Short Border stories
FBI INVESTIGATION
Oh let's ask the question everyone is wondering. Given the amount of money involved in the Tunnel deal over the next 75 years, is the FBI taking a look at this transaction as well?
TEXT MESSAGING
Let's ask this one too. Has anyone checked the text messages for those involving the Tunnel deal?
LEGAL FEE JUSTIFICATION
You know that $1.2 million plus for legal and consulting fees on the Tunnel, that really should not concern taxpayers. According to our Mayor,
- "Given how the tunnel has returned $56 million in dividends to the city since 1990, the legal fees are part of the cost of doing business to protect the asset, Francis said."
No wonder Cliff Sutts feels comfortable and can say to the Detroit media:
- "he denied the existence of any criticism in Windsor about his legal fees and said his bills cover three years of work." [emphasis added]
Hmmmm does anyone at City Hall read the Windsor Star Forums.
NO COMPETITION BETWEEN THE BRIDGE AND THE TUNNEL
I thought the City's position was that there was no competition between the two crossings. I guess that has changed:
- "The mayor refered Thursday to the 2005 bid by Ambassador Bridge owner Matty Moroun to gain control of the U.S. side of the tunnel and his suggestion to create a new customs superplaza at the bridge in Detroit that would redirect tunnel traffic.
"For a long time we took for granted the arrangement we had at the tunnel - until 2005 when the weakness of the arrangement was exposed," Francis said.
Windsor has 5,000 commuters who cross over daily to Detroit.
"If somebody comes in and shuts down half the tunnel, all of us would ask why didn't somebody do something," Francis said.
"If you are a commuter, think what it means if there was no public oversight, no control over tolls, capitol improvements or what happens on the other side. That's what continues to drive us.
"Those are key issues that effect tourism, economic development and both cities."
ARE COMMUTERS BEING PROTECTED
According to the Mayor one of his justifications for the Tunnel deal, since he has not yet demonstrated its business case, is to protect the 5,000 commuters.
On the $75 million transaction, forgetting interest costs, that means that Windsor taxpayers will subsidize commuting by the amount of $200 per year per commuter.
Assuming however that the Mayor is a business person, since after all he was Young Entrepreneur of the Year, he would want to recover the costs since otherwise Windsor taxpayers would get very upset. Given the annual principal and interest payments and Tunnel volumes as at the end of 2007, the toll would have to increase slightly more than a dollar per trip or two dollars per round-trip to cover those costs.
Given the new booths at the Bridge that should help decrease congestion at US Customs and if the Bridge Company chose not to increase their tolls if the Tunnel did or to increase them at a lower amount, how long do you think it would take for Tunnel commuters to switch crossings?
Wouldn't that mean a reduction in revenues for the Tunnel as volumes decreased significantly.
WHY IS A LOAN BEING CONSIDERED AT ALL
I would still like to know why Detroit is considering a $75 million loan from Windsor that has to be repaid with interest when it appeared that Alinda was offering them $70 million plus 20% of the gross revenues.
And who gets that $10M for fees and insurance expenses and what are they? Does it include bond insurance premiums in case of default?
ACTUAL AMOUNT OF LOAN
If a $75 million loan is taken out from Infrastructure Ontario by Windsor over 40 years, then the amount to be repaid per year is about $4-5M per year depending on the interest rate. According to the media however, Detroit will only pay to Windsor $700,000 per year. Presumably, that means that the agreement between the City of Detroit and Alinda which is to last another 12 years will be assigned to Windsor because that is how much Detroit is making under that agreement now.
Assuming that no one wants to lose the difference between the real payback amount and $700,000, that means that about $4 million per year would have to be added on to the loan outstanding. After a dozen years, including interest, another $50 million or so would be owing meaning that the total amount of the loan would be in the neighborhood of $125 million to be paid back over 28 years.
WHICH INTERSTATE WILL BE CLOSED NOW
Windsor cannot close a road at the Ambassador Bridge on a temporary and intermittent basis to allow bridge repairs but the Americans can close down I-75 for up to 18 months for the Ambassador Gateway project. Here's the latest announcement.
The Michigan Department of Transportation closed a one-mile section of I-96, in both directions for three months.
WHERE WILL THE DRIC MONEY GO
Assuming that our Mayor's ad blitz and threatened lawsuits will be successful in killing off the DRIC Road to be replaced by nothing, where will all of that Senior Level money go?
The Globe and Mail reported on a number of projects around the Golden Horseshoe area that will be looking for money. Included in the projects is this one of interest:
- "NIAGARA GTA CORRIDOR
Plans to twin the Peace Bridge at Fort Erie and traffic already push the capacity of the Queen Elizabeth Way to its limit.
Consequently, the province is studying a transportation corridor across the Niagara Peninsula above the Niagara Escarpment that will link into the GTA highway system west of Hamilton.
Two studies, one of environmental factors and the other of transportation and socio-economic factors affecting the corridor, have been finished.
By the end of next year, the ministry hopes to have a final assessment of transportation needs in the corridor and to have prepared a recommended strategy to meet them. It will then study alternate routes for a new highway and pick one early in the next decade."
I wonder how many of those roads will be tunneled the way the Mayor is demanding for Greenlink. It is unbelievable... the DRIC Road which supposedly costs 10 times more than any other road project in Ontario is being fought by the Mayor whose priority until the Tunnel deal, since he snubbed meeting with John Tory who was here talking about unemployment, was jobs, jobs, jobs.
SOME TUNNEL NUMBERS
While the Mayor has been on the Windsor Tunnel Commission, the Tunnel volume has dropped dramatically.
At the end of 2003, the Tunnel volume was 6.39 million cars with a 10.6 percent market share.
At the end of 2007, the Tunnel volume was 4.31 million cars with a 7.9 percent market share.
The drop is about a third of the volume in such a short period of time.
For trucks, the volume decreased from 180,000 per year to 110,000 per year with a fall in market share from 1.3% to .9%
The drop for trucks is about 40% of the volume in such a short period of time.
WHO WILL OWN THE DETROIT/WINDSOR TUNNEL IN THE FUTURE
Can you imagine what the numbers will be once people understand that the Bridge Company has opened up seven more car lanes at the bridge and if the DRIC numbers are realistic and that the new DRIC bridge will take away 25% of the Tunnel traffic.
Increasing tolls would be virtually impossible if the two bridges are competing for car and truck traffic.
It is problematic whether the interest on the loan to the Ontario Government could be paid such that there would be a default and the Tunnel taken over.
Would Ontario become the owner of both sides of the Tunnel? Would the Feds take it over? Would it be sold to some private enterprise third party?
Naw, the P3 operator of the DRIC Bridge would get it as part of a package. A new DRIC bridge P3 investor wants a monopoly over the crossing to guarantee a profit. Isn't that why Senator Fortier is down here!
That could give Ontario a say in the real jewel, the DRIC bridge where the real money is to be made, if they owned the Tunnel. It would be leverage against the Feds who have shut them out of the Bridge transaction completely!
posted by JoeBlog at 11:05 a.m.
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