Thoughts and Opinions On Today's Important Issues

Friday, November 21, 2008

P3 Cocaine (Part 1)


Did you know that we have a number of addicts who are running our Government at the highest levels? I’m not talking about drugs or alcohol. Rather P3s have become the opiate of the politicians and bureaucrats. Officials have been tempted with the newest substance by those who traffic in money.

Do you remember the Military/industrial complex? Here’s how it was described by President Eisenhower a few days before he left the White House:
  • “This conjunction of an immense military establishment and a large arms industry is new in the American experience. The total influence -- economic, political, even spiritual -- is felt in every city, every State house, every office of the Federal government. We recognize the imperative need for this development. Yet we must not fail to comprehend its grave implications. Our toil, resources and livelihood are all involved; so is the very structure of our society.

    In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the militaryindustrial complex. The potential for the disastrous rise of misplaced power exists and will persist.”

We have a new complex today, one involving politicians/bureaucrats and the P3 companies.

Government officials are now hooked on a new narcotic: the money provided by P3 investors that will fix up all of their problems. Whether it is a school, a hospital, a highway, an airport, a bridge or transit line, P3 investors are there ready to provide the hundreds of millions and even billions of dollars needed to make the life of the Government official so much easier.

Read the literature about why P3s are so beneficial. One article by the former chief of staff to Prime Minister Paul Martin (whose Executive Assistant was a VP of Borealis in case you did not know) that I read that is typical claimed the following advantages:

  • ‘‘Off-book’’ financing. What this means is that the government does not show on its books a debt for the amount of the project but rather shows only the payment each year to the P3 operator. Accordingly, the Government does not show that it is in debt for as much money as it really is since it has to make payments over time. They can try to demonstrate that they are fiscally responsible since the debt is not increasing.
  • needed public infrastructure can be built faster under a P3 for debt-restricted governments
  • public private partnerships also have a solid track record of completing construction on time or even ahead of schedule
  • all the commercial risks, such as design risk, meeting standards of service delivery, cost overruns, market risks, etc., related to building and delivering the public good can be transferred to the private sector.
  • P3 model can deliver costsavings to government. The argument from logic asserts that efficiency and cost-effectiveness are not hallmarks of public-sector service delivery
  • private-sector participant has a strong incentive to provide high-quality customer service.
  • Enabling the public sector to focus on outcomes and core business

Can it get any better than this! These are the so-called advantages of the P3 model.

There are some disadvantages but they are easily explained away. One of the issues is ensuring that there are proper contractual terms between the Government and the P3 operator. And this is what the apologists for P3s state must be undertaken.

  • “Carefully crafted service and quality standards in a concessionary P3 contract, ombined with effective oversight, provide the public sector with the power to clearly define and control the levels of quality and service required of its private-sector partners. Penalty clauses and, in the extreme case, the right to terminate the contract, can be used by the public sector as a discipline on service quality.”

Another negative of P3 is

  • “that P3s are more expensive because they face a ‘‘triple hurdle – the higher cost of private borrowing; the need tomake a profit and associated other potential inefficiencies; and higher procurements costs.”

That is dismissed however because

  • “In a P3, however, the risks and potential costs are underwritten by the private sector, albeit compensated by an appropriate return. In other words, in a P3 procurement, the government is paying an insurance premium to protect against the risk of higher costs, rather than self-insuring at a zero premium cost but at a potentially high failure cost.

I would have thought that if a Government can enter into a massive and complex agreement that will protect its interests in a P3 then it ought to be able to enter into such a contract with a General Contractor that deals with one project. After all, a contract is a contract is a contract. I would have thought that it is much easier to write an agreement with a General than it is to write a contract with a P3 operator to cover every eventuality in an up to 99 year agreement.

Did you like how the word profit was transformed? It became “an appropriate return” and “an insurance premium.” I wonder if the author was embarrassed to discuss how much money a P3 operator can make on a project that effectively gives it a monopoly. That is what P3 operators want: no competition. I have Blogged this before but it is worth while repeating;

  • “Jane Welsh, a senior investment consultant at Watson Wyatt, said infrastructure funds were typically aiming to make inflation-linked returns of about 12% a year after management fees of 1% to 1.5% and performance fees of 20%.

    The riskiest opportunities, such as those involving the building of a tunnel for a tollroad, may aim to generate returns of more than 20% a year. "

For OMERS, as an example, its overall private equity rate of return in 2007 was 18.6%. Its rate of return for infrastructure was 12.4%.

Why would any P3 operator have any interest in the Windsor border unless they are going to make this kind of rate of return. There are so many other places that they could invest their money that they would be negligent if they did not do so but rather came into the Windsor area and only made a “borrowing rate” amount.

You think I am overstating and being dramatic with the use of the word “addict.” Here is one description about drug addiction and its effect on the brain. Just substitute P3 money and tell me I am wrong:

  • “Addiction is a chronic, often relapsing brain disease that causes compulsive drug seeking and use despite harmful consequences to the individual who is addicted and to those around them. Drug addiction is a brain disease because the abuse of drugs leads to changes in the structure and function of the brain. Although it is true that for most people the initial decision to take drugs is voluntary, over time the changes in the brain caused by repeated drug abuse can affect a person’s self control and ability to make sound decisions, and at the same time send intense impulses to take drugs.”

Just read quotations over the past little while about how politicians are salivating about the use of infrastructure money to create jobs in this time of economic crisis. Is anyone talking about the possible adverse consequences of P3 deals? I don’t see any of it.

We are told that governments don’t have the money… how could they after spending $700 billion in United States and now $75 billion in Canada on the mortgage meltdown problem never mind the issues with the Automobile Industry. But the private sector is rolling in cash even though pension plans took a huge hit in the stock market. The Canada Pension Plan lost $10B in the last quarter but they still have $117.4B under their control with more coming in each month from compulsory taxpayer contributions.

We are dealing with so much money. And nothing makes politicians happier than dealing with money, especially other people’s money that they can spend. With a P3 deal, they can talk about private money and can pretend that it is not taxpayer money either so that they don’t have to raise taxes right away.

Of course, taxpayers are responsible for paying for the P3 either directly or indirectly as users or even more indirectly when the project fails because there is not enough revenue. But that doesn’t matter. By the time that people understand what has really hit them, those politicians and bureaucrats who were responsible for the project in the first place, will be off doing bigger and better things.

Who knows what positions or consultancies some of them will take or law firms they will join after they leave their Governmental jobs…just like the retired generals and admirals who took employment with defence contractors. It should not be too hard for you to grasp that idea.

Our Politicians love P3 operators. They are becoming completely dependent on them. Here are some examples that you may find interesting:

  • “Building Canada, the $33 billion commitment to fund infrastructure projects through to 2014, requires all projects seeking $50 million or more in federal contributions to consider the P3 option. The February 2008 budget created PPP Canada Inc., a new Crown corporation that will work on P3s with the public and private sectors.”

  • “Ontario ’s Finance Minister Greg Sorbara invited some of the province’s most powerful investors to consider helping to finance the rebuilding of the province's crumbling infrastructure. According to Sorbara, the province's pension funds have a central role to play in financing public-sector projects. "

Bureaucrats like P3 deals as well. They can have all of that money and deal with the P3 operators only and ignore the politicians. Who wants oversight anyway by a bunch of people who are merely elected by the public. As that Civil Servant in the Star wrote:

  • “Civil servants have been trained to give politicians the best, most extensive and most complete analysis of just about any public policy issue thrown at them. Bureaucrats are initiated very early in their career in the art of communicating this kind of information to politicians, and by the time they reach the senior echelons of the civil service, they have learned to do this very well indeed. Throughout their careers they have been encouraged not to shy away from making recommendations and providing fearless advice to their political masters on the understanding that even if their advice is rejected, this is how the best possible decisions are taken.”

I will be much more specific in Part 2 about how the money dealers will work in Windsor and with DRIC in particular.

Windsor Retailers And Canadian Club

Thanks again to the Detroit/Windsor Tunnel folks for helping out Windsor retailers in these tough economic times.

NOT!

Obviously, the expectation is that people will spend a lot more at the US malls. No one is going to drive for an hour both ways to a mall just to spend $20 dollars.

If one assumes that each car will spend at least $100, then Windsor retailers may have just lost out on about a quarter of a million dollars worth of sales in just one day.

Perhaps the Presidents of the various Business Associations in the City might want to have a chat with the head of the Windsor Tunnel Commission/Mayor about this to see what he has to say.
  • Taubman Malls Again Distribute Gift Card Vouchers to U.S.-Bound Travelers at Windsor-Detroit Tunnel on Black Friday

BLOOMFIELD HILLS, Mich., Nov. 20 /CNW/ -- On the day after U.S. Thanksgiving, better known as Black Friday -- traditionally one of the biggest shopping days of the year -- 2,008 lucky drivers passing through the Detroit- Windsor tunnel will get a $20 boost to their holiday budget.

On Friday, Nov. 28, Taubman will give away a $20 (U.S. dollar) gift card voucher to the first 2,008 vehicles entering the United States from Canada via the tunnel. The promotion will run from 5 a.m. until 10 a.m., or while supplies last. This is the second year for this popular and successful cross- border promotion.

Recipients can redeem the vouchers from 6 a.m. to 1 p.m. that day only at four Detroit-area Taubman malls, all within an hour's drive of the international border. With gift cards in hand, shoppers can then purchase a variety of merchandise from participating retailers.

"For those Canadians who make Black Friday an annual shopping tradition, we would like to be their shopping destination of choice," says Karen Mac Donald, director, communications for Taubman.

After paying the tunnel toll, drivers will receive one gift card voucher per vehicle from tunnel staff. They can redeem their voucher before 1 p.m. that day only at the customer service centers of The Mall at Partridge Creek in Clinton Township, Fairlane Town Center in Dearborn, Twelve Oaks Mall in Novi or Great Lakes Crossing in Auburn Hills, Mich."


As for Canadian Club, I am so thrilled that our Mayor helped open a lounge in the US. I wonder if there is going to be one at the East End Arena

  • Canadian Club rebrands lounge in Palace of Auburn Hills
    By Bill Shea

    The latest move in Canadian Club Whiskey’s aggressive marketing campaign launched a year ago is to put its name on a 4,000-square-foot, 300-seat terrace lounge at the Palace of Auburn Hills east concourse entrance.

    Terms of the deal were not disclosed.

    The Canadian Club Terrace, formerly sponsored by Diageo plc-owned Captain Morgan rum, is an open-air bar and buffet open before each Detroit Pistons game to season tickets holders by reservation, and then as an open bar after games have begun.

    The lounge was officially opened Thursday night before the Pistons’ 96-89 victory over the Cleveland Cavaliers during a ribbon-cutting by Palace Sports & Entertainment President Tom Wilson, Windsor Mayor Eddie Francis and several other dignitaries.

Just A Few Stories


Here are some items you may have missed.

BULL SESSION

I wonder what our Mayor will talk about with our loopy Councillors at his regularly scheduled Friday session this week. I am certain that he will prepare the Councillors fully for the Saturday Greenlink meeting and then the DRIC meetings next week.

Wait a minute, he may not be able to hold one on Friday. Cancelled. Again.

He has missed several over the last few weeks in case you did not know this. He will be in Toronto on Friday this time for the Ontario Mayors for Automotive Investment meeting from 10 a.m. to 3 p.m. I thought he was calling for the meeting. If so, couldn't he have called it for Windsor or would no one have shown up.

Ahhhh. I know why he wanted to go to Toronto. No, not for shopping. He can cross the border and get a US$20 gift card if he does using his Tunnel. Obviously, he has another big deal to do while he is there, probably about getting Provincial money for his Canal vision. Perhaps Dwight could chauffeur him to the airport again and do another transaction on the way there.

No worries. Knowing our Mayor, I'm sure that he had his Bull sessions before he left and that the Councillors are now up to speed. After all, he wants to make sure that they all know what is going on and are in the Loop so that none of them will be surprised when he makes a huge announcement at the meeting on Saturday.

BORDER TRAFFIC NUMBERS

I wonder what the average number of people per car that crosses the border is. The same with buses, especially tour buses.

The reason I ask the question is because the number of vehicles-- passenger cars and buses-- that crossed over the border in 2008 in our region year to date has dropped dramatically from last year. If most of the passenger cars are tourist vehicles, it is no wonder that our region is suffering with restaurants closing and retail in big trouble. We are looking at potentially hundreds of millions of dollars reduction in revenue.

The scary part about this is that the Bridge Company traffic has dropped. A good part of it can be attributed to the Ambassador Gateway project and all of the construction around the bridge. However, the Tunnel is not picking up the slack since its volume is down too. What it means is that people are not coming over at all whether due to the dollar or the price of gas or fears about passports or who knows what.

What is even more troubling is that the number of trucks is sharply reduced as well, obviously because of the slowdown in the automotive business. More bad news for us.

Without wishing to belabour the point again, how can a new DRIC bridge be justified on a traffic volume basis when traffic is dropping like a stone. Who can afford to finance a new bridge and why should the other crossings be put into financial difficulty because some bureaucrats can't see beyond the end of their nose.

Can someone explain to me what positive note there is in the economy that will marvelously result in an increase in volume when everyone is predicting that we are in or close to a recession?

PUBLIC AUTHORITIES HAVE HOUSE PROBLEMS TOO

This sounds familiar except the story takes place in Buffalo and with Brian Masse's favourite Public Authority:
  • “But it’s clearly not our intent to restore these properties, which may be different from the views of some neighbors,” Rienas said.

    He told city officials the authority had bought the properties on Busti between Rhode Island and Vermont streets in the 1990s, always planning to demolish them to expand the Peace Bridge plaza. He noted that city officials even ratified documents several years ago recognizing that the properties are slated for demolition.

    As the bridge project faced a series of delays, all parties agree that conditions at the vacant properties continued to deteriorate. Neighborhood residents have long complained that the structures are more than just eyesores, claiming they have been magnets for rodents, feral cats, hookers, squatters and drug users."

ONE GOOD TERN DESERVES ANOTHER

The plans for a dramatic Signature Bridge at the Peace Bridge were put in jeopardy because of some birds and fish:
  • "Terns fly over — not under — bridges, so flying over Menn’s 567- foot-high bridge could “lessen their chances for survival and their ability to adequately feed their young,” the department said...

    As for the emerald shiner, a primary source of food for the tern, placing Menn’s piers along the Canadian shoreline and along the Bird Island Pier would have a negative effect on the fish, which moves along the shoreline."
No problems in that part of Ontario and New York State however
  • "Senator Charles E. Schumer called on the Public Bridge Authority to move full speed ahead in designing a new signature bridge by following a plan that would involve the community, as well as local, federal and state officials. In October, Schumer worked with officials to successfully win the green light to move ahead with a Signature Bridge Design without a lengthy environmental study."

I see that the Senator did not involve the terns as part of the group nor the fish. He could have had some bird brains involved to help him in his upstream fight.

  • "It was a big win for us to get the unnecessary environmental study of the bridge off the table..

    Senator Schumer, a long-time advocate for a signature, cable-stayed bridge, worked with the Federal Highway Administration (FHWA) over the past year to ensure that a lengthy, unnecessary environmental study of the common tern would not impede the community’s efforts to build a new Peace Bridge."

Clearly, the environmentalists are upset. While some may say that the Senator's plans are for the birds, his opponents are crying fowl.

I think there is something fishy going on because I did not see anything that dealt with saving the fish. The birds may fly but they will all starve to death without food.

Maybe that's the idea. With no birds alive--terned off if you will--they can build their nice big bridge without challenge!

Thursday, November 20, 2008

Are Bloggers Being Taken Seriously


You better believe that they are. Just do a Google search on Bloggers who have been jailed recently for expressing their opinions. And they will be taken even more seriously in the future!

Given the role that the Internet is playing with respect to individual candidates for office, and in particular with the Obama campaign, there is no doubt that political parties will pay more attention to Bloggers. Not only will they want to get them on side but they now have to learn to deal with what opposition Bloggers may say about a candidate.

The huge advantage that Bloggers have is that they can identify or deal with issues instantaneously. That is one of the reasons given by the Christian Science Monitor when they decided to put their newspaper completely online and drop their daily print edition.


For one important example, take a look at what the Democratic Party in the United States has done:
  • "BLOGGER CREDENTIALING AND THE 2008 DEMOCRATIC NATIONAL CONVENTION
    DNCC Expands Credentialed Blogger Pool, Launches DemConvention State Blogger Corps for 2008

    While the 2004 Democratic National Convention in Boston was the first to credential bloggers, the DNCC aims to significantly expand access for the blogger community in 2008. In line with the DNCC’s goal to engage more people in the 2008 Convention experience than ever before as well as Democratic National Committee Chairman Howard Dean’s 50-State Strategy, the DNCC will both expand the size of the credentialed blogger pool and also offer for the first time a state blogger credentialing program in 2008. Under this program, the DNCC will offer the opportunity for one blog to be credentialed from each of the states and territories. The DNCC will also credential national bloggers for the 2008 Convention, to include both political and niche bloggers as well as video bloggers from across the country."

Even the Republicans recognized the need to accommodate Bloggers:

  • "BLOGGER CENTRAL

    The 2008 Republican National Convention will utilize numerous mediums – both emerging and traditional – to share our nominee’s vision with the American people.

    We have a great appreciation for bloggers and the ever-increasing role new media has in providing real-time information and shaping public opinion.

    We had a blogger presence at the 2004 Republican National Convention in New York City - and we look forward to building upon the successes of that effort. In 2008, we will have a considerable blogger presence in Minneapolis-Saint Paul during our convention."

If you don't believe that Bloggers can play a role even on the municipal level then you have not been reading or listening to the "local" smears against Bloggers by certain memebers of the media and some politicians who want everyone to believe that everything is running tickety-boo in this City. They are frightened of Bloggers. Why else have Bloggers been deemed the equivalent to naysayers. It is because the alternative media in this City is not subject to the control of City Hall and that scares people.

All of this is just to let you know about a recent article that In Business Magazine wrote about Bloggers in this City entitled "Local Blogs and the Changing Media." It would be worthwhile for you to take a look at it by checking out your copy of the magazine. In case you do not have a copy, I have posted it here: http://www.scribd.com/doc/7847593/In-Biz-Blogs

I will give the writer of the story credit for getting to the heart of the matter and understanding what the role of Bloggers is especially in this City where we are poorly served:

  • "Unlike mainstream media who report on issues, bloggers are able to do more than report—they’re able to analyze."

There are a number of BLOGs in town written by a dedicated group of Bloggers. Will you agree with everything that is being said? I doubt it just as you do not agree with everything that you hear or see with the traditional media. The BLOGs present opinions that you might not get anywhere else and provide information that you might not see anywhere else.

Take look at thls graphic that I saw. Here is the context:

  • Last month I put out a survey of foreign correspondents who cover China to try and get a sense of how - and whether - blogs are impacting their coverage of China:

Take the well-researched and well-informed BLOGs seriously. The Democrats and the Republicans already do.

As for me, I'm still trying to get my media credentials from City Hall.

Did The Governor-General Kill DRIC


If you read the Speech from the Throne carefully, she may have done it. Or rather she read the words in her Speech prepared and written by the Government:
  • "Hard decisions will be needed to keep federal spending under control and focused on results. Grants, contributions and capital expenditures will be placed under the microscope of responsible spending. Departments will have the funding they need to deliver essential programs and services, and no more. Our Government will engage Parliament and encourage members to take a more active role in scrutinizing spending and suggesting areas for restraint...

    Public infrastructure is vital not only to create jobs for today, but also to create the links between communities and regions to help generate jobs for the future. Our Government is committed to expediting our Building Canada plan to ensure that projects are delivered as quickly as possible...

    Our Government will continue to invest in expanding gateways on our Atlantic and Pacific coasts, and in vital border corridors such as the Detroit River International Crossing, to ensure that Canadian goods and services can reach markets in Europe, Asia and the United States...

    Our Government will review all program spending carefully to make sure that spending is as effective as possible and aligned with Canadians’ priorities."

Compare this language with that of the Ministers of Finance for Ontario and Canada in a letter published in the Toronto Star:

  • "There is a significant and long-standing trade partnership between Ontario and Michigan, and Canada and the United States, representing a key source of prosperity for all sides...

    We recognize that both our economies depend on the efficient flow of cross-border traffic. This requires that we have modern border crossings, including the construction of a new one between Windsor and Detroit. Canada is thus actively participating along with the United States, Michigan and Ontario in the Detroit River International Crossing (DRIC) study.

    Significant planning work has been completed to date and we look forward to constructing the new crossing as quickly as possible."

If one reads the Ministers' statement, there seems to be a commitment to building a DRIC bridge. Of course, as I have said before, this statement disrespects the process and may give rise to an apprehension of bias.

However if one reads the statement very closely, even then there was no firm commitment to DRIC since the language could mean the Enhancement Project too. It seemed that the Governments were hedging their bet.

Go back again to the Governor-General's speech. The interesting aspect to most of what she is saying is the devotion to fiscal restraint in this time of economic crisis. That is consistent with the Government's plan to take a look at the disposal of assets. How one can be fiscally responsible and yet at the same time spend an excessive amount of money on a DRIC project seems illogical to me, especially when the existing private operator is prepared to build a bridge at his own expense.

Look at the exact language again

  • "Our Government will continue to invest in expanding gateways on our Atlantic and Pacific coasts, and in vital border corridors such as the Detroit River International Crossing."

Of course, mention is made of DRI Crossing so that may make Transport Canada happy but not of the project itself or even the bridge. It is the "border corridor" that is important. The Government will invest in expanding gateways on both coasts but only in expanding the corridor here.

To me, this sounds more like the DRIC road rather than the DRIC bridge. The Government is prepared to spend money on building a road because they have already set aside $400 million to do so but may no longer be eager to spend money on a bridge or even on a P3 bridge.

The use of the word "corridor" is very interesting as well. That term was used by Dan Stamper in his Senate testimony:

  • "The enhancement would include a new six-lane cable stay bridge located in the same corridor near the existing Ambassador Bridge. Consistent with the approved and on-going gateway project, this bridge would tie directly into the existing plazas in both Canada and the United States without modification to their currently approved and permitted configuration.

    The bureaucrats projected the traffic growth at the Blue Water Bridge by taking it away from the corridor in Windsor, Detroit...

    This attempt at Blue Water failed mainly because they built everything but what was needed, which was additional inspection booths for customs. The attempt now by the bureaucrats, if they could not move the traffic from Detroit-Windsor corridor to Sarnia-Port Huron, is to build a bridge in the Windsor corridor and compete with us, but they cannot do it on a straight-up competition, and they know it. They have to have Bill C-3 to take our away business legally...

    The permit process has developed in the U.S. by saying, "We will issue a permit for the corridor. We want to know that the corridor is in the right geographical area for the good of the U.S. We want to know that that corridor is needed. We want to know that that corridor will not affect an existing corridor.” The presidential permit being issued says, "We the U.S. have looked at that and said the corridor is good." That is why the current presidential permit process says, "We are not going to affect or remove rights that a current corridor has because we issued that right to be there."

    Canada, with Bill C-3, is trying to say, "We are not just concerned about the corridor, but we want to micro-manage the whole border."

Just so that you understand what the term "corridor" means in the context of the Ambassador Bridge, there is a very strong legal argument in my opinion that the Company has a protected "corridor" that a DRIC bridge would violate. Has the Government recognized that by their language in the speech?

To be direct, I am probably reading too much into what was said in trying to be hopeful that perhaps that there is a signal being given that the Government of Canada want to talk seriously with the Bridge Company.

Let us hope at least that they will speak since there is a new Minister involved. Perhaps there can be a resolution before we face a decade of litigation that does nothing to help this region economically.

Will The Bridge Company Buy The DRIC Bridge

Where are the Liberals? Where is the NDP? Are they invisible?

Seriously, have you heard a peep out of any of them since the election with respect to the economic catastrophe that this country is in. $75 billion paid over to the banks already and no one says anything. The Government claims that they are so tightly regulating our banks that we ought not to worry about anything. I would hate to think how much money they would have to put in if they were not regulating!

Perhaps I should run for the leadership of the Liberal party. I would have been out there by now accusing the Government of cover-up before the election and not telling the public the truth with respect to the financial position of our banking system. It is inconceivable to me that this has happened just in the time- frame after the election.

Not only that, the world must be turning itself upside down if Ontario is now a have-not province and the federal government may be running a deficit as well.

However, the reality has to be that our Government is in dire financial straits. There is no other explanation for it. Just take a look at this story and shake your head in despair
  • Canada mulls selling CN Tower to balance books

    WINNIPEG, Manitoba (Reuters) - Canada could slap a For Sale sign on Toronto's needle-like CN Tower and other national assets as a way to ease pressure on the federal budget in the midst of the financial crisis, Finance Minister Jim Flaherty said on Thursday.

    Flaherty mentioned the landmark, until recently billed as the world's tallest free-standing structure, as one property that could be auctioned off so that Ottawa can remain in the black.

    When asked by reporters if the building was on the block, he quipped: "Do you want to buy it?"

    He declined to name a price.

    Asset sales are one way of cutting a deficit or helping to generate a small surplus, he said.

    "If that review shows that there are some assets that should be sold, then we'll go ahead."

My sources tell me that the Ambassador Bridge Company is aware of the dire financial position of the Government of Canada. A team of Bridge Company financial analysts and outside experts have been working around the clock trying to put together a package to try to assist the Government.

When initially approached to consider this matter, the Owner of the Bridge Company looked at his calendar to see whether this was an April 1 joke. It was inconceivable to him that a Government who wanted to partner with the have-not Government of Ontario to spend $5 billion on a DRIC road, Plaza and Bridge to try to force him out of business would at the same time be trying to dispose of assets because they were going to run a deficit!

