Are Mayor Cockrel and Detroit In Trouble
Ex-Mayor Kilpatrick certainly has learned that I would think. Just before his campaign to be re-elected for Mayor, our Mayor was very concerned when it appeared that Kwame was prepared to enter into a transaction with the Bridge Company over the Tunnel. Events took place that were certainly helpful to Kwame’s opponent, Freman Hendrix, and could have cost Kwame the election.
I need not discuss what happened with respect to the Tunnel Deal between those two Mayors afterwards because that should be fresh in your memory.
However, are Mayor Cockrel, and the City of Detroit as well, now facing the wrath of Francis because of recent events? Could it mean not only the end of Cockrel’s career as Mayor but also the financial distress of the City of Detroit?
Lest you think that I am being overdramatic, let me remind you what our Mayor said:
- “Detroit seeks $100M for tunnel agreement
Grace Macaluso, Windsor Star, Tuesday, February 03, 2009
The cost of entering into any kind of a tunnel agreement with the City of Detroit has soared to US$100 million under a new proposal unveiled by Mayor Ken Cockrel Jr…
Anthony Neely, spokesman for Cockrel, said Monday.
"It's not proposed as a deal with the City of Windsor. It was proposed as a deal with an outside, private business that would operate our end of the tunnel for us and and pay out that amount of money to the city in exchange for regular collection of fees from the tunnel…"
PRICE QUESTIONED
Mayor Eddie Francis questioned how Detroit arrived at a $100-million price tag for control of the U.S. side of the tunnel.
Windsor has gone through an "exhaustive process" to arrive last year at a $75-million value, he said.
"That was the number we were prepared to pay back then, but economic conditions have changed considerably and are very different than five or six months ago."
The mayor said 2010 toll revenues for the Detroit side are projected at about US$11.5 million, but the city has no way of knowing exactly since it is controlled by Alinda, a private company which holds a lease until 2020.
"Does the tunnel have revenues to support $100 million on the American side? I'd be interested in looking at their numbers," Francis said.”
There, do you understand what I mean? If not let me take you through what is going on.
Detroit has a budget deficit of about $300 million. Mayor Cockrel, as did the previous Mayor of Detroit, wants to help solve that deficit by doing a deal involving the Tunnel, whatever the type of transaction may turn out to be. The assumption everyone was making is that the deal would be with Windsor. Eddie certainly expected it. A Tunnel deal is a fundamental plank of what has to be done for Detroit. Kwame wanted $75 million while Cockrel wants $100 million to fill the Budget hole.
The little wrinkle that makes this more interesting is that there will be an election on February 24 for Mayor of Detroit because of the resignation of Kwame and Cockrel is running as well as Freman Hendrix who also ran against Kilpatrick. The actions before the last Detroit mayoral election would have helped Hendrix. Will Eddie’s comments hurt Cockrel and help Hendrix and Cockrel's other opponents this time around too?
The comment from Cockrel’s spokesperson effectively means that Eddie cannot get the Tunnel. Is Eddie a gracious loser? Is he thankful he is out of a bad deal? Does he contact the Detroit Mayor and say instead let us talk again to see how we can help you and do a deal? No, he lashes out and in doing so undercuts Cockrel and Detroit.
Effectively, our Mayor has said that the Tunnel is not worth more than $75 million. He should know shouldn't he because he operates the other side. After all, we went through “an exhaustive process.” Eddie also questions whether the Tunnel can support a $100 million deal. And everyone always, that Eddie is never wrong.
Accordingly, we know that the maximum price is $75 million which would leave a $25 million shortfall for Detroit. But does Eddie stop there? Oh no. He now reveals as if it is new news what the Blogmeister and other Bloggers have been saying for a very long time and which made this transaction nonsense from Windsor’s perspective:
- “economic conditions have changed considerably and are very different than five or six months ago."
Eddie has been listening too long to Harper/Flaherty about our economic crisis that suddenly appeared after the last Federal Election it seems.
I assume that he is not just talking about the decline in traffic but the DRIC challenge of taking 25% of the Tunnel traffic away in the event of a new DRIC bridge.
Let us do some rough math and say that that would result in a $25 million decline in the value of the Tunnel making its worth only $50 million now.
Oh my goodness… Cockrel’s Budget does not work. There is a $50 million hole there that cannot be filled. No one would bid more than $50 million when the Mayor of Windsor is telling everyone what the price of the Tunnel should be publicly. And he is the expert remember.
There goes Cockrel’s credibility as a financial manager who can help Detroit get through its economic crisis. Cockrel obviously has no idea about what the Tunnel is worth. Had he known, he would have understood that more action needed to be taken on the Budget. He has left Detroit in a jam!
Hendrix and the other candidates now can attack Cockrel mercilessly based on what Eddie has said. The beauty from their position is that they have the word of the Mayor of Windsor on this, obviously someone who has no interest in the outcome of the campaign.
What about the City of Detroit? What are the bond rating agencies going to say now and the holders of existing bonds when there’s a $50 million hole in Detroit’s budget that no one has contemplated. Could this push Detroit’s financial position over the edge? There are very delicate negotiations going on with respect to Detroit and its creditors. Could this result in more onerous terms being Detroit being imposed on Detroit or perhaps the creditors pulling out of any further negotiations. Could that result in the economic collapse financially of the City?
Perhaps I am overreacting. Perhaps I am not. In my opinion, our Mayor should not have opened his mouth the way he did. He should have thought through the potential negative impact of what he was saying.
This is the future of a City at stake and a mayoral career. Depending on what happens, will Eddie and Windsor be blamed?
posted by JoeBlog at 10:25 a.m.
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