Blocking The P3 Package Deal

Enough of these silly diversions with DRIC/Greenlink and with Eddie and Dwight. Let’s get down to the real facts of the border file. It has all become crystal clear because of one single sentence in a news story.

This file is much greater than the Ambassador Bridge. It is much greater than Matty Moroun. In fact, it really has nothing to do with him whatsoever except for the fact that he is the Owner of the Ambassador Bridge. And that exactly is the difficulty.

His ownership is causing major problems for Governments that completely misunderstood his and his family’s interest in maintaining their ownership of the bridge. They thought that because they are Government they could take certain actions which he, as a rational business person, would understand could result in the devaluing of his business. According to their script, he would beg them for a buyout at almost any price.

It is Government miscalculation that has caused the misery in this area that has prevented our economic diversification when it is so crucially needed and has delayed the construction of the Enhancement Project. That miscalculation is the cause of the delay in the creation of thousands of jobs as well.

When the Governments saw the two and one half page spread in the Globe and Mail about him and his attitude towards the bridge, they understood the mistake they had made. By then it was too late for them. It is pretty obvious to see Government desperation as a result. It is a shame that no one gave him a copy of the script in advance to read so that he would have known what he was supposed to do.

It is not what Moroun is doing or not doing that is the problem. He is just running his bridge and doing what he has been doing over the last decade with respect to the Enhancement Project. It should be no surprise to Government, especially the American Governments who are putting in several hundred million dollars into the Ambassador Gateway project. It was designed to accommodate another bridge.

In fact, he probably had no idea what the Governments’ intentions really were. How could he? He probably thought it may be payback on his FIRA victory or due to anti-Americanism or jealousy of his success. I doubt if he ever thought that it was as simple as the fact that he owns the bridge that is the issue.

Let me explain

It really would not matter who the owner of the Bridge was, Canadian, American or from wherever. It does not matter if the Government is the owner either. All Governments are desperate for money and will seek it from whomever, no matter what has to be done.

We saw it clearly in the City of Detroit as an example. Their budget deficit was so bad that the ex-Mayor proposed to offer his side of the Tunnel to Windsor for an upfront payment of $75 million. Was it a good deal for Detroit or a bad deal? Who knows because it seems that the City Council was never given enough information in order to make a decision. The point is that the ex-Mayor was effectively doing a P3 transaction to help solve his budget problems.

This is obviously the pitch that the P3 investors are making. We have the money to solve all of your ills so lease to us your assets for a long period of time so that we can rip off the public. That is my view about what the DRIC road is all about as one small example.

• “Every toll facility in the country is looking at this, [Indiana deal]'' said Schulz, the city of Chicago's budget director in 1983 and 1984 [and the head of the Infrastructure Technology Institute at Northwestern University in Evanston, Illinois] . ``Cities and states are strapped for funds, and the anti- tax sentiment is increasing almost daily, particularly with the motor-fuel price run up last year.''

The politicians love the P3 companies. In Chicago as an example, that City made $1.8 billion on the lease of its Skyway tollroad to Cintra-Macquarie. That is about double what they expected. The Indiana toll road was also leased for $3.8 billion to Cintra-Macquarie.

It is not always rosy with these transactions, especially now when pension funds have lost so much money because of the stock market decline and because some of these Infrastructure deals have not worked out as well as was expected. For example, for the lease of the Pennsylvania Turnpike, the State expected to receive $16 billion but the best bid was only $12.8 billion. Interestingly, Cintra-Macquarie only bid $8.1 billion.

Okay, okay, okay. I have told you all this before so what is so new. Here is the shocking revelation which confirms one of my speculations that I have Blogged in the past. This is from a recent story that was quoted in the Windsor Star.

• “Gov't assets on block?
  Flaherty mulls sale to balance books
  
  OTTAWA - Forget shopping online or tuning in to The Shopping Channel, the government of Canada may have just what you're looking for -- office space, housing, planes, boats or if you're on the hunt for more unusual items including dinosaur bones and Harlequin romance novels, you may be in luck.
  
  Federal Finance Minister Jim Flaherty said Thursday the government is considering selling real estate and other Crown assets to help balance the books as the economy continues its downward slide.
  
  Flaherty, speaking at the Conservative policy convention in Winnipeg, said the government plans to review its capital assets and determine if any should be sold.
  
  Friday, Prime Minister Stephen Harper said the government does not, however, intend to hold a fire sale of properties, Crown corporations and other assets to avoid a deficit.”

Here is a strange asset that they are offering perhaps for sale or long-term lease. Interestingly the assets were not named as many of the others were but just described:

• “Two bridges over the St. Clair River between Ontario and Michigan.”

That is the one key sentence in the story that confirmed my speculation as far as I am concerned. Of course, you know what that asset is. It’s the twinned Blue Water Bridge between Sarnia and Port Huron. Two bridges between Ontario and Michigan.

I wonder how the reporters chose the list of assets that might be dealt with or did the Government provide them with that list.

It appears therefore that not only will the DRIC bridge be a P3 project but the Blue Water Bridge may be one as well by the time everything is done. That is not something that I have ever heard in this file for all of this time. I wonder if the people in Sarnia/Port Huron know something about this because I don’t recall reading anything about it in their media either.