He had difficulty understanding that logic. It seemed circular to him. But then again, he was a business person and not a politician. The politicans and bureaucrats live in their own cocooned world with their own logic that cannot be understood by mere taxpayers.

Initially, some of the younger analysts who did not understand the border business suggested that an offer be made to construct the DRIC bridge and take over the entire project from the Government. Thus the Bridge Company would run their private operation and the DRIC operation as well perhaps as part of a P3 with them being the operator.

Of course, they did not appreciate that duplicating the bridge and plaza a mile down the road was absolutely stupid financially and practically suicidal to the bottom line. It could never be paid for or financed.

As an example that people not familiar with the border would overlook when calculating costs, on the operations side alone, a full team of Customs officers and support staff would be needed at each of the bridges thereby doubling the costs at a time when traffic was declining with little hope of a major improvement and when the Government wants to control costs. The Governments would never go for this duplication resulting in tieups at each of the bridges because they were not staffed adequately. Even now, booths are not staffed properly all the time resulting in problems for border crossers.

There was consternation on the part of most of the people involved in the project because, given the 80 year partnership of the Bridge and the Governments, the Bridge Company people wanted to help out. At a brainstorming session, the President of the Company demonstrated why he was put in that position. Dan Stamper had an "AHA" moment.

In passing, that is a medical term whereby "solving a problem that requires creative insight prompts distinct changes in brain activity."

Stamper's solution was mind-boggling. He suggested that the Bridge Company offer to build their Enhancement Project and that the Governments agree to build the City's WALTS road to the Bridge. And then table DRIC!

Initially, there was opposition to the idea. The people there thought that the Governments could never do as was suggested for the following reasons:

  • P3 investors and managers would not be able to rip off the Government and taxpayers and make excessive profits

  • taxpayer subsidies would not have to be paid to support the DRIC bridge or the other crossings to prevent their bankruptcies

  • no homes and businesses would be displaced in Delray or in Sandwich since the Bridge Company already had all of the land they needed

  • the project would be finished in a very short period especially since the likelihood of any legal action would be greatly diminished

  • tolls would not have to go sky high over the bridge to cover the costs nor any levies or fees charged to use the border road if it was built properly

  • Michigan did not seem to want to the billions of dollars of federal matching grants and seemed to be insistent upon spending $1 billion to build the bridge and Plaza on their side of the river.

My information is that there was a very nasty fight within the Bridge Company over whether the Enhancement Project and the City Road route be offered as a solution so that the Government of Canada would not have to dispose of more assets in order to pay for the DRIC project. Eventually, everyone agreed that it was the only solution that made sense.

Sources claim that Stamper has arranged a three party meeting with himself and the Ministers of Finance for Ontario and Canada in Ottawa shortly. Their meeting will take place in the new, trendy meeting place for Finance Ministers: the Federal Minister of Finance's limousine as he drives the other two from the airport in Ottawa to the downtown. If this kind of the meeting is good enough for our Mayor, then it is good enough for Dan.

Apparently, if the meeting is not going well, Stamper has a contingency plan. He may ask the Ministers to extend the car ride and discuss his offer further but that he cannot stay in the car with them. Apparently, Stamper will suggest that the two Ministers should cross the Ottawa River and

  • "Go to Hull."


Wednesday, November 19, 2008

Will Eddie Bring Dwight Down



Once more in this BLOG about the Dwight and Eddie soap opera given the new facts that have arisen since Henderson’s column last Thursday.

To be quite direct about it, I am so tired as I am sure that you are, dear reader, of the phoniness surrounding the DRIC Road/Greenlink so-called controversy. Do they think that we are complete fools as we are supposedly being manipulated by them and their entourage.

Who cares since we are going to get an upgraded Expressway and a cheap or at grade solution for Huron Church in the end.

I just do not understand Dwight Duncan. He has the most to lose in how this file is being handled and he is losing big time. He is the Minister of Finance of Ontario after all, one of the most powerful jobs in government in Canada. Why does he have to lower himself to the level of the Mayor of Windsor, Ontario, a small-town mayor who believes that he may have some authority and some clout. It is pathetic.

I have always suspected that what is going on is part of an orchestrated campaign especially because the Government of Ontario does not have money for this project until after 2010. That was pretty obvious with the Gong Show incident in Windsor where Dwight and his Cabinet colleague made complete fools of themselves by saying that $500 million was available for the project one day and then reneging on it the next. The Schwartz Report and Greenlink were both praised initially and then ignored. However, the stalling bought the Province lots of time.

Aren’t you tired of the games and the urban legends? Meeting in a car on the way to Toronto airport to decide a crucial issue to the economy of North America. How inappropriate. How childish. How immature.

Is this the best that a senior politician can do? Is that the way Government should operate? If so, somebody had better audit the books of the Province, and quickly, to see how they are being managed. Why is it necessary for Dwight to act in such a strange and bizarre way?

Does the Minister give us mere taxpayers direct information? No, it supposedly has to be leaked to us by some provincial government insider via the Windsor Star Chief Columnist. Presumably, the Minister is ashamed that he is being forced to eat crow by the Premier to keep our Mayor, or more likely the Windsor Star, onside. To be direct, the management of this file has made the Premier look foolish and not in control as well.

Have we now achieved peace in our time between the City and Province if what Gord said was true? Hardly, or is this part of the game too? There really cannot be a war at all because the Province is supreme over a municipality and can upload the roads that they want at any time that they want. So why do we need a charade that pretends that Eddie has any voice in this at all? He does not.

Mr. Henderson writes another column subsequently about tunneling. That does not make sense at all. Where is the compromise solution that was so close to being achieved? Why is he going back to tunnels and Schwunnels? Then the Mayor sets up a meeting about Greenlink two days before the DRIC open house to put pressure on the Province I assume. Isn't this all so confusing and so unexpected?

There are two alternatives:
1) if there was any hope of a deal, it has fallen apart, or
2) this is part of the game that Eddie negotiated with Dwight to try to demonstrate that he is still our Saviour. When DRIC offers some kind of insignificant tweaking after their open house and Eddie’s Greenlink session, he can claim a massive victory instead of his disastrous failure. The cheerleaders and sycophants will have their day. They will say that Eddie as the master negotiator who has achieved more than ever could have been expected knew when to hold them and when to fold them. It is the Buzz/Ken Sr. school of declaring victory when completely beaten.

It does not matter to me frankly which way it goes. As I have Blogged, as far as I am concerned, both DRIC and Greenlink are a waste of taxpayer money designed to enrich certain members of the private sector at our expense.

For Dwight however, this is a slap in the face to his ambitions. While I doubt that any member of the Opposition will ask for an Integrity Commissioner investigation or will raise this matter at Queen’s Park, nevertheless, it shows Dwight to be weak and ineffectual as a leader.

Whatever happened to the guy who had the nerve to say
  • "THE MAYOR IS WRONG. THE MAYOR IS WRONG."

This is his file, not Sandra’s. He cannot pass off the responsibility to her. While he tried to be gracious to the Mayor and Council over their handling of the border file, and I commend him for that, nevertheless he is unable as a senior Minister to put the Mayor in his place. This is not the kind of person I want to lead the Province or the country in future.

There is of course one way for Dwight to salvage his reputation and his career in spite of everything. There is one way for him to make people forget about how Eddie seems to be making a fool out of him politically even though he is a Cabinet Minister. Dwight knows what to do. I don't have to tell him. All I know is that he is running out of time.


It is a shame. Dwight has achieved so much to fall now so far. Why? And for whom!

One After Another



There are so many stories taking place that it is almost impossible for me to keep up with them. However I will try the best I can to keep you informed.

OUR NEW PLEDGE OF ALLEGIANCE


It would appear that all school children within Windsor and Essex County will soon be required to put their hands over their hearts to pledge their faith in this region every morning right after the national anthem.

I am sure that you saw the gigantic ad in Saturday’s Star presumably paid for by that newspaper out of the hundreds of thousands of dollars that it received from the City and the County for the ad campaign to promote Windsor. It does cost money for paper and ink after all. Nice sucking up to the politicians with their photos.

The sloganeers have been so busy with the names that they have dreamt up that they may have set a world’s record for logos in one newspaper ad: Believe Team, W.E.CAN, Believe! W.E. CAN.

Just watch City Council next week as the Mayor stands and asks everyone in the Chambers and at home to rise and repeat after him:

  • “I hereby pledge to stand up and be proud of Windsor Essex County.

    I believe in the potential of this community and will share its positive and unique attributes with all.”

Why, it reminds me of the pledge that I used to repeat in my childhood. You remember the one don’t you, the one right at the end of the Mickey Mouse Club! It is appropriate as far as I am concerned. This whole campaign is Mickey Mouse.

STAR JOURNALISM

I am pretty disgusted to be blunt about it. How many negative scare stories have we read about the Province and the new jail since it has been announced.

All we have read about is our Mayor and Councillor Marra denouncing the decision and the process.

All of a sudden in Monday’s Star, the other side is mentioned. All of a sudden the Star has decided that it ought to provide a balanced point of view. All of a sudden there are some positives about living near a jail:

  • You couldn't ask for better neighbours than the inmates and staff at Windsor jail
  • If anything, it makes the community safer
  • the jail has benefited the community immensely as staff -- there are at least 110 unionized workers -- patronize area shops, restaurants and even the local pharmacy.
  • They're a boost to our economy and I'm sad to see them go
  • the jail, long located in the heart of Sandwich near General Brock Public School, has been nothing but positive for the community.
  • "We have houses right across the street and their property values would be the same whether the jail was there or not," she said.
  • Gordon Krantz, the Mayor of Milton, Ont., which hosts the 1,500-bed Maplehurst Correctional Facility, said the jail "provides "a lot of good jobs, well-paying jobs in the community" and that the prison purchases supplies locally."

A number of comments are given by Mary Ann Cuderman. Obviously, there is no need for any more debate since she is the Council favourite, especially about bridge issues, so she must know what she’s talking about.

It is obvious that something more is going on with respect to the jail than we are being told. Secrecy rules. I am sure that it all has to do with real estate and land values. In other words, money.

Too bad that we taxpayers are completely irrelevant and need not be told anything.

THE FEDERAL GOVERNMENT TUNNEL DEAL

I may start believing that we may actually have a DRIC bridge in this area if the Federal Government decides to help finance Eddie’s Tunnel deal with Detroit.

As I have said before, the Federal Government needs to eliminate competition in order to grant the P3 investor a monopoly in this region. I expect that the Tunnel and DRIC bridge will be wrapped up together in one big package for someone to bid on. There is no other explanation than Federal Government involvement to explain why the Feds took such aggressive action to prevent the Bridge Company from operating the Tunnel.

My view is that the Feds have always been interested but were not prepared to pay the kind of money that Kwame and Eddie were negotiating.

Now Detroit is really in a jam and it would not surprise me to see the Feds come in with lowball offer that they would make through Eddie to Detroit to try to get control of the Tunnel.

As the Free Press reported:

  • “Then there’s the question about how the current 2008-09 fiscal year will impact the deficit number. Kilpatrick proposed selling Detroit’s half of the Detroit-Windsor Tunnel to raise $65 million for the city’s budget, but the plan died under heavy opposition from the council, which instead called for selling deficit bonds.

    Failure to find that $65 million in some form would push the deficit past $200 million, Corley said. And with the economy sinking, that could further worsen the situation.”

Watch and see what happens. Watch also as it becomes a controversy between Canada and the new US President.

CALLING THE SHOPPING CHANNEL

As I have written before, Sandwich has been Delrayed! All these wonderful plans and concepts to work up the area into believing that something may actually happen there.

I see that the word “jewel” is still being tossed around to over-dramatize something in Windsor:

  • “Sandwich can be city 'jewel'”

You can effectively ignore all the propaganda about the area by skipping to the end of the Star story to read what this is all about. As if you, dear reader, did not know:

  • “One threat to the heritage designation remains the Ambassador Bridge company, which has been barred from tearing down homes it owns on Indian Road to expand its operations because of the neighbourhood studies.

    It has threatened legal action to stop designation and its officials have been in regular attendance at community meetings.

    Bridge owner Matty Moroun and his companies have continued to purchase dozens of homes on Indian Road, Edison Street and Bloomfield Road in anticipation the property may some day be required for its expansion plans, including its twin-span proposal. Many of the homes have been abandoned and boarded up.

    "He has decimated a whole community and made us look like a ghetto on his own whim," Cuderman said.

    "The city has to be strong as to what they do here."

No, the real threat to the area is that residents have been taken for a ride and their community put in limbo for two years with the Interim Control by law and now more time with the Heritage plan.

The Star story provides the kicker:

  • "it is an anxious time as they await municipal approvals they believe will kick-start their vision to revitalize the area -- provided the necessary funding follows...

    "If you can get dollars to move the plan forward, it will bring tourism and money into the city."

Did you notice that Councillor Postma was not interviewed. The Star dare not do so because she let the cat out of the bag on John Fairley's show when she said that there was not enough money for the Sandwich Community Improvement Plan.

Of course, there was a way that the area could have been helped. But that never would have happened so there's no point talking very much about it.

The only kind of jewel that Sandwich will become with his Mayor and Council is Cubic Zirconia!

PAYING THE FREIGHT

I wonder if the WEDC is running out of money or is the Commission too embarrassed to let people know how many overseas trips they have taken. I read as an example in a WEDC newsletter that the Chair, Remo Mancini and Tracy Pringle will be going to Germany to attend the International Suppliers Fair in Wolfsburg.

I wonder if the overseas travellers ever provide a report on what they have achieved. I do not remember seeing anything about the trade show in London for instance and how many new businesses with jobs were attracted here. I really would be interested in knowing what follow-up was taken after the big party in Toronto with all of the movers and shakers there. Someone needs to assess whether all of these trips have any value or not in a time of economic slowdown.

Now they have a new Sugar Daddy who can open up its wallet to allow members of the Commission to go overseas.

The International Relations Committee of Council is recommending that a member of WEDC be included as part of the Committee.

It makes good sense for that to happen because we do have a number of Twin City partners around the world and we ought to be capitalizing on our relationships with them to generate new business. Please excuse my cynicism however.

Bon voyage!

PETTY-coat JUNCTION

Do you remember the BLOG I did Monday, July 16, 2007 "More On The Junction." In that BLOG, I differed with the opinion of the City Solicitor about the legal relationship between Council and its own Chief Building Officer in the Junction case:

  • "I was also interested in what the City Counsel, Mr. Wilkki, had to say about the City suing the CBO if they disagreed with him. He referred to an Ottawa case where that happened. It is unfortunate that he did not mention that the CBO had a specific statutory duty that he was acting under and THAT was the reason why the City had to sue. That is NOT the case with the Junction. All that happens here is that the City listens to what the CBO says and then COUNCIL makes the decision."

There was an interesting item in the recent Communications Package about grandfathering Bed and Breakfast houses. In this instance, the City Solicitor said that Council could overrule its Licensing Commissioner who believes that it would be a bad idea to grandfather them.

No mention of the City perhaps being required to sue the Licensing Commissioner.

Tuesday, November 18, 2008

Environmental Minister Must Reject DRIC Proposal


Take pity on the Honourable John Gerretsen, Ontario Minister of the Environment. The poor man has been placed in an impossible position not only by his Cabinet College, Windsor’s own, Minister of Finance, but also by Ontario Realty Corporation in their conclusions about the Brighton Beach area as the location for the new jail in Windsor. Wait until you read what the Corrections Department's actual position is below. It is a show-stopper.

He has no choice now but to turn down the DRIC proposal when it comes in front of him. If not, then a lawsuit is guaranteed to start. It is such a winner that even our Mayor would not only threaten but actually would start a legal case in order to prove how tough a guy he is.

If the Minister turns down DRIC, he will have to take the pressure of rejecting a project that has cost millions of dollars of taxpayer money on both sides of the river and years of work. It would be a shocking indictment about waste that would give rise to many more questions. Does the Minister have the intestinal fortitude to be able to do that and to withstand the incredible pressure that is being now and will be put on him!

In the end, rejection means that the only alternative is for the Ambassador Bridge Enhancement Project to be built. Since the object was to force the Bridge Company Owner to sell out cheaply, does the Minister have the nerve to disappoint those who have been directing this project for so many years?

The Minister of the Environment is the person within Ontario who must make the ultimate decision with respect to the DRIC project:
  • Requirements of the Ontario Environmental Assessment Act (OEAA)

    As required under the OEAA, a Terms of Reference (TOR) document was prepared and received approval prior to commencement of the DRIC Environmental Assessment study. This document outlines the framework that the DRIC study team must follow in completing the environmental assessment including key opportunities for public participation.

    Once completed, the Environmental Assessment (EA) Report will be submitted to the Ontario Minister of the Environment for approval. The formal review process provides opportunities for public comment.”

The Minister is not a rookie. Formerly, he was the Minister of Municipal Affairs and Housing so he would be very familiar with what is going on Windsor.

One should expect that the Minister would make his decision on the facts without any pressure, independently and fairly. There should be no bias or reasonable apprehension of bias in the process. In my opinion, this is impossible now.

I have already mentioned that I thought that Spanky may have crossed the line in his joint letter with Federal Minister of Finance Flaherty to the Toronto Star. Clearly, a decision had been made even before the DRIC Draft Environmental Assessment statement was published. No one needs a DRIC project if the Ministers already had made the decision. It certainly demonstrates to me that the DRIC process was nothing more than a process designed to justify what had already been agreed by the Governments. It was a farce.

  • “We recognize that both our economies depend on the efficient flow of cross-border traffic. This requires that we have modern border crossings, including the construction of a new one between Windsor and Detroit. Canada is thus actively participating along with the United States, Michigan and Ontario in the Detroit River International Crossing (DRIC) study.

    Significant planning work has been completed to date and we look forward to constructing the new crossing as quickly as possible."

I also talked about the presence of Infrastructure Ontario being here already, even before the Environment Minister made his decision. Since this process will be so far down the road by the time that the Final Environmental Assessment report is presented to the Minister, nothing will be able to stop it:

  • “Preparation for Windsor's border highway begins

    Ontario's infrastructure ministry will come to Windsor over the next couple of weeks to start meeting with chamber officials, labour associations and contractors to launch job-hiring preparation for the massive border feeder highway planned for Windsor, the province's finance minister Dwight Duncan announced Friday.

    "We want to talk with labour and business about the job opportunities all will have as we invest in the largest and most expensive piece of road in ever built in Canada," he said…

    "We are beginning the process next week, involving local business and labour to take advantage of this investment," Duncan said. "We are anxious to get on with it…"

    Duncan vowed Friday construction will begin sometime between next June and September.

    "We are determined to get our work done and get on with things," he said. "We have an outstanding project and it's time to start."

Now the last part of the Triple Play. I wonder who the “provincial government insider” who leaked all of the information to Gord Henderson for him to tell us about it in his Thursday column. You remember about Eddie's ride to the airport in Dwight’s car.

Seriously, the only people it could be that I can think of are Dwight Duncan himself, the Premier to whom Dwight reports or perhaps his colleague in Windsor, the MITI Minister. None of them would have said anything I am certain so it had to have been one of their staff members who should be fired on the spot for leaking such confidential information. I see no alternative but for the Government to have the Ontario Provincial Police undertake an immediate investigation to find out the source of the leak.

Why am I so upset about this? Here we have a senior member of the Government, the Minister of Finance, the local Liberal MPP for the area, discussing important matters in an automobile. Was anyone else with them or was it just the two men discussing vital issues with respect to this region? Does this inspire confidence about how matters of Government are dealt with and billions of taxpayer dollars are spent? Is this the manner in which decisions are made… behind closed doors in an automobile travelling on Highway 401? The optics of this are horrific. This is not how Government is supposed to operate in the best interest of the public.

As far as I am concerned, there is such a reasonable apprehension of bias that the Minister has no choice but to require that this project to be started all over again and without any ministerial intervention whatsoever from both Senior Levels of Government. If he does not do so, then how can we have any confidence that the Government has “respected the process!”

But this is politics after all isn’t it? If the Minister of the Environment makes such a decision then doesn’t Spanky have to resign? What other alternative would he have if he is the person responsible for wasting millions of dollars and years of effort in a matter that is so important to the Province?

Who knows, maybe that is the end game. Kick out that DRIC study and say because the matter is so urgent that the Government needs to introduce legislation to permit what has been proposed to be undertaken notwithstanding the Environmental Act. No, I am being too cynical. That could never happen in a democracy.

You and I both know that this is not going to happen. Spanky resigning could discredit the Government so badly that the Progressive Conservatives could form the Government and even John Tory could be the next Premier after the election.

The Minister needs another excuse. Fortunately, the Minister has an easy way out thanks to the Ontario Realty Corporation. They are the ones who did the site investigation and selection according to the Star. One of their criteria is environmental issues.

I find it very interesting that the Windsor Star has not reported the pollution matter issue that CKLW reported days ago and which I posted on my Blogsite. I find it bizarre that this important news about the border was not published by the only daily newspaper in town. Could it be that it is not doing so because it could prejudice whatever it is that the Mayor wants to do with respect to Brighton Beach and the jail? Could it prejudice his plans re the sale of lands to the Senior Levels for the plaza? Millions of dollars are at stake given the $11 million or more that the City paid to buy the lands in the first place. As the Mayor said:

  • “It’s exactly the location for both plaza and bridge the city proposed nearly four years ago,” said Mayor Eddie Francis.”

If there are serious problems there, then there go the City’s plans!

I believe that the Star and the other media in town owe it to their readers, listeners and viewers to follow up on this story. If they refuse to do so then one needs to ask why.

While CKLW did the story, there is a question whether the story is 100% accurate. Here is the information that I have been able to uncover through my Government sources. Of course, it may be self-serving for the Government to say this now because of the impact on DRIC.

There seems to be some confusion over the CKLW coverage regarding the proposed jail site and what the Government’s spokesperson actually said.. While CKLW reported that the Ministry's reason for not choosing Brighton Beach was pollution, that was not something said to the media according to what my sources claim.

It is claimed that the spokesperson did speak about Brighton Beach possibly being more difficult to get approvals from the Ministry of the Environment as part of the Environmental Assessment because Brighton Beach is comprised of heavy industry. Perhaps the station came to the conclusion this means pollution. However that is not what was said it is claimed. The issue with heavy industry is that it would be considered "sensitive land use" because there would be people living, sleeping and working in the building 24/7. In accordance with the Ministry of Environment guildelines, the introduction of sensitive land uses in heavy industrial areas is not encouraged.

Frankly, it is a difference without a distinction. The result is the same.

Just so you know, there is a specific Environmental Guideline with respect to this matter:

  • COMPATIBILITY BETWEEN INDUSTRIAL FACILITIES AND SENSITIVE LAND USES

    “The objective of this guideline is to prevent or minimize the encroachment of sensitive land use upon industrial land use and vice versa, as these two types of land uses are normally incompatible, due to possible adverse effects on sensitive land use created by industrial operations."

To be blunt about it, if the location is too dangerous for prisoners to reside there and for Corrections employees to work there, then how can Canada Customs officers and the public use the bridge and plaza. I am shocked that the head of the Customs union in this area has also been so silent about this matter.

While I am certain that the DRIC could spend some money to undertake massive environmental studies to prove that this is not a real issue, I would find the results hard to believe. One side of the Provincial Government is saying one thing while another side of the Government is saying something completely different. If I am the Minister of the Environment, I have to make a decision based on protecting the public. Out of an abundance of caution, considering what ORC said and that the the guidelines of the Ministry would be violated by the DRIC project, I would have no alternative but to toss it out!

Is all this too far-fetched, too unbelievable? Hardly. We know that Ontario is now a have-not Province. It cannot afford to spend $3 or $4 billion on a DRIC road. Neither can the Federal Government if it is going to start running a deficit, small or otherwise.

No investor would ever finance such a road because it is uneconomic. It would require massive government subsidies of hundreds of millions of dollars a year, something that no Government would dare do in this time of economic uncertainty while there are other, less expensive alternatives.

This could be an action by the Province directed at the Federal Government to force them to increase amount of money that they are to contribute to this project. If the Federal Government refuses, and they have to do so because every other Province in Canada would otherwise demand equal treatment, then what is the result? Windsor gets the cheap solution for Huron Church Road and an upgraded E C Row from 4 up to 10 lanes to match what will be taking place west of Huron Church.

Don’t be too surprised. After all, that was proposed in 2002 by the Joint Management Committee Report. And Eddie can hardly argue against it because he was one of the Councillors who supported what we will effectively get!

The "Shadow Toll" Governments (Part 2)


You have been given the Wake-up Call in Part 1. Now learn how you, dear reader, as a taxpayer will be fleeced in Part 2. Be prepared, it's a 2-coffee BLOG as well that hopefully will give you some insight on the border financing!

Thank heaven for the economic crisis. It has made it simple for taxpayers to be ripped off for generations by politicians, bureaucrats and P3 operators. I will demonstrate this using Windsor and the DRIC road as the example how this will be done.

I am not opposed to upgrading E C Row provided that DRTP is really dead and provided that trucks have their own separate lanes so that they do not mix in with local traffic. I am not opposed to the "cheap solution" border road or a below grade road.

However, I see NO value in a $3B DRIC road which is what it will cost by the time it is done as we saw with Manning Road estimates. I see even less value in Greenlink which will add at least another billion to the cost. What do these roads offer us other than hundreds of acres of green space where weeds can grow freely since we cannot even look after properly the new landscaping on Dougall Road! It does little for the environment based on the studies to date and on the changing truck emissions and fuel standards.

