure, dumb luck.

Why do we need a DRIC bridge today? When the DRIC process started, the need for a new bridge was based on traffic projections that demonstrated that within a few years our roads and crossings would be plugged up due to the rapid increases in traffic.

Remember the "Report on the "Michigan-Ontario Railroad Border Crossing Infrastructure" completed in December 1991 which I found by a fluke too, their comments on traffic projections included:

• Ambassador Bridge system could reach capacity in some of its elements such as inspection booth numbers by 1996


• Detroit-Windsor Tunnel will reach capacity by 1994 and there will be a need for additional capacity by 2000


• Ambassador Bridge's roadbed capacity will be adequate until 2005

Compare what they predicted with what is the case today

They were just as wrong then as DRIC is now about our crossing traffic projections. The bridge is operating at around 50% capacity and there are few tie-ups on Huron Church Road due to a few new Customs booths opening up. And the Tunnel, its volumes are down significantly since 1999.

Remember the graphs I posted about actual and projected traffic numbers at the Blue Water Bridge and here. "Projected" were also incorrect. Would you have liked to have been an investor in Sarnia in their new bridge with flat traffic increases when you expected big increases?

We know from Mr. Corradino's comment that

• "Nonetheless, it is believed (by Joe Corradino) that the market won’t support three bridges."

So please help me, why are we still considering spending billions on a new crossing when an enhanced Ambassador Bridge will serve our purposes for the intermediate term and money has been spent to accommodate a new span already?

I found this 7 year old article on Florida traffic projections that were done by URS, one of the consultants on the DRIC project. The purpose is NOT to take a shot at URS but to prove again that Mega-projects can go wildly out of control unless carefully watched. Note that the URS spokesperson said:

• "By learning from their past mistakes URS officials predict they will do a much better forecasting job in the future.
  
  "It is a difficult thing to do," Miller said, "but we do it very well."

I know that the rational for a new crossing keeps changing after traffic numbers could not be used as the excuse to spend billions. The answers are easier still:

• Security----put in reverse customs


• Redundancy---that is what the old bridge will provide


• Spacing---building a bridge a mile away is not an answer given the multi-target attacks and also see security.

I read an interesting story on oil refineries recently:

• "Oil refineries could become a key target in terrorist efforts to cripple economies around the globe, warns a Department of National Defence report obtained by the Ottawa Citizen."

Look what happened to gasoline prices when the Imperial Oil refinery had a small fire. YET, where is the demand to build a new refinery for security and redundancy purposes and to move it into a rural area?

Have the consultants done a better job on the DRIC project about projections? You decide. To be fair, who could have predicted some of the events that took place since the first ones were made on this project!

Isn't the real answer that URS and their American counterpart have done their job already in identifying where a new crossing could go WHEN it is needed and have identified a road that can be built to both the Ambassador Bridge and the new bridge?

All that should happen to end this silly debate and avoid lawsuits is that the enhancement project goes forward, a road to feed both crossings is built, the corridor to the new bridge protected and the new crossing is built when needed. Exactly what the Australians did as I Blogged the other day

It's all politics isn't it and frankly directed at one family's private ownership of a border crossing! It comes down to that as simply as one can say it. "Oversight" by Government is not what some want since Bill C-3 is an answer to issues raised. No it is more. Confiscation of a private asset is what some desire and the purpose has been to drive down the asset purchase cost as low as possible using a variety of techniques.

The absurdity of all of this to the Governments involved is that they could have purchased the bridge years ago for a lot lower an amount than they could today if they wanted the bridge that badly! Infrastructure dollars have pushed the amounts sky high.....Look at the Detroit/WindsorTunnel as an example...How can it really be worth US$150M or more with its problems!

It's time for the game to stop before our region is destroyed economically by all of the misinformation and disinformation and billion of taxpayer dollars are wasted. The Bridge Co. people are not going to be bullied. They fought FIRA for a dozen years until they won.

We know it's politics based thanks to the Governor Granholm and her killing of the Downriver crossings. Dwight Duncan told us again the other day in a Henderson column:

• "The study process must be respected, said Duncan. "If we attempt to influence the project decision for political reasons, it will scupper the whole thing and set us back." But the DRIC "will not be the final word." Cabinet and the premier will make the final decisions, insisted Duncan, and those decisions will respect the wishes and long-term interests of Windsor residents."

Get some guts Dwight. You know what should be done. You won't lose the election by doing the right thing. You will only be responsible for thousands of new jobs being created. I think you can win on that platform! As for Borealis, they have lots of other investment opportunities since the Ontario govrnment needs cash so much.

• Flawed figures leave toll roads running flat
  
  A consulting firm has grossly overestimated traffic projections for five different projects in Florida, leaving the state to deal with the cost overruns.
  By CRAIG PITTMAN
  St. Petersburg Times, July 16, 2000
  
  --------------------------------------------------------------------------------
  
  KISSIMMEE -- The most expensive turnpike in Florida is a ribbon of asphalt through a quiet countryside near Orlando. For most of its 12 miles, the few cars that use the Osceola Parkway scoot past grazing cattle, tall pines and stately cypress.
  
  In the middle of nowhere, drivers tap the brakes and fish for their wallets. Time to pay the toll.
  
  At $1.25 per car, the Osceola Parkway was supposed to pay for itself. But five years after the Osceola opened it has attracted such meager traffic that taxpayers must subsidize it. County officials say that by the time all its debts are paid, the $150-million road could wind up costing more than $1-billion.
  
  "I'm no rocket scientist, but somebody really missed on this," Osceola County Commissioner Ken Shipley said. He blames the disaster on a consulting firm that produced wildly optimistic estimates of how much traffic would use the Osceola Parkway.
  
  The Osceola's woes are not the result of an isolated error. Over the past decade the same San Francisco-based consulting firm, URS Greiner Woodward Clyde, has produced erroneous traffic projections for three other toll roads and a toll bridge that have plowed into undeveloped Florida, planting the seeds of urban sprawl.
  
  Flawed traffic projections from URS were used to justify the construction of the Veterans Expressway in Tampa; the Seminole Parkway near Sanford; the Polk Parkway which loops around Lakeland; and the Garcon Point Bridge near Pensacola. In some cases the roads drew only half the cars that URS promised.
  
  URS officials concede they "were basically guessing" on all those projects.
  
  "They're still good projects," URS Vice President Hugh Miller said. "I don't think anyone is questioning the decision to do those projects."
  
  Yet state transportation officials say that if URS' predictions had been more accurate, some of those toll facilities would never have been built.
  
  Because they were built, though, that made it possible for developers to sprinkle the landscape with new subdivisions, apartments, malls and other businesses in areas far from city centers. Charles Pattison of the anti-sprawl group 1,000 Friends of Florida calls the toll roads "an inducement for development."
  
  For instance, the largely rural Osceola Parkway is dotted by a few big developments: Disney's neo-traditional community, Celebration, and its Animal Kingdom park; the Opryland Hotel Florida tourist attraction, now under construction; and an upscale subdivision called Seralago.
  
  Without the toll road "those things wouldn't have been built, period, because you couldn't develop without the road there," said Richard Diez, the parkway's executive director.
  
  Beyond some professional embarrassment, URS has suffered no penalty for being so wrong so often. But now URS' work is under fire again, this time in connection with the $500-million Suncoast Parkway. Slated to open in five months, the 42-mile-long Suncoast has developers in Pasco and Hernando counties eager to replace pastures and swamps with new homes, stores and offices.
  
  In 1992 URS predicted the Suncoast Parkway would be so popular it would make $70-million in 2002 and $119-million in 2010. That persuaded the state to proceed with planning the highway.
  
  But then URS scaled back those projections to the point that, when the Suncoast faced a do-or-die test of its financial feasibility in 1995, it barely passed.
  
  Then URS reduced the Suncoast's numbers even further. The latest forecast, released in February, says Suncoast will bring in $14-million in 2002 and $31-million by 2010. If the same financial feasibility test were given today, parkway would probably flunk.
  
  Yet construction is going full steam ahead.
  
  "I don't think (state officials) care whether these roads pan out," said Lesley Blackner, a lawyer for the Sierra Club, which is trying to stop the Suncoast. "They're just in the business of building them. This is just a money-making racket for these road-builders."
  
  A bridge too empty
  As with the Osceola, URS' cracked crystal ball has caused big headaches for the Garcon Point Bridge, nicknamed "Bo's Bridge" because it was a pet project of former House Speaker Bolley "Bo" Johnson. So far about 3,500 cars cross the Panhandle bridge a day, not the 7,500 URS promised.
  
  The bridge's owner, the Santa Rosa Bay Bridge Authority, has been forced to delay paying back millions of dollars it was loaned by the state and has asked the state for an additional $500,000 loan.
  
  URS miscalculated in part because it based its figures on a bridge in the next county that leads to the popular beach resort of Destin. There is no Destin at the end of the Garcon Point Bridge, just a few subdivisions on a barrier island that until recently was under a septic tank moratorium that limited growth.
  
  "We now know that," said Arthur Goldberg, the URS vice president who wrote the estimates for both the Garcon Point Bridge and the Osceola Parkway. "I don't think the Garcon Point Bridge will ever get back to the forecast we made for it in 1996."
  
  Some people challenged URS' projections before the bridge was built, but they were ignored.
  
  "The authority was more interested in getting to the bond market because they knew the money was there, so why worry about the numbers?" asked Joe Mooney, who was ousted as the bridge authority's financial adviser after he disagreed with URS. "The point is not to get a realistic expectation of what's going to occur. The point is to raise capital."
  
  Diez said something similar occurred with URS' projections for the Osceola Parkway: "What they want to do is make (the project) look good -- inflate the revenues, deflate the cost of operations."
  
  Among other flaws, Diez said, URS' projections for the Osceola failed to budget for operating the road. URS' Miller blamed everything on Osceola officials: "I think the county had pretty much made up its mind to do that project and they just needed our numbers for the bond sales."
  
  When URS' projections turned out to be wrong, the Garcon Point Bridge and the Osceola Parkway ran into trouble because they were supposed to stand on their own as moneymakers. The state Department of Transportation, which owns the Polk, Veterans and Seminole expressways, had a fallback. It made up for the shortfalls on those roads by dipping into the pockets of South Florida motorists.
  
  From the 1950s to the 1980s the state's major toll road was the Florida Turnpike, which carried tourists and truckers between Central and South Florida. Enough travelers paid to use what's known as "the Mainline" that the bonds that financed its construction were paid off by the end of the '80s.
  
  The state could have torn down the toll booths. Instead the DOT agency in charge of the Mainline, the Florida Turnpike District, has raised the tolls four times, so that it now costs $16.40 for one car to travel the road's 320-mile length.
  
  Last year the Mainline raked in more than $250-million, enough to cover the shortfalls on the Polk, Seminole and Veterans expressways and still pay $125-million on the Turnpike District's bond debt, which has reached $1.9-billion.
  
  "The main Turnpike is a gold mine," said J.P. Morgan Securities managing director Bob Muller, an expert on toll facility bond issues. If Polk, Seminole and Veterans had been freestanding projects they would be sunk, he said, "but instead they're just a drag on the rest of the Turnpike."
  
  Although state law is supposed to limit how much South Florida motorists pay to support toll roads elsewhere, Turnpike officials say they have no idea how much Mainline money goes to cover the shortfalls on the Polk, Seminole and Veterans. They have already announced that, should Suncoast fail to pay for itself, the rest of the Turnpike would cover that too.
  
  The shortfalls won't last, Turnpike officials said. Eventually, they say, the area around the toll roads will develop and fill them with traffic.
  
  Developers' delight
  The stumbling toll projects have something in common besides URS, Muller said.
  
  "Developer interest drives a lot of the toll roads in Florida," he said. "Roads driven mostly by developer interest tend to be the ones with the most problems, because developers tend to be an optimistic lot."
  
  The developers' interest in promoting Florida's toll roads was driven by the state's Growth Management Act. The 1985 law said developers could no longer build subdivisions and businesses and let the roads, sewers and other amenities try to catch up sometime later. Instead, everything is supposed to be in place by the time the new development opens.
  
  Yet in the late 1980s state and federal road money was sputtering, and politicians were reluctant to raise taxes. Without new roads, developers and paving companies, major sources of campaign contributions to both parties, were hurting.
  
  The solution: borrow the money for new roads and pay it back by charging tolls.
  
  But the Legislature worried that special interest groups would push the state to build unneeded roads that would lose money. Lawmakers insisted new toll roads prove they could start paying off their debt within a certain length of time. They decreed that "no bonds shall be issued to fund a Turnpike project" until the road was proven financially feasible "based on the most current information available."
  
  "That was to keep the politics out," said Bill Ham of the Florida Transportation Commission, a DOT watchdog. "It was to make sure that no one project sucked all the money in."
  
  To test the financial feasibility of the new roads, state officials needed traffic predictions. Turnpike officials say there are only three companies in the nation with sufficient expertise and credibility to do this kind of work. The one they picked is the one they have worked with since the 1950s, URS, which had been providing projections for the Mainline that had been on the money.
  
  Despite its experience, URS made some beginner's errors. URS failed to figure that a new toll road would take time to attract customers. URS assumed the roads would draw plenty of traffic immediately.
  
  "Our previous experience with toll road forecasts tended to be with roads built in areas where there was already a pent-up demand" because of congestion on existing highways, Goldberg said.
  
  Yet these new toll roads were being built through areas where there was little development. That was URS' other major error: It assumed that every developer with a project on the drawing board would build those subdivisions, apartments, hotels and offices as soon as the toll road was begun.
  
  Some developers did launch new projects, but many are still sitting on the drawing board. Miller conceded URS was not sufficiently skeptical.
  
  "We listen to a lot of people (about a toll road project), and it's just a matter of what will actually happen," he said. "A lot of it is -- well, I don't want to say they're selling something, but I guess they're selling something."
  
  Although state officials touted URS' scientific approach to forecasting, the truth is different.
  
  "Ten years ago, we were basically guessing," Miller said. "Even two years ago."
  
  Forging ahead
  The first two new roads the Turnpike District built were the Seminole and Veterans expressways. Both opened in 1994 and soon exposed URS' mistakes. That forced Turnpike officials to delay a planned toll increase for those roads and alter plans for other projects.
  
  Meanwhile URS came up with a new forecast for the Polk Parkway that cut its numbers in half. The Polk's original forecast had passed the financial feasibility test, but by the time Turnpike officials were ready to sell bonds to build the road, which was backed by powerful political and business interests, the Polk flunked.
  
  Turnpike officials sold the bonds anyway, arguing they "had already made the commitment" to build the road, Ham said. To the state Transportation Commission, that violated the law, but all the commission did was write a letter pointing out the problem. Longtime Turnpike Director James Ely insisted last week that his agency complied with the intent of the law.
  
  Sen. Mario Diaz-Balart, R-Miami, who has repeatedly criticized the Turnpike for making South Florida motorists pay for roads not connected to the Mainline, called the situation "infuriating."
  
  "It's not a matter of whether you can cook the numbers, it's whether or not the numbers justify the thing getting done," he said. "To me that seems like it's not kosher."
  
  URS has made other missteps that required changing the Suncoast projections. Their 1992 forecast came out the same day the Census Bureau released fresh data on commuting patterns that changed their numbers. The 1995 forecast assumed the existence of a toll road through Pinellas County that is unlikely to be built. Yet, as they did with the Polk, Turnpike officials went ahead with the Suncoast's bond sale.
  
  Turnpike officials say they remain happy with URS. Three years ago, after competitive bidding, they renewed the company's $500,000-a-year contract through 2002. When the Turnpike's headquarters moved to Orlando this year, URS consultants moved into the same offices.
  
  By learning from their past mistakes URS officials predict they will do a much better forecasting job in the future.
  
  "It is a difficult thing to do," Miller said, "but we do it very well."

Oh Oh, Bridge Company Is Serious

If anyone wanted confirmation that the Bridge Co. is serious about building its enhancement project, the issuance of a PRESS RELEASE is proof.

Off-hand, I cannot recall another one being issued in the years I have been involved in this matter. (Give me a break...I am not going to do research at 6:30 AM!)That along with the 2-page ad in the Star and the public meetings in Windsor and Essex County ought to give some people in Ottawa and Toronto pause for reflection! The Mayor might want to reconsider what he is doing before it is too late as well.

Interesting story in the Star today about the Sandwich meeting. Pretty factual too. Perhaps a new Star reporter perspective on the border file might be refreshing for a change.


No Tax Dollars Needed for Bridge Enhancement Project

Historic Sandwich Town and Southwest Detroit Neighborhoods Preserved

DETROIT, April 17 /PRNewswire/ -- Ambassador Bridge President Dan Stamper used today's U.S. tax deadline as a platform to reinforce his company's position that the Ambassador Bridge enhancement project will require no municipal, federal or provincial funds to bring a new six lane, cable-stayed span to Windsor and Detroit.

The Ambassador Bridge is investing a billion dollars between the new span and the ongoing Gateway highway connections in the United States. This will immediately create 3,700 jobs and restore business confidence in our region. The Ambassador Bridge is privately funded by the Detroit International Bridge Company.

"I wrote out my check last night," said Stamper. "Windsor and Detroit residents should be spending their tax dollars on a variety of important community needs like health and education before they put down their hard- earned money to fund million dollar holes in salt mines one mile west."

During his remarks at a press conference in Detroit today, Stamper also reinforced that the Ambassador Bridge Enhancement Project will preserve Windsor's Sandwich Town and Southwest Detroit neighborhoods.

"The Detroit River International Crossing (DRIC) study put out an inaccurate drawing in 2005 that we have objected to and asked them to correct numerous times," said Stamper. "Their drawing highlighted a 100 acre Windsor plaza for our new span. That is completely false. Because of that false drawing, the people in Sandwich have been unnecessarily alarmed about our project and that has to stop."

The footprint necessary for the Windsor Plaza is 40 acres, exactly the same as it is today. "No additional space will be needed," he reassured Sandwich Town residents.

The Ambassador Bridge is in the process of securing the necessary permits in Canada and the United States to build a new six lane cable-stayed bridge just west of the current Ambassador Bridge.

The Ambassador Bridge is hosting a series of public forums this week in Windsor.

The Tunnel As An Investment

There is obviously a lot more involved in the Tunnel story than we know yet. That is why I get so angry. We are not told everything but are given information as dribs and drabs along with the "isn't Eddie a genius" slant.

It hardly takes a finacial whiz to lease an infrastructure asset these days with all of the publicity about it and when the approach has been telegraphed for quite some time

Good luck to the Mayor of Detroit for eliminating his deficit by allowing the City of Windsor to operate his half of the Tunnel for the next 75 years, assuming of course that Alinda can be bought out of its agreement ending in 2020.

Presumably, according to what the Mayor said on the Melanie Deveau show, each side had financial advisors who said the deal made sense financially. The Americans had Goldman Sachs but the Mayor did not say who our advisors were. I hope that advisor provides a similar type of guarantee against losses that Mr. Sutts is giving on his part of the deal!

From a "deal perspective," I think what Detroit did was masterful. I think that Kwame and his colleagues seem to be a heck of a bunch of negotiators. We won't know for some time until Eddie drops Part 2 of his Tunnel Plan who got the best of the deal to be blunt. Kwame's advisors I think understood quite well Eddie's objectives in coming up with their number and capitalized on it.

I do not want to offend the Detroit Mayor nor do I want to jeopardize the deal for him but I have to look at the deal from the point of view of a taxpayer of Windsor I am afraid. I need to ask some questions from MY personal pocket-book perspective.

In any event, so far Eddie thinks it will work out but he has his built-in safety valves: Cliff Sutts who will say the deal makes no sense and Matty Moroun who will be accused of doing something to kill it.

The first and obvious question----how can we pay for the deal? Where is the US$75M coming from plus probably some money to buy out Alinda? I would not be surprised if there is some creative financing going on as was done in the financing of the University of Windsor restructuring.

It almost sounds like a buying a house with a conditional offer saying that it will only close if one can get financing. The "bank" appears to be Transport Canada or are their other sources:

• "The city has requested financial support from Transport Canada for the deal — given how the federal government also expressed strong fears about Moroun’s potential border crossing monopoly in Windsor.
  
  “We have invited federal and provincial governments to participate and hope they will see the benefit of preserving the tunnel as a public asset and give us the legal and financial assistance we require,” Francis said.
  
  Transport Canada is awaiting a formal proposal from the city on any funding support, said Mark Butler, spokesman for the federal ministry.
  
  “Certainly there may be an opportunity for the government of Canada to be involved in the actual transaction,” he said."

However, Gord Henderson claimed in his column:

• "Following that meeting, feelers were put out to the U.S. and Canadian governments about buying it. Ottawa and Washington weren't interested."

I wonder why Gord did not tell us about all of the other meetings that have been held subsequently amongst the Senior Levels and the City and why the City has put no formal proposal in front of Canada until this time. Is this called pressure negotiations ie to blame Harper if the deal falls apart too? Eddie ought to know that a deal of this size has to go to Cabinet for approval

If they were not interested then in "buying" the Tunnel, then why would Canada be interested in merely financing it? What's in it for them from a strategic perspective? Are we about to see Conservative-bashing now in the Star to bludgeon Stephen Harper into submission a la Sandra and Dwight?

Please, Eddie is not a financial genius. Give me a break Gord:

• "How the heck did little old Windsor snatch a blue-chip infrastructure investment opportunity out from under the money-sniffing noses of Canada's major pension fund managers?"

DUHHHH Windsor did not do it, that's how!

Seriously now, do you really think that Eddie is smarter than Matty Moroun who only was prepared to pay $20M for longer term deal? Was he smarter than Macquarie Bank who were involved with DCTC for years and would have the best idea of what the Tunnel was worth? Do you really think he was smarter than Borealis Capital who are desperate to salvage their DRTP investment in Windsor? How about Alinda who just bought the operating agreement from Macquarie...why would they move on without getting a nice premium? They need money to deal with Alabama boycotts right now.

Come on Gord, we do not need you to create another "urban myth" to enhance Eddie's CV for his future career. Tell us the rest as I speculated before--The Governments including the US Federal, MDOT and MTO along with all or part of the infrastructure companies are all part of the deal and Eddie is just along for the ride!

Or maybe this is a Federal Government deal so that Canada can own this border crossing in Windsor and then go after Matty Moroun's business next. (My goodness, if the Tunnel is worth this much, how much would the bridge be worth?) I can see Canada using Eddie to front the deal with Kwame. Since former Minister Anne McLellan harassed Kwame on the Bridge Co. deal and threatened him I thought with an anti-trust action, how could TC negotiate with him.

It's like the call centre story where Eddie was the hero on Day 1 until we learned who really was responsible for the deal, Sandra!

Please Gord, you cannot be serious about the Tunnel:

• "They'll be kicking themselves where the sun doesn't shine for not recognizing, as the City of Windsor did, a once-in-a-lifetime chance to purchase a safe and reliable revenue stream for the next century and beyond."

Haven't you read my BLOGs about the Tunnel finances and how traffic volumes are sinking like a stone---or did Eddie do that on purpose---and the Tunnel's volumes are down by about 50% since 1999. Interestingly, Gord's financial tale of the Tunnel finished in 2004! What about the financial picture in 2005 and 2006 and the start of 2007? Too ugly eh!

It's just like the other day with the Mayor talking about Tunnel revenues on Melanie Deveau's show. He talked about Tunnel net revenues of $4-5M last year when he full well knows that the Treasurer projected the net revenues this year to be in the $1 M range. I thought Detroit Council was in fact told as well in the Joint Councils meeting that the Tunnel's net revenues were $6.6M only months before a sharp drop was announced!

As for what the value of the tunnel is:

• in February 2005, Eddie said "We're sitting on a $200 million to $300 million asset." (I am not sure if he meant total, or just Windsor's side)
• in September, 2005 Detroit received "three offers with a baseline offer of $20 million"
• in October, 2005, the Bridge Co. offered $20 million for a Tunnel deal with Detroit
• in November, 2005, Representative Steve Tobocman, D-Detroit said "Factoring in inflation, Detroit's side of the tunnel is worth at least $62 million up front
• in October, 2006 the Alinda deal closed for who knows how much (but it seemed to be part of a package with toll bridges so we will never know its true number)
• in April, 2007, Windsor bids $75M

Frankly, who knows whose numbers make sense but Windsor's seem out of whack.

Seriously, the Tunnel cannot compete against the Bridge Co. today---the Tunnel's market share has dropped over the years. How could the Tunnel compete against both the Ambassador Bridge and a new DRIC bridge when there is not enough traffic for two crossings now. Geee Gord, haven't you heard, the Tunnel dividend is just about gone so net revenues are NOT going up now. [And if the money was borrowed by the City, how many more millions would have to be raised to cover the funds borrowed?]

And as far as renovations go....what about the fact that US Customs has called the Tunnel a unique security risk, how much has to be spent on Tunnel Plaza improvements and expropriating the only land owner left in the area now that Burger King may be going to the Top Hat site, where is the exhaust scrubber and where is the land for reverse customs on both sides of the river?

Oh I read the Globe and Mail story too about infrastructure. In fact, I sent the author a note. Here is part of what I wrote:

• "I read your article "Infrastructure: "A safe road to riches..." with some amusement.
  
  You might want to re-read your colleague, Elizabeth Church's articles about OMERS and ask her about the FSCO investigation into Borealis Capital which was responsible for their infrastructure investing. It is a shame as well that you neglected to mention the...write-down in OMERS...
  
  As for infrastructure investments, it was frankly hilarious that you pointed to "OMERS jointly owns the Detroit River Rail Tunnel with Canadian Pacific Railway..."
  
  Infrastructure investments are risky for pension plans... It may look good on paper, as DRTP did, but reality may not play out as they think. But then again, pension plans do not care, especially government ones. They merely ask their contributors to pay in more to cover their losses while playing entrepreneur....just check out the financial problems that Ontario municipalities faced when OMERS dramatically increased the contributions that cities and their employees had to pay to cover their losses a few years ago.
  
  Oh heck, it's only taxpayers money after all!"

Here are a few thoughts I might leave Gord to consider if he gets a chance to ask the City what due diligence it took before making the offer:

1. The City's former budget chairman, Councillor Brister, said to Gord Henderson a year ago that he cannot provide any details but there are major issues pending involving the Windsor-Detroit tunnel that will consume "a significant amount of taxpayer resources." All such "issues" have never yet been revealed publicly
2. We know that the Tunnel Ventilation Building had a cost over-run so far of $7 million but have never been given a full accounting of what work was done and what work may still have to be done
3. A recent magazine article calls the Tunnel "a unique security risk, which makes US Customs and Border Protection officials nervous." Ask the reason why. It should be so obvious
4. That article states that US Customs has said that the Tunnel doesn’t meet their requirements
5. The City's $30 million Tunnel Plaza Improvement proposal creates a giant parking lot to get cars off of City streets but does not move one single vehicle though the Tunnel any quicker.
6. Why would anyone use the Tunnel to cross the border when the Bridge Co.'s enhanced project will have a bridge up and booths in operation to speed people through Customs quickly, never mind if a DRIC bridge is built too. They could not even get Transit Windsor buses through the Tunnel properly for Wrestlemania!
7. The Windsor side's low pricing policy has been a total failure as the Mayor admitted when quoted in the Star "Francis countered there hasn't been a noticeable increase in traffic numbers despite the Windsor side of the tunnel providing the cheapest cross-border tolls at either the bridge or tunnel in recent years."
8. The Bridge has still been able to compete against the Tunnel requiring the Mayor to concede "our traffic has gone to the bridge and we have to do a better job of convincing people that the tunnel should be their crossing of choice."