This leads to an interesting question and may explain the real reason for the cross-border partnership amongst the Governments: Will Michigan make their half of the two bridges part of the P3 disposition as well. Michigan has to pay over $400 million for a new plaza in Port Huron, money which is going to be hard to find. How tempting would it be to put the plaza project and the bridges into a P3 Request For Proposal along with the Canadian side of the bridges to see how much money could be brought in. If Michigan played it properly, not only would the Plaza be built at no expense to it but it would also bring in money for the term of the lease upfront. A twofer!

Doesn’t that sound vaguely familiar? Doesn’t that sound like something that the Governments want to do in Windsor/Detroit? The problem they have here is that the Ambassador Bridge is a competitor and no one may want to bid on the DRIC project without a massive Government guarantee if the Bridge Company is still in business.

What is fascinating as well is that the main competitor of the Blue Water Bridge, as disclosed by that Bridge’s management itself, is also the Ambassador Bridge. That clearly came out at the Cropsey hearings. Trucks, depending on destination, have the choice of using either one of the bridges since the distance to be travelled is virtually the same.

Because the Ambassador Bridge is better run, the wait time for trucks is generally shorter there than in Sarnia/Port Huron which means that someone does not have to sit on the bridge idling at $125 an hour. That means that truckers would prefer to use our crossing as their crossing of choice. That is also why the US DRIC consultants felt confident that the new DRIC bridge would take away a substantial part of the Blue Water Bridge truck traffic as justification for building the DRIC bridge.

Thus, Matty Moroun’s ownership of the Ambassador Bridge is a problem in both Sarnia/Port Huron and in Windsor/Detroit. His continued operation blocks Michigan and Canada from having someone spend all their private money to build the infrastructure at their expense and prevents them getting an upfront payment that they can squander. Politicians are good at doing that.

There is even more. My belief is that the Governments always intended to lump together the two crossings in one package and perhaps even throw in the Tunnel as well. They had to do that because the two crossings and the Tunnel are competitors with each other. One could not have two P3 operators competing with each other for the same traffic because that is not what they do. A P3 operator does not want competition and wants a monopoly in order to guarantee a success on the transaction. The Governments would have had no choice but to put them together.

Of course this all has to do with money. And the Ambassador Bridge is the block to some bureaucrats’ multi-year ambitions. Why bureaucrats… This plan was developed under the Liberals and has been continued by the Conservatives. After all, wasn’t Bill C-3 one of the first pieces of legislation introduced by the new Conservative Government? According to some Senators, it was supposed to pass as a slam dunk until the Bridge Company people made their presentations at the various hearings.

That is why Governments had to get rid of them. That is what DRIC is all about and Bill C-3 and a whole bunch of other matters designed to terrorize Matty Moroun into selling out cheaply or be bankrupted.

Of course, some people reading this may well be skeptical of what I have to say. To take all of this from one sentence in a newspaper article seems outrageous doesn’t it. But of course, that one sentence is confirmation of what I have been saying for a very long time.

Here is the real proof however. It was laid out in front of us years ago at the Cleary when Sam Schwartz made his first presentation to us as our Traffic Guru. It was typical Eddie. Put it out there so no one would really understand it and when it did happen he could point to it so that we would understand his genius.

Here is what I Blogged about it before:

• “…we merely need to look to the first Report of Sam Schwartz and its Socialist-type musings. That Report was prepared at a time when Eddie and the Senior Levels were buddies and he would have known what their thinking was.
  
  Here is what Sam wrote:
  
  Balanced Traffic between Blue Water Crossing and Windsor-Detroit Crossings
  
  Developing a balanced traffic network between the Sarnia-Port Huron and Detroit-Windsor Crossings would provide benefits without a new crossing but would be compatible with any of the new crossings... It sets aside the profit-motive, which means each facility is competing for the most traffic, with a utilitarian-motive: the greatest good for the greatest number. Such a scheme may require revenue sharing among participants."
  
  How can this possibly happen? How can one manage revenue sharing between two bridges unless you own them both? Do you really believe that a private enterprise operator is going to set aside the profit motive to help out its competitor when it is the more efficient operator? This can only happen if there is one owner of both bridges…
  
  MDOT is prepared to go along with Canada on the transaction because then both bridges will be Government owned. MDOT is interested because their expectation I am sure is that there will be a P3 offering to help pay for the Blue Water Bridge expansion. Their Canadian Government P3 teacher will instruct them how to do it. How else would Michigan come up with that kind of money in the economy that it has now…
  
  And even if there was not a P3 at the Blue Water Bridge to pay for the expansion "Such a scheme may require revenue sharing among participants." It would mean that Michigan would not have to worry that a private operator in Windsor/Detroit who runs the best border operation in North America would take away business from them. They would not really care then if the new DRIC bridge took away 15 or 16% of their truck traffic because there would be some kind of a revenue sharing program to ensure that the Port Huron bridge did not go broke.”

Eddie revealed the Plan years ago. It is something that the Governments wanted. All that has happened is that the economic melt-down makes it easier for the Governments to do what they want without much scrutiny. Why everyone from every party supports the infrastructure “New Deal” and the jobs that will be created. Who cares if taxpayers get ripped off.

If I am right, then the Bridge Company Owner knows now why he has been treated as he has been. He is in the way of plans that he did not know about. He is costing people money and perhaps careers.

The question now is how will he react and what will he do?