If there is the desire to waste money, then build Windsor the cheap solution road and give us the balance of the billions of dollars to fix up our City! But that will not happen since there is nothing in it for the money boys.

Congratulations to Windsor. We are now a big city.

It appears that Windsor is going to be a leader in the Province by getting our own equivalent to Highway 407. It is called DRIC’s Windsor–Essex Parkway. No one but P3 investors will be able to afford to build that road we will be told in due course! Certainly not a have-not Province like Ontario has become or a Federal Government that may run a deficit and have to sell assets.

Obviously, I don’t know all the gory details but a toll road was hinted at some time ago by Transport Canada except that there will not be any tolls charged. Rather there may be a “levy” or extra fee to use the speedy Customs lanes. That supposedly is designed so that the Ontario Trucking Association and the Canadian Automobile Association who are opposed to tolling won’t get on the backs of the Senior Levels and denounce them.
  • “Ownership would be with the government of Canada, but you need to know how much traffic will be on the new bridge, how much tolls will be and so forth," Butler said. The surveys given to trucking firms will gauge interest in paying an extra fee to travel in a dedicated Nexus or FAST lane that will start along the highway to the next bridge. "

Why do I say that you ask? It is obvious from the Windsor Star story:

  • Border jobs on agenda for province, industry

    Infrastructure Ontario officials will be in Windsor today for the first of a series of meetings with local construction, trade and labour leaders to discuss hiring for the planned $1.6-billion border feeder highway project in Windsor.

    The ministry is scheduled to sit down with Jim Lyons, executive director of the Windsor Construction Association, as well as other local industry leaders, said Steve Dyck, spokesman for Infrastructure Ontario.

    "We are at a very preliminary stage. We will try to give a better sense of what they can expect and answers questions on whatever they want to learn more about," he said…

    There will be several more meetings staged in Windsor by the infrastructure ministry over the next six weeks with labour leaders and other business groups, Dyck said.

    At the end of this month, many of the same construction association leaders will be invited to Toronto to participate in a provincewide seminar led by the infrastructure ministry about its project requirements…

    Ontario's transportation ministry officials will also take part in many of the meetings, but offered no new information Wednesday about the hiring process…

    Despite the global economic crisis and the Ontario government's growing financial woes, Duncan said last week funding of the border highway is not a concern despite the massive price tag.

    "It's a capital project that's financed over 40 years," he said. "

The obvious point to make is that the project is being run by Infrastructure Ontario and not the Ministry of Transportation who is normally responsible for road building. And guess who has joined with Infrastructure Ontario as I told you previously: Len Kozachuk, formerly of URS and intimately involved as Deputy Project Manager for the DRIC project.

The only reason why Dwight would not be concerned about finances is because the Province would not be putting up the money. Rather, a P3 road operator would be doing that. In this case, the structure of the P3 is not known by me but it is still a convenient term to use for ease of reference.

We can suspect then that the term of the deal with the private enterprise P3 operator would be 40 years. Remarkably, that is also the longest time period for loans that Infrastructure Ontario makes. In other words, their maximum term for debentures for borrowings they would make on behalf of a project would be 40 years.

In passing, here is a real friction point with the Federal Government. As you know, they want to do a P3 deal as well for the bridge and plaza. I would have thought that the two Governments would have a joint offering for a P3 for the road, plaza and bridge but it seems that each of them is going down their own road, if you will please excuse the play on words.

If the amount of money that a P3 road operator puts in requires a significant toll or levy, then it will discourage traffic from using that toll road. That means that the number of vehicles that would use the DRIC bridge would go down. If that volume then goes down, then the P3 Bridge operator might not be able to recover its investment in the plaza and bridge. That messes up everything.

Here’s the funny part. If the Province refuses to back down and will not join in a P3 package with the Federal Government, then the Federal Government still has the power to declare the road as a federal matter under the International Tunnels and Bridges Act. If that is the case, then Dwight is laughing. The Federal Government would have to pay for the entire road on its own and Ontario would not have put up a penny.

Is that Dwight’s diabolical plan, to place the responsibility entirely on the Feds? Or is it to try and force the Feds to pick up more than 50% of the cost using some creative financing tools that the other provinces will not recognize?

Here is how all of this will be presented and sold. It is really the P3 sales pitch these days trying to justify why the Government should NOT do it and why the private sector is deserving of massive profits. It comes from Michael Nobrega of OMERS/Borealis:

  • “I think the pension funds themselves - large capital pools in this country - are ideally suited to be partners with governments on the very large infrastructure projects. We can be substantial partners with the governments on what I call the infrastructure required to trade. One (example) is the North American Free Trade Agreement, which removed tariffs and, hence, barriers for free trade amongst Canada, the United States and Mexico, but has put a lot of pressure on our existing infrastructure at the borders. Secondly, the demand for our resources and our two-way trade with China and India and the emerging countries, especially in ports like Vancouver and Montreal. Goods that are coming to those ports have to be moved across the country. We don't have the rail infrastructure to handle (the traffic) and we don't have the ports or roads infrastructure to make us efficient.

    I think there's a real drag on the economy in Canada - right across the country - from our lack of major infrastructure. You're talking billions of dollars. The benefit for government is that they don't have to divert money that could go to health care, education (or) to service the national debt. So they have a capital source.

    A huge number of jobs would be created from that expenditure. It would also generate a lot of productivity, efficiency and wealth in the economic system. For pension funds, it would provide an opportunity to put a number of dollars into the Canadian marketplace that will give us stable returns over the long period of time without having the political risks and the currency risks that automatically go with making investments outside of Canada."

This is very important since I told you before that P3 operators are looking for huge returns in infrastructure even though they are effectively granted a monopoly by the Governments:

  • “Jane Welsh, a senior investment consultant at Watson Wyatt, said infrastructure funds were typically aiming to make inflation-linked returns of about 12% a year after management fees of 1% to 1.5% and performance fees of 20%.

    The riskiest opportunities, such as those involving the building of a tunnel for a tollroad, may aim to generate returns of more than 20% a year.”

Do you think this is getting too far-fetched. Read this from Wikipedia about Highway 407:

  • “As part of a controversial plan to finance revenue for tax cuts, the highway was sold to a conglomerate of private companies in 1999 for $3.1 billion. The deal included an unprecedented 99-year lease agreement, unlimited control of the highway and its tolls…

    Today, the highway is valued at over $10 billion, and the Progressive Conservative party has been heavily criticized for the poor terms of sale, including underestimating the value of the road... "

While Highway 407 is 108 KM and the DRIC road would be under 10KM, the costs are about the same. These days the maximum toll for Highway 407 for a car at peak time is: $20.50. For trucks, it is $61.51. Note also that there are about 400,000 trips per workday taken on that highway.

Now you will understand why a P3 for the bridge and a P3 for the road must be joined together. No one would ever use P3 bridge given that kind of a toll structure if the user is to pay for the road project. The investor in the bridge would go broke.

Here though is where all of this seems to fall apart. There are under 50,000 border crossings per day in our area. No one would ever cross the border with those kind of tolls unless they were forced to do so. Presumably they would have to pay an increased amount for the tolls as well because of the significantly fewer trips, about 1/8th of Highway 407. For full cost recover in tolls, that could mean a $160 or more toll since the capital recovery time period is half that of Highway 407 too if the math is comparable!

Almost $200 to use the DRIC Road and to pay tolls 3-4 times higher than the Ambassador Bridge to use the DRIC bridge! What are they smoking!!!

To be direct, cross-border business would die here and no tourist would ever cross the border unless they crossed at the Ambassador Bridge where tolls could be significantly lower and people could use local roads at no cost to get to the border.

Now you will understand why the Bridge Company has to be eliminated as a competitor.

So what happens next? Shall we expect a $2-300 million “cheap solution” road rather than an "estimated" $1.6 billion DRIC Road? It would not shock me at all to see that happen. In fact, I expect it. Some changes to Huron Church and the upgrade of the Expressway to make it a redundant road to the border. Based on the numbers, this makes the most sense.

However, if we are to assume that we will have everything as promised by the Governments, then how are they going to convince a P3 operator to construct any of that stuff. Of course, the Governments could offer subsidies and guarantees but that would get them into big trouble with the Bridge Company who would demand payment as well. Moreover, the public would finally understand the idiocy of the transaction and how they were being ripped off. Another reason that the Governments need to get rid of the Bridge Company.

And that could happen too. The Governments could well make an offer to the Bridge Company that could not be refused and then build the equivalent of the Enhancement Project with a cheap road. All the Economic Nationalists would rejoice and would not worry too much about quality-of-life issues if that happened.

