Thoughts and Opinions On Today's Important Issues

Wednesday, March 19, 2008

Tunnel Truth

I wonder how many of my readers have taken a Philosophy course in school? One of the questions that philosophers have discussed over the ages is what is "Truth."

One of the functions of lawyers for competing parties in the adversary system that we have is to determine "Truth." How does one tell what is true or not or who is telling the truth or not when different people have different perspectives on the same set of facts. That is what Judges are there for. They have to determine credibility in order to decide who is more likely be telling the truth as between two parties. One of the ways that they determine credibility is by looking at "objective" facts, if there really are such things, and then drawing conclusions from them.

If you want to see a classic example of a Judge doing so take a look at his comments in the Paul McCartney divorce case decision. (Then click on "Court Rulings" and then "What's new in this section")

Now tell me, which other media outlet in town would compare the divorce of a former Beatle with the Detroit/Windsor Tunnel. You only get that kind of analysis here.

Why don't we try and play Judge today and see how hard or easy it is to determine what is true or not. Here is what I'm getting at. We read in the Star today the following:
  • "Windsor Mayor Eddie Francis, chairman of the tunnel commission, said Tuesday that negotiations are continuing in the city's bid to gain control of the U.S. side of the tunnel, owned by Detroit.

    "Those discussions are coming close to a conclusion," he said.

    Lawyer Cliff Sutts has been negotiating on the city's behalf and was in Detroit for talks on Tuesday, the mayor said.

    A price tag of US$75 million was discussed earlier in the talks. The City of Detroit included that money in its municipal budget last year, but had to make alternate arrangements after a deal fell through when Transport Canada withdrew its support of the Windsor bid.

    How Windsor can fund a deal to take full control of the tunnel remains unknown.

    "Our legal team is looking at different financial options that are available," Francis said."

There is a meeting we know between the Council and the Windsor Tunnel Commission on March 27 to discuss something about the Tunnel. We know about this only because of the of BLOG of Councillor Halberstadt who speculated that there might be a deal to be announced.

Is he right since from the information I have received, no one has yet been let in on the Mayor's secret.

If one reads the Mayor's words, since we know that the lawyers of the City and Detroit have been meeting constantly it seems for the last year, it would suggest that there will be a deal because "Those discussions are coming close to a conclusion."

But wait a minute... go back to the top and read what I have shown in the image above. That was part of the recent Detroit Council Resolution that was passed asking Kwame to resign as Mayor of Detroit. Those few paragraphs suggest very strongly that there is no deal and that there won't be one for months, not until after the end at the least of Detroit's fiscal year at least.
  • "The transaction is in its preliminary stages."

How can this be after a year, and at how much money that City of Windsor taxpayers have paid for outside legal services? How do we reconcile these two seemingly different points of view as to what will happen with the Tunnel?

If I were to ask you, dear reader, to decide today what is the truth about the Tunnel deal, what would you say? Would you say that the possibility of a deal is strong or not? I will let you decide that for yourself but if I were the Judge here is what I would determine.

I would say first that the likelihood of getting anyone to finance the Tunnel deal for US $75 million is remote. Never mind that the Bridge Company was only going to pay a fraction of that amount. And they understand the Detroit/Windsor Border crossing better than anyone.

Who is going to invest in an asset that only has a bump in traffic for a maximum two-year because of the Ambassador Gateway construction project. After that, it is likely that the traffic numbers will decline sharply especially since the Gateway will be so smoothly operating and the new DRIC bridge, if ever built, will take away so much of the Tunnel's traffic.

Even if the entire Tunnel was mortgaged, and especially if payments were non-recourse and guaranteed from Tunnel tolls, who would take a chance that the tolls in the future would be sufficient to cover the payments? If there was a default, one would be stuck with an old Tunnel with all of the business risks that would entail.

And if the City only received US$75 million from a financier to cover the cost of the acquisition of the US side, then what is in it for Taxpayers? Even if we got a few extra million dollars, if there was a default and a financier walked away, then the City would be on the hook to spend many millions to fix up the Tunnel if it was in a bad state of repair.

  • "without the vehicles diverted from the bridge to the tunnel, traffic numbers would be down about five per cent compared to 2007."

In passing, I'm not quite sure where the Tunnel spokesman got the 5% number because in 2007, the drop in annual Tunnel volume compared with 2006 was just over 10%.

In addition, what the story did not say, is that the annual dividend that Windsor received from the Tunnel dropped from $6.6 million annually at the time of the Joint Councils meeting in Detroit to $0 today. And the Tunnel is still a unique security risk.

Accordingly, even if the parties wanted to go forward, and especially because the Federal Government seems to have pulled out, the likelihood of a deal being concluded would be low because there is no money.

However, the real determinant in my mind is what the Mayor of Detroit presented to his Council and what they concluded. I would have thought that if Kwame wanted to demonstrate to Detroit Council that there was going to be a Tunnel deal, especially because it was so important to the Budget of the City of Detroit, he would have provided convincing information to eliminate the Tunnel issue as part of the attack against him. That apparently was not done.

It could well be that the Detroit Mayor decided that since the Resolution was so unimportant, he need not give his Council at this time any information, especially if there is a confidentiality clause with the City of Windsor. I would assume that the Mayor would have said something about confidentiality to the Councillors but he did not.

The only conclusion that I could draw based on what a responsible elected body said after reviewing the facts and determining that the likelihood of a deal in the near future is "unlikely" is also to conclude that the truth is that the deal with Detroit it is still very much up in the air, at a very preliminary stage.

Therefore if I was a Judge today, I would say that there is no deal that will be announced on March 27 or any time soon.

So how do I reconcile what I am concluding with what Eddie said? It's quite simple. I could be absolutely wrong, and that could well be the fact. Or will the announcement be nothing at all?

It could also be that Eddie is being cute and hedging his bets. Is he leading us to believe that there will be a Tunnel deal but in reality what he will announce at the meeting on the 27th is that the deal is dead ie "concluded."

Is Eddie just putting us off again, for as long as possible, so that he can blame the conclusion of the deal on Kwame because of all of the problems that he has with the Text Messages scandal. After all, Eddie is never at fault and can never be blamed.

You be the Judge!