Please I am not that dumb...the Mayor will pull a deal out of the hat and be a hero by doing something with the Windsor half of the Tunnel too as part of a total package, if anyone is that foolish to invest in it. That is Eddie's Part 2 now. It's been obvious for a very long time. And it is no wonder that my Municipal Freedom of Information application is now in appeal and has been stalled for months.

It's just like Eddie's buddy in Chicago who did this with his toll road. Of course, when do citizens get to debate whether that should be done or to ask if we got the best deal by the issuance of an RFP or Tender for the transaction. Or will it be rammed through like the arena deal or kept secret like Canderel and Spitfires leases.

In other words, when do citizens have a say about what happens to our asset and should we have the risks of a $75 M deal when Standard & Poor's is worrying about our reserves.

I am sure that you have noticed that I am ignoring what Councillors and the WTC Board may have to say since my information is that some of them had little idea what Eddie was going to do in any detail. They have to feel inadequate and unnecessary. They are there to be rubber-stampers only because they are not as clever as our Mayor and would not understand financial wheeling and dealing.

I don't object to smart financial moves that make the City money or reduce the financial burden on my pocket-book. I applauded what the University did.

I just object to being treated like an idiot and being sold a bill of goods that could turn out very poorly in the long run! Short-term expediencies and then moving on may make sense for the Mayor but perhaps not for us.

My Exchange With The Treasurer

Here is the note sent by the Treasurer to me concerning reserve funds.

I like him a lot. He seems to be a "straight-shooter" in answering questions both at Council and in email responses he has made to me and to others that I have seen on other financial issue! He has a job to do and I respect him for that as well.

Note that the email was sent at 10:40 PM after the Council meeting. I appreciate how promptly that the Treaurer answers questions unlike some of his colleagues.

----- Original Message -----
From: Colucci, Onorio
To: Ed Arditti
Sent: Monday, April 16, 2007 10:40 PM
Subject: RE: Reserve funds

Mr. Arditti,

the $74.1 million figure that you quote comes from the 2005 Financial Information Return (FIR) that all Ontario municipalities submit annually to the Ministry Of Municipal Affairs and Housing. That is the document that is used for comparative purposes by most municipalities and is the source for the BMA data that you quote in your e-mail. The FIR consolidates the direct municipal data as well as that of Local Municipal Boards and Commissions. In the City of Windsor's case these other entities include among others the Essex Windsor Solid Waste Authority, The Windsor Public Library, etc. The figures include both Reserve Funds as well as Reserve Accounts.

The Figure of $39 million quoted in the Star is not at all comparable to the $74.1 million in the FIR. The $39 million includes only the City's direct Reserve Funds it does not include the City's reserve accounts (approximately $8 million as of the end of 2006) or the reserves of the other consolidated local Boards and Commissions. We are in the process of compiling the 2006 FIR and the total consolidated data (inclusive of the other Boards and Commissions) is not yet available. The latest BMA study (based on 2005 figures, the latest available) does show Windsor as the third lowest in terms of total reserves as a percentage of expenditures. Similarly the Financial Indicators Review shows that that the City has lower reserves than its peers. That is why the mayor has announced his intention to develop a plan to enhance reserves.

Reserves do fluctuate over periods of time based on many factors. One of these factors has to do with projected inflows into reserves. Budgeted draws from reserves are based in large part on projected inflows of revenues into the reserves. When inflows are lower than projected, it can impact on the balances of reserves. This is especially problematic during downturns in the economy. Similarly, some reserves are set aside for a specific purpose and may be non-replenishing or one-time in nature. Therefore, when they are used for the intended purpose, the level of reserves will decline. I would expect our reported reserves (based on the FIR) as of the end of 2006 to decline somewhat from the 2005 figures due to these types of reasons, but certainly not because of a mentality of "raiding" reserves. The current financial plans are very much based on ongoing long term sustainability. This prudent financial management concept is embodied in the mayor's financial plan that calls for a reserves enhancement strategy. The recommended 5-year capital plan that will be deliberated by council at the end of the month, provides for new transfers of some $35 million into the reserves.

I should further point out that in 2001 (i.e., the year prior to the start of the debt reduction plan and the pay-as-you-go plan) the capital budget amounted to $48.5 million of which fully $23.2 million was funded by the issuance of long term debt, and an additional $18.4 million came from reserves. By contrast, the recommended 2007 capital budget of approximately $75 million has zero debt financing and only $5.9 million coming from reserves (those being replenishing type of reserves that have regular inflows of revenue). Fully $62 million of the 2007 capital budget will come from ongoing pay-as-you-go sources of funds (up from just $5.5 million in 2001). This funding transformation has allowed the enhancement of the capital program (up more than 50%) at the same time as reducing debt and fully funding some very major capital projects. This is, in my view, is a very clear testament to the efficacy of Council's current financial policies.

Regards.

Onorio Colucci
City Treasurer



----- Original Message -----
From: OJIBWAY NOW!
To: Onorio Colucci
Sent: Tuesday, April 17, 2007 10:27 AM
Subject: Fw: Reserve funds


I am very disturbed by your reply.

