Straight Tunnel Talk
I want to talk about two matters with respect to the Tunnel in this BLOG. One has to do with financing the Detroit deal and the other has to do with the Council meetings on March 27 and next Monday, April 14.
Why can't we have a boring Mayor and Council who see their job as fixing roads and sewers. Why do we have to have entrepreneurs who are prepared to play with taxpayer money and put the risk on us. Oh well, if it doesn't work out, I guess we can just not re-elect them as we all go to the poor-house.
First, I'm getting more and more concerned about whether the City should be entering into a US $75 million transaction at all with Detroit. I do not see a business case to be made for it to be direct.
In the Star story dealing with legal fees, the following comment was made:
- "One source suggested Windsor needed to create a corporation of its ownership in order to use the asset as collateral to secure a mortgage or bonds to finance a deal for the Detroit side.
The federal government was originally supposed to help fund the deal, but backed out of the talks nearly a year ago."
Let's assume that the City wanted the Feds to pay the $75M, or more likely more, to provide the financing. You remember how much less the Bridge Company offered to do this transaction and they are a pretty smart border operator.
We should expect that the Feds would have an interest in the Tunnel given their recent legislative action on bridges and tunnels and their Corridors and Gateways policy. We should also expect that they would have undertaken an evaluation of both the finances of the Tunnel and its condition.
If they pulled out, should we assume that they thought that the amount asked for was excessive or perhaps the condition of the Tunnel was poor requiring future repairs or both?
If I am right, then why are we doing this deal at this amount of money merely to help out Detroit's Budget hole. Who's looking out for Windsor citizens' pocketbook? I have no desire to be in the hole either.
I was glad to see that Detroit Council President Cockrel made the comment:
- "the idea has to make sense for both cities."
I was pleased when Council Dilkens stated, given his financial background:
- "There ought to be a very strong business case before we jump into any kind of deal of this magnitude. At this point, we haven't seen that."
I was deeply concerned about the negativity in his remarks about the deal but extremely delighted to see that Council Marra who knows how to run a large organization said the following:
- "Coun. Bill Marra, a member of the tunnel commission, said his comfort level has declined since the federal and provincial governments backed away.
"Initially, it was based on being able to secure funding from the provincial and federal governments. I understand those opportunities don't exist. Regardless of how this is set up, it falls on the municipal taxpayer and there needs to be a good business case."
He noted that tunnel traffic has drastically declined in recent years to the point where the city's dividend from tolls has dropped from $6 million to zero.
"(Sutts) is the best you can have on this," Marra said. "My concern is not legal finds, but ultimately is this decision favourable for the taxpayer. What looked good eight months ago might not be good today."
Let me turn your hair white if you are a Windsor Taxpayer, dear reader, when I give you this information:
2002 - $14,170,702
2003 - $12,658,749
2004 - $11,051,779
2005 - $10,202,456
2006 - $9,895,000
2007 - Probably even less given the 10% drop in Tunnel volume over 2006.
I have been told that these are the official Tunnel numbers for the Windsor side of the Tunnel. If that is the case, please explain to me how we could finance $100 million deal for the Tunnel by using the asset as collateral to secure a mortgage or bonds ie. approximately 90% of the $111 million valuation of the Tunnel rollover amount. If the money was borrowed for example for 75 years at 6% with a 75 year amortization, the principal and interest to be paid back every year would be about $6 million!
If the Tunnel is not paying a dividend now, how would this money be paid back since there are expenses for operating an old Tunnel? Where would we find an extra $6 million? If tolls are increased, vehicles would merely move to the Ambassador Bridge where the tolls are lower already thereby decreasing revenues some more.
Given what US DRIC has said about the new bridge if it is built, it would take away almost one quarter of the Tunnel's business. Was that factored in by anyone since the Tunnel Rollover amount was calculated in June, 2007!
Where's the Business Case to justify the deal? Please explain to me then how the Tunnel would not go bankrupt. What is the rationale that would demonstrate that the Tunnel would be a viable operation if the worst case happens.
Is this why the Feds pulled out? If they pulled out, then why is Eddie so insistent about doing this deal? Frankly, I wish that citizens were given a proper explanation for this huge transaction. Please do not give me the nonsense about transferring the risk to a new Corporation because if the Tunnel goes bankrupt, then the City is hurt dramatically. Taxpayers will suffer regardless.
And that leads me to my second point.
If you have read my BLOG for awhile, then you will know that I was pretty upset about what happened at the Joint Tunnel Meeting between the Windsor Tunnel Commission and the Windsor Council that was held on March 27, 2008.
Accordingly, I filed a Meeting Investigation Complaint under the new procedure that was introduced with respect to meetings.
I was also annoyed when I saw the Windsor Star article and then looked at the Council Agenda for Monday and saw an Agenda Item: Item 4 Closure of Part of Park Street East Abutting the Tunnel.
Given the fact that I was already complaining about the previous meeting, I would have thought that this matter should not be heard until my Complaint was dealt with.
Accordingly, I sent the following e-mail requesting a deferral of Agenda Item 4 to the Clerk and Deputy Clerk with a copy to the Mayor and Councillors:
- "Request for Deferral: Item 4 Closure of Part of Park Street East Abutting the Tunnel
I will be unable to attend the Council meeting in person on Monday, April 14, 2008 because of a previous engagement. Please accept this email as my formal request for the above-noted matter to be deferred until such time as the LAS investigation into my complaint respecting the March 27, 2008 Council meeting is completed.
If my complaint is upheld, then it may be that the "Tunnel Rollover" to the new Tunnel Corporation may not be proper. Accordingly, it would not make sense to take any action with respect to Item 4 on Monday's Agenda until such time as LAS renders its decision.
Notwithstanding that I have submitted my complaint to LAS, I have requested that LAS recuse themselves from making a decision for the reasons set out in my complaint. Accordingly, I have also forwarded my complaint to the Ombudsman of Ontario for handling."
You can watch Cogeco TV to see what the outcome will be. Can you guess what it will be?
By the way, the Clerk, the Mayor and every Councillor except one has acknowledged receipt of my email seeking a deferral. The one who has not is the Councillor formerly known as Councillor Budget! And he is my Ward Councillor too.
So much for the dandelions being cut in front of my house in a timely fashion.