Thoughts and Opinions On Today's Important Issues

Tuesday, September 01, 2009

Born Again Tunnel Deal

Don't get too concerned even though Eddie met with Mayor Bing today. Yet.

The noise over the Tunnel is based on this quote from the Detroit News:
  • "But Charlie Beckham, Bing's top aide, said the reality is that the city cannot continue to operate without cuts.

    "Frankly, all our revenue projections have been in the wrong direction," Beckham said. "We are still, quite frankly, in financial crisis. There is no question of that."

    Beckham said bus service will see changes this weekend, but they won't know by how much until Friday, following a series of public hearings. Beckham said in addition to bus cuts and wage concessions, the city is considering a deal involving the Detroit-Windsor Tunnel."

Remember Gord Henderson's words:

  • "How the heck did little old Windsor snatch a blue-chip infrastructure investment opportunity out from under the money- sniffing noses of Canada's major pension fund managers?"

The answer is we did not. The deal stunk as Bloggers in town kept writing. And as shrewd investors knew, the real pros in the business not the Windsor municipal wannabes, from doing a modicum of research.

I am still waiting for my FOI appeal to be decided by the Privacy Commission to find out how much exactly Infrastructure Ontario was prepared to offer on Eddie's dead deal. If they got involved again, clearly the amount offered would be even less based on what Eddie himself says.

Who has the better idea about border crossing valuations? Now we know why Matty Moroun offered less than a third of the amount that Eddie was going to pay: $20M vs $75M! It's his money at risk not taxpayers.

Given what has beeen taking place at the Tunnel with its huge traffic drop, even then that $20M might have been too much for an asset that is so old and may need major renovations over the rest of its life. Considering the ferry service that could take away a huge chunk of the Tunnel's commuter traffic plus the DRIC bridge if it is ever built which is suposed to take away around 25% plus the Ambassaor Bridge competition due to the Gateway project, does the Tunnel have any value at all now?

It would not surprise me to see Eddie try and make a low-ball offer to try and get control of the Tunnel. Or perhaps the Feds, but I doubt that they would have the nerve to do that because it would get the Americans all upset.

If Eddie does it, hold on to your hats taxpayers considering how much in legal and consulting fees have already been paid out:

  • "Circumstances have changed drastically since the tunnel discussions of a year or two ago and any potential deal would have to start from scratch, the mayor said.

    “There has been a significant traffic decline and the economy is vastly different than when the tunnel was first talked about in 2006,” Francis said. Those factors would affect the value of the property."

To be direct, it would not surprise me for someone to make an offer for the Tunnel as an "agent" with a hidden "principal" behind them. It could could be a cheap way to end Tunnel border traffic competition for a new DRIC bridge with a P3 investor who likes monopolies. Force vehicles to pay huge amounts for the Tunnel crossing or use the new DRIC bridge instead!

Again, this is another example of our Mayor being incapable of doing a deal in a timely manner. He claimed at one time that the Tunnel was worth hundreds of millions of dollars. It is certainly not worth that today. Accordingly, taxpayers lost out on a huge amount of money. If it ever made sense to do a Tunnel deal, then the time to do it was years ago, not now.

Let me give an example using Eddie's and Gord's hero as a mayor: Mayor Daley of Chicago.

When he leased out the Chicago Skyway toll-road, the City received $1.8B. It might be worth a fraction of that amount today after the financial melt-down. And Chicago, the recipient of all that money---wasn't last Monday the day that City Hall closed down to save cash because of their budget mess!