You have of course not answered my specific questions. You have not explained at all the figures in a matter that can be examined in concrete terms. What does the number of $39M in the Star story represent exactly? You can give a number of $39M but then you tell me that "Reserves do fluctuate over periods of time based on many factors. One of these factors has to do with projected inflows into reserves." You must have some idea what is going in and out in order to give a specific number. I would appreciate knowing how you made the calculation.

In effect, what you are saying is that the Mayor in his Inaugural speech overstated the City-only reserves by lumping in the reserves of other entities. Does the $39 M also lump in other entities? It would appear that the City was in worse shape than the Mayor stated at the time respecting City-only reserves. I quoted NOT from "the 2005 Financial Information Return (FIR)" as you suggested but from what the Mayor said at the public session. He said specifically:

• "The size of our reserve fund is an indicator of a city’s financial strength.
  
  And it also provides us with the security to deal with emergencies. It’s our savings account. And our savings account is lower than most of our peer municipalities.
  
  Today, our debt-to-reserve ratio is 2.55.
  
  That means we have 2.55 times more debt, than we have in our Savings Account.
  
  Today, Windsor has $74.1 million in reserves. We need $140 million." [emphasis added]

There was absolutely NO qualifier in his speech that the amount of $74.1M "consolidates the direct municipal data as well as that of Local Municipal Boards and Commissions. In the City of Windsor's case these other entities include among others the Essex Windsor Solid Waste Authority, The Windsor Public Library, etc." A citizen leaving that meeting would have thought that the City of Windsor's reserves were the specific amount stated at the meeting. Moreover, it would appear that the City does not have $74.1M for emergencies either since some reserves have been set aside for specific purposes.

Neither I nor any other member of the public should be required to have a copy of the City's financials on our knees as the Mayor speaks to try and interpret what he is saying. His comments were very clear without any qualification.

To be fair then, what was the actual amount of the City's reserves less that of Local Municipal Boards and Commissions at the time of the Mayor's speech? Presumably it was less. What would the ratio have been using City only reserves and City only debt and how are you making that calculation and with what figures? What amount was actually available for "emergencies?" What are those numbers as of today?

Is the City allowed to take money out of the reserves of the other organizations for its purposes thereby weakening the financial position of the other organizations?

I am tired of playing with numbers. Why just the other day the Mayor in talking about Tunnel revenues on Melanie Deveau's show talked about Tunnel net revenues of $4-5M last year when he full well knows that you projected the net revenues this year to be in the $1 M range. I thought Detroit Council was in fact told as well in the Joint Councils meeting that our net revenues were $6.6M only months before you announced a sharp drop! Again overstatements are not helpful in understanding whether the Tunnel deal makes sense and whether the City can pay for it.

The issue is a vital one for understanding Windsor's fiscal health. I am certain that you have seen the National Post story about Toronto's reserves today:

• "Toronto’s 2007 operating budget will obliterate reserve accounts and leave the city in “serious shape” next year, the chief financial officer said yesterday.
  
  Joseph Pennacheti said plans to use $202-million in reserve funds to balance the budget will empty some accounts and leave the city with greater financial burdens in future years. “We are down to the last discretionary reserves,” Mr. Pennacheti told the city’s executive committee.
  
  
  Mr. Pennacheti warned draining reserves “could adversely affect both capital and operating expenditure plans” in upcoming years."

I am suprised as well at your comment in the Star reserves story:

• "The plan is cut down on the amount coming out and develop an enhancement program putting money back in,” Colucci said...
  
  “The general philosophy is of taking care of existing assets rather than adding new assets,” Colucci said."

Yet only two days later, the Mayor announced the adding of an asset: "the City of Windsor has entered into a US$75-million agreement with Detroit to take full control of the Windsor-Detroit tunnel." Which City funds will be used to pay for that asset or will the funds have to be borrowed? Is the City instead looking for a P3 partner and if so, will there be an RFP for that or will it be "single-sourced?"

I am not trying to be difficult contrary to what some may think. I would like to have the facts in order to make an informed decision.

I thank you for your co-operation.

Ed Arditti

Correction Re Reserves

I apologize for any confusion.

In re-reading the Mayor's Inaugural Address again this morning, I note that he did state the following:

"That’s why our balanced fiscal plan proposes to increase Windsor’s reserve fund to $112 million by 2012."

It is true that there was a $28M difference between the $140M as the amount Windsor "needs" in the Mayor's speech and the $112M.

However, the Mayor's speech was exactly consistent with what the Treasurer said in the Star story where he stated "The goal is to build up the municipal reserves to $112 million by 2012, Colucci told council."

Doesn't Councillor Postma Read My BLOG

I am very hurt. And even more lonely.

It appears that Councillor Postma is unaware of my BLOG.

According to http://chrisschnurr.wordpress.com Councillor Postma said on John Fairley's Face-To-Face that she

• “read[s] all the blogs out there. If you read certain blogs the [Ambassador Bridge] project is outlined very clearly.”

She must have missed mine because she claimed as well that

• "when you look at it (the Ambassador Bridge’s plans) it will take out 1/3 of Sandwich Towne.”

I thought I had been pretty clear in my BLOGs that such an assertion was incorrect. That is why I thought she never came here.

Then I figured it out.

Obviously the Councillor and some of her colleagues and clearly many people in Sandwich and the rest of Windsor may have been misinformed by the DRIC drawing and comment that kicked out the Bridge Co. from the DRIC hearings. [See BLOG April 12, 2007 "Border Misinformation http://windsorcityon.blogspot.com/2007/04/border-misinformation.html]

To be fair, I can understand as well why she may be confused. After all, the Mayor is the "voice of Council" in this matter. She naturally would look to him for direction. Didn't he write to the Transport Minister Lawrence Cannon and Premier a few months ago saying:

• "City council is calling on Ottawa to dismiss the Ambassador Bridge's application to twin its span, citing concerns about the impact on Windsor's environment and residents.
  
