Thoughts and Opinions On Today's Important Issues

Wednesday, March 31, 2010

P3 The Blue Water Bridge

This bridge is a natural to be P3ed.

It is owned by Canada through the Blue Water Bridge Canada and by the State of Michigan through MDOT. As everyone knows, both Governments are hot to trot on a P3 for whatever is built in Windsor/Detroit although Michigan legislation does not allow for P3s. So far.

Trouble is, no one has a tremendous amount of experience on P3s for major transportation routes, especially an international one. Ontario had a deal over Highway 407 and it took a lawsuit to figure out who could do what. I hardly think think that makes Ontario a pacesetter in this area.

Who could dare take such a chance on the major land broder crossing between the US and Canada? No one is the answer. We need to run a test first to see how it can be done and what lessons can be learned.

Wait, I have a fabulous idea. Or rather, I am publicizing someone else's fabulous idea that few have picked up on. P3 the Blue Water Bridge:
  • "[Republican Senate Majority Floor Leader Alan] Cropsey also is unhappy with Granholm's budget recommendation for the Michigan Department of Transportation. Her proposal calls for reducing operational expenses by $20 million and using that money for road construction to leverage $100 million in matching federal funds. Even so, Michigan will be unable to use an additional $475 million in federal road cash because of inadequate state road funding.

    Cropsey said Granholm needs to think about creative solutions such as instituting road tolls and privatizing bridges.

    "Maybe we ought to turn the Blue Water Bridge over to the private sector and let them run it," Cropsey said of the bridge between Port Huron and Sarnia, Ontario.”

It's not such a foolish idea. Remember that Canada had the Blue Water Bridge on a list of possible assets it might sell. Just the other day, the Finance Minister said:

  • "Finance Minister says Canada may sell government assets

    March 9, 2010 Canada may announce plans in the coming year to sell government assets following a review of its operations, Finance Minister Jim Flaherty said.

    Flaherty, who this week outlined the Conservative government’s plan to bring down its budget deficit, told CBC Radio a lot of work had been done on the review and “there’s more to be said about that before too long.”

    “There are some opportunities there for some privatizations of businesses that one questions why the government is in them anymore. So we’ll look at those and I expect that in the next year we’ll be able to make some announcements,” he said in an interview posted to the website Friday.

    “It’s actually an asset review. Why does the government own A or B or C? Why are we in that business? Do taxpayers really need to own this?”

    He did not elaborate on what assets might be sold or how much this could raise."

Relax all of you Canadian economic nationalists. He is not really going to sell the bridge but he could P3 it instead. This way he can say he still owns it while he brings in all of this cash to pay down the deficit.

After all, how could he sell it when the Prime Minister has a secret mandate letter to buy the Ambassador Bridge. He may buy it but then probably would turn around to P3 it probably to the same party who P3s the Blue Water Bridge. We know that this was part of Canada's plans for years thanks to Gridlock Sam's "socialist-type" musing that could come into play:

  • "Balanced Traffic between Blue Water Crossing and Windsor-Detroit Crossings

    Developing a balanced traffic network between the Sarnia-Port Huron and Detroit-Windsor Crossings would provide benefits without a new crossing but would be compatible with any of the new crossings... It sets aside the profit-motive, which means each facility is competing for the most traffic, with a utilitarian-motive: the greatest good for the greatest number. Such a scheme may require revenue sharing among participants."

But why would MDOT do it? They aren't a bunch of namby-pamby leftwing-leaners are they.

There is a simple explanation: money. MDOT is desperate for money. They need to spend a half a billion dollars to fix up the mess they made at the Blue Water Bridge Plaza. They have a need for hundreds of millions of dollars for highway and bridge projects they cannot finance. And if they get money for their budget from private parties, then effectively they are no longer controlled by Legislative oversight at budget time and can tell the Legislature to stuff it. Mind you, they do that now anyway as we can see with DRIC.

They were seduced by Canada over sums that were raised in Chicago and Indiana as the P3 boom skyrocketed. And who would not be! I wonder how many billions they thought the Bridge was worth, half of it to go to MDOT. However, it may be too late for them as the economic meltdown has meant that P3 operators will have trouble finding the cash to satisfy the bureaucrats. Who knows though, Canada might offer to buy it but at a reduced amount. Perhaps like the Tunnel too.

If you do not think that this is a possibility, then why else would MDOT raise the tolls by almost double? There was an immediate need to get the revenues up to increase bridge value and to attract bidders. Moreover, if the successful bidder increased tolls right after it took over, then the private operator would take the public hit and would not like that. Just take a look what happened when Alinda did that in Alabama when they bought out 4 Macquarie bridges there.

However, I have to tell you that this concept will not work. All that it will get would be OTA's David Bradley whinging another time when the private P3 operator increased tolls again. Who could stand that! I guess he cannot figure out that someone has to pay for bridge building. Or perhaps he has and wants it to be taxpayers not bridge users like his members.

I hate to admit it. The better idea would be to follow what the Detroit Free Press proposed and let Matty Moroun run both crossings (and throw in the Fort Erie/Buffalo crossing too for good measure):

  • "Moroun's legal efforts can stall the planning and building of a second crossing, but ultimately they won't stop it. If the Ambassador wants to continue getting a big piece of the border action, it ought to negotiate an agreement under which it would jointly own and operate the Ambassador, the new downriver crossing and maybe even the Blue Water Bridge in Port Huron. Moroun's company could even share revenue on the new downriver crossing while repairing the Ambassador.

    The bridge company, which has done an excellent job of operating the Ambassador, has the capital and expertise to make such a public-private partnership work. If structured properly, such an agreement could protect the bridge company's economic interests while providing the public oversight and governance that a border crossing should have.”

Put the DRIC bridge P3 project on ice for awhile, P3 the Blue Water bridge by allowing P3 legislation just for that project. And learn what a disaster that will be as the Governments get taken for a ride.

Then the Governments can beg Matty to please build his bridge and run theirs!