My guess however as to how the road will be paid for is a project that a law firm colleague of former Senator Michael Fortier was involved in and which was probably what was supposed to happen in Windsor. Fortier became after all the point man on the border file because of his financial background. That project was the 218 km Fredericton-Moncton Highway.

It is a shame for the movers behind this transaction that the Senator resigned and then lost in the federal election. There just does not seem to be anybody right now who is prepared to push this deal forward from a financial perspective. As I pointed out there is no responsible Minister for the border crossings in the central part of Canada.

We may see something called “shadow tolls” that were used by the Government in that project to give the P3 investors what they need to build a bridge, plaza and road. No one will care or know since it will never be visible. It will be a mere line-item in MTO's budget and that of Transport Canada who is to pay 50% of the eligible capital costs, an expense item charged every year for the next 40 years. It will be buried in other words, effectively hidden from public view unless you know what you are looking for and where to find it. Of course, the money comes directly from taxpayers. This should give you an idea of what is involved:

  • “Shadow tolls can be an element of a highway finance approach whereby a public or private sector developer/operator accepts certain obligations and risks — such as construction, operations and most specifically traffic — and receives periodic shadow toll payments in place of, or in addition to, real or explicit tolls paid by users. Funds for shadow tolls can come from diverse (and multiple) government and/or private sector sources....

    Shadow tolls automatically spread periodic or annual payments to a facility operator over a concession or franchise period; this can place the initial financing responsibility on the developer/operator rather than placing this burden on the public sector agency sponsoring the project…

    Shadow tolls are not a financing source in themselves, but rather a payment approach which can employ a range of financing methods, innovative or traditional, and can permit a viable financing structure that fits the characteristics and needs of certain projects. The concept of shadow tolls is, therefore, particularly applicable to public/private partnerships.

To put this in a nutshell, shadow tolls are a financing tool and a way that the Governments can pay to private enterprise huge sums of taxpayer money that is generally invisible to taxpayers on a project that doesn’t make any sense in the first place.

If the Government dared to issue a 40-year debenture or a "mortgage" for the $3B cost, the public would go crazy since the actual costs would be easy to calculate. Instead, P3 it so that the private enterprise operator appears to bear the risk but gets up to a 20% guaranteed return or more at taxpayer expense for 40 years!

This needs to be emphasized again. A P3 operator will not accept or be satisfied with a bond interest only return of 5%.

Why should OMERS as an example invest in the DRIC project at such a low rate when their overall infrastructure return in 2007 was 12.4%. Believe it or not, that return was 23.2% in 2005! I would think that the OMERS' Board and management could risk being accused of negligence for investing at such low returns if other higher return projects are crying out for money!

The P3 investor will make multi mega-billions over the 40-year term on a project that unnecessarily costs mega-billions because bureaucrats and politicians are seduced by the ease of obtaining private money. Why support a multi-million dollar project that provides all that is needed when for the same effort you can have a Megaproject. It will be the most expensive road ever built in Ontario and an unnecessary DRIC Signature Bridge and Plaza that cost multi-billions in total. The project will a nice, safe guaranteed return to private enterprise P3 investors for 40 years. It just does not get any better than this.

The politicians with their indexed pensions will be long gone by the time the project is completely finished after being re-elected by a supposedly grateful electorate, the bureuacrats will be retired and taxpayers will be left holding the bag. But we won't complain now because all we are hearing about is the glut of jobs to be created by the P3 deal, not the due diligence required.

Of course, this is all mere speculation on my part and I am sure will be subject to change as the Governments come closer to doing whatever it is that they are going to do. Just understand that we will see the greatest transfer of taxpayer money from the Governments involved to the private sector in our history as these P3s unfold!

Taxpayers are being robbed and in broad daylight too. And no one seems to know or care.

Monday, November 17, 2008

Is This Dwight Duncan’s Last Hurrah


One cannot tempt Fate so many times and always win. Sometimes one gets burned. Even a cat only has nine lives. Is this now the end for Dwight as Minister of Finance?

Oh Spanky…why are you doing this? Your political career, after seemingly being over, has skyrocketed. As I Blogged previously:

  • “Dwight Duncan has already had a near death political experience a number of years ago with his meltdown on CBC television at a Liberal Leadership convention. He's been able to resurrect his political career and is now in the second most important job in Ontario and is one of the key politicians across Canada.”

And now you are jeopardizing your future in becoming Premier of Ontario, a Federal Cabinet Minister or even the Prime Minister of Canada. For what?

Let me explain.

Do you remember the big fight between Councillor Gignac and our Provincial Ministers. She wanted them to lobby on our behalf but they refused using as their excuse the Members’ Integrity Act. In case you have forgotten about the letters that Dwight and Sandra sent, I have posted a copy of them.

Why they took such a strict interpretation of the rules that they could not even help Windsor with a tree research project. Dwight was so concerned to be seen giving support because it

  • “could reasonably be considered as attempting to influence or interfere in a decision, contrary to the Members’ Integrity Act, 1994.”

Just to emphasize the point, our two Ministers wrote to the City again saying with respect to the border access road:
  • “As you are well aware, Council has been advised repeatedly that as Ministers of the Crown, it would be inappropriate for Minister Duncan and Minister Pupatello to comment on specifics of any proposal for a new border access road, including Greenlink, before a final recommendation is selected by the Detroit River International Crossing study. To do so could be interpreted as an attempt to interfere with, or influence the process, which is contrary to the Members’ Integrity Act.” [emphasis added]

That is about as clear as it gets in my opinion. So what does Spanky do? Does he follow what was said in those two letters? Hardly. We are still at the Draft stage, not the Final one, and things could change drastically because of the Ontario Realty Corporation warning about environmental issues. Yet, Gord Henderson tells us:

  • “'We're so close you can smell it and taste it," confided a provincial government insider who believes Queen's Park and Windsor are just "tweaks" away from a win-win border infrastructure agreement.

    The insider said Mayor Eddie Francis and Finance Minister Dwight Duncan, who've had a rocky relationship for some time, shared a ride to Toronto's Pearson International Airport two weeks ago that was helpful in clearing the air and giving each a better understanding of the other's position.”

I do not understand this at all. Was it just the two of them, Eddie and Spanky, in the car talking about different things? What were they talking about:

  • Greenlink and DRIC road resolution

  • $75 million for the Tunnel deal with Detroit

  • paying extra money so that the Tunnel Plaza Improvement project could be completed

  • Brighton Beach and the Windsor Jail

  • Other financial matters such as the canal project?

I know those are a lot of subjects. However, if the President-elect of the United States and world leaders can have 10 minute phone conversations and resolve issues, then given all the time that it takes driving from downtown to Toronto Airport should be more than enough time to resolve these minor matters.

What was Sparky thinking? Doesn’t he know that a disgruntled Member of the Opposition could jump on this and demand that he resign? It could lead to an investigation under the Members’ Integrity Act. Dwight’s letters would be used as evidence of a possible impropriety that he committed.

After all, Eddie Francis is not just the Mayor of Windsor but he is also a border proponent who is competing with the Ambassador Bridge Company for traffic at the Tunnel. He obviously has an interest in ensuring that the DRIC Road does not go to the Ambassador Bridge but rather goes to a plaza at Brighton Beach so that he can sell the property to the Federal Government and prevent the Bridge Company getting more traffic.

Here are the relevant provisions of the Members’ Integrity Act:

  • Preamble

    3. Members are expected to perform their duties of office and arrange their private affairs in a manner that promotes public confidence in the integrity of each member, maintains the Assembly's dignity and justifies the respect in which society holds the Assembly and its members.

    4. Members are expected to act with integrity and impartiality that will bear the closest scrutiny.

    Conflict of interest

    2. A member of the Assembly shall not make a decision or participate in making a decision in the execution of his or her office if the member knows or reasonably should know that in the making of the decision there is an opportunity to further the member's private interest or improperly to further another person's private interest.

    Insider information

    3. (1) A member of the Assembly shall not use information that is obtained in his or her capacity as a member and that is not available to the general public to further or seek to further the member's private interest or improperly to further or seek to further another person's private interest.

    2) A member shall not communicate information described in subsection (1) to another person if the member knows or reasonably should know that the information may be used for a purpose described in that subsection.

    Influence

    4. A member of the Assembly shall not use his or her office to seek to influence a decision made or to be made by another person so as to further the member's private interest or improperly to further another person's private interest.

I hope that no one gets mad at me because of this. Even my inside moles did not know about that car trip together and you know how good their information usually is.

Don’t blame it on me if Spanky is forced out. Blame it on that “provincial government insider” who probably thought that he/she was doing Spanky a favour. Instead that person should have kept his/her mouth shut.

With a friend like this… why if I was Spanky, I would phone up Henderson and demand to know who that person was.