  The demand was made in a letter recently to federal Transport minister Lawrence Cannon...
  
  The city has also written to Premier Dalton McGuinty and other provincial government leaders requesting their support.
  
  "City council is very concerned about the potential significant harm that a second Ambassador Bridge would cause to residents of the city of Windsor," said the letter to McGuinty, signed by Mayor Eddie Francis."

And this

• "BRIDGE SNUBBED
  
  City council has no plans to meet with officials of the Ambassador Bridge as part of the environmental assessment process regarding its twin span.
  
  The bridge company on Monday unveiled plans for a series of public consultation meetings across Windsor and Essex County. As part of the process, a request was made to meet with city council and the mayor.
  
  "It will be up to council through a majority to decide whether they will act upon the request," said Mayor Eddie Francis. "No member of city council has expressed a desire to meet with them..."
  
  But the city has opposed the twinning of the bridge, fearing the environmental impact of border-bound trucks on local residents. "

Was the Mayor misinformed too?

Geeeeeeeeeez, then I got it. Of course they do not want to meet with the Bridge Co.. The Mayor and Council think they know what the Bridge Co.'s plans are. They may not know the real facts either! Maybe they did not come to my BLOGsite just like Councillor Postma.

There is a problem for me that is a bigger one and perhaps for other Windsorites as well. I am not sure how I should interpret what the Mayor says.

I thought he was speaking on our behalf as Mayor. Now I am not so certain. Perhaps instead he may have been speaking as Chair of the Windsor Tunnel Commission, the competitor of the Ambassador Bridge for border traffic, and the competitor of the Bridge Co., if you listen to Eddie, about gaining control of the operation of the Detroit half of the Tunnel! The Senate of Canada picked up on that issue away during their hearings on Bill C-3.

We learned on Melanie Deveau's show the other day that he was speaking with the Detroit Mayor since 2005 about a Tunnel deal which was announced by Kwame the other day for the first time.

Mind you, on March 11, 2004, the Governments of Canada, Ontario and the City of Windsor signed a Memorandum of Understanding for the Let's Get Windsor-Essex Moving Strategy that Eddie negotiated. One of the five projects announced as part of Phase One was improvements to the Windsor-Detroit Tunnel Plaza which would help the Tunnel compete against the bridge. Each level of Government was to put in $10 million or $30M in total to help driver traffic from the "private" Bridge to the "public" Tunnel.

Why this even got Gridlock Sam involved as an advocate for the Tunnel way back when he first presented his report. As part of his "Fast Track Elements," he proposed "Restore Windsor Tunnel share of border crossing." and Improve operations at Detroit-Windsor Tunnel.

He also pointed out that the Tunnel should be improved to recapture the traffic lost since

• "Had 1999 traffic ratios been sustained Ambassador Bridge would have had 1900 fewer cars per day in 2004."

Sam was also paid $40,000 for a ordered by the Windsor Tunnel Commission which has not

• "released the report to the public.
  
  Chairman Mayor Eddie Francis cited property and security reasons for keeping the report confidential...
  
  Schwartz's report on the tunnel plaza addresses how to route traffic to the tunnel, how to manage it through the tunnel and changes needed on the other side, said Francis.
  
  "We have an obligation to ensure our passengers and our commuters are able to access the tunnel with as little impediment as possible," he said.

What made Eddie do it, the blockbuster Tunnel deal I mean:

• "Fearing that billionaire Ambassador Bridge owner Matty Moroun was poised to gain a stranglehold on Windsor’s two border crossings, the City of Windsor has entered into a US$75-million agreement with Detroit to take full control of the Windsor-Detroit tunnel...
  
  Moroun over a year ago made a US$20-million offer to Detroit for control of the U.S. side of the tunnel for 100 years, but that deal was killed by Detroit city councillors following objections from Windsor and the Canadian government...
  
  Sutts agreed the driving force behind the deal has been “to keep this out of the hands of Matty Moroun and the Ambassador Bridge.”

Which hat is the Mayor wearing when he speaks? The interest of the Tunnel is not necessarily the same as the interest of Windsor as conflicts in the past have shown. Making money at the Tunnel which is good for the Tunnel's bottom line so it can pay the Community a dividend ($6.6M in the past) could reduce tourism and business which would hurt the Community.

I have talked about the inherent conflict of interest of Windsor Mayors as MAYOR and as CHAIR of the WTC. The Tunnel deal is the classic example. It is like Transport Canada being the regulator of the Bridge Co. under Bill C-3, being a competitor for the DRIC P3 bridge and acting as financier for Eddie's deal. As Mark Butler of Transport Canada said

• "Transport Canada is awaiting a formal proposal from the city on any funding support, said Mark Butler, spokesman for the federal ministry.
  
  “Certainly there may be an opportunity for the government of Canada to be involved in the actual transaction,” he said.
  
  The federal government recently budgeted $400 million for the border in Windsor and funds also still remain from the joint federal-provincial $300million border infrastructure commitment to the city."

I am disappointed that Caroline's Council colleagues on the WTC did not explain the facts to her so she would not say the wrong thing. Or were Councillors Brister, Marra and Valentinis misinformed as well?

As a public service, let me clear everything up in the simplest possible terms for everyone so they can know what the Bridge Co. wants to do in the West End of Windsor. It will be done visually so Councillor Postma and others will be able to grasp the concept quickly---if the Ward 2 Councillor ever finds her way to my BLOG!