Thoughts and Opinions On Today's Important Issues

Saturday, April 24, 2010

BLOGextra: Michigan P3 Bureaucrats Plan State Government Putsch (Part I)

It was to be a quiet and bloodless coup d'├ętat started in a Michigan House Committee. Clearly, Michigan bureaucrats as seen from their performance in other DRIC hearings were not smart enough to plot this out by themselves. They needed expert help to circumvent legislation and the Legislature.

The mainstream Michigan media were absent from the proceedings so few knew of the plot except for those who read the subscription legislative news services in Lansing. Who goes to hearings anyway? Even the Representatives were not fully up to speed. Clearly they missed some of my P3 BLOGs:
  • "Everyone seemed to be in agreement at the House Transportation Committee that so-called Public Private Partnerships regarding making infrastructure investments are a good idea -- except maybe if they apply to a new Detroit River International Crossing (DRIC)."

  • "There is unanimous support for the Department of Transportation having the authority to create partnerships for private financing of infrastructure projects - as long as the Detroit River International Crossing is not one of those projects."
Who gives a damn what the Legislature wants. MDOT rules Michigan. A DRIC exception---after they worked so hard. No way!

I erred before. I did not go far enough. Now I know why MDOT really wants P3 legislation. So they can do a deal with Canada. On their own. Without oversight. No wonder the financial side of the Wilbur Smith Report has never been released. The Legislature would go ballistic when they see the real cost and the subsidies or guarantees required.

For what reward, easy---money for 243 postponed MDOT road and bridge projects once Canada pays MDOT $100M for road connections as a nice gift for helping them out. The proposed Legislation provides for gift-giving too. The $84M is then freed up.
  • "The subject of DRIC was touched upon when Rep. Marty KNOLLENBERG (R-Troy) asked why the state wanted to lead off with the largest possible project (DRIC).

    "The answer to me is why not?" Gonzales said. "If we used your perspective, the Mackinac Bridge would have never been built."

    Dan STAMPER, president of the Ambassador Bridge Company, said his firm was generally in support of P3s but argued the legislation needed to be amended to exclude P3s in the Detroit/Windsor corridor.

    Rep. Coleman YOUNG (D-Detroit) also asked whether the Legislature would have another vote on DRIC beyond HB 4961. When DeCook said "no, this was it," Opsommer added that "this will be the final discussion because MDOT will have control over all the P3s."

Here's how easily a multi-billion project like DRIC can be done which could bankrupt the State. There are about a dozen projects that could be P3ed in addition to DRIC costing multi-billions. The proposed legislation says this:

  • Sec. 6a. The director may do the following:

    (i) Enter into public-private agreements under section 7b with the approval of the Commission.
  • Sec. 7. (1) The Commission's powers and duties shall include:

    (c) Approval or disapproval of public-private agreements entered into by the department under section 7b.

And to make it perfectly clear:

  • Sec. 7d. (3) Subject to approval from the Commission and compliance with applicable federal laws, the department has exclusive authority to determine where and whether to establish a transportation facility authorized by a public-private agreement and the scope and nature of the facility.

Done. That's it. The DRIC boondoggle moves forward on whatever terms MDOT wants and with whomever MDOT wants and no legislative oversight as you shall read in my (Part II) BLOG:

  • Sec. 7b. (1) Except as otherwise provided in this section, the department may enter into a public-private agreement with a private entity or with a private entity and 1 or more other instrumentalities of Government.

Here's how to accept a nice gift from Canada too:

  • Sec. 7f (4) The department may accept from any source, and use for supporting a transportation facility authorized by a public-private partnership, any grant, donation, gift, or other form of conveyance of land, money, other real or personal property, or other item of value. A transportation facility authorized by a public-private agreement may be financed in whole or in part by contribution of any funds or property made by any person or entity.

I thought a law had been passed during the Budget debate that required MDOT to appear in front of the Legislature to get permission to move forward with DRIC. Wasn't it this:

  • MDOT Budget authorization dealing with how MDOT may deal with DRIC:

    "Sec. 384. (1) The department may continue with preliminary legal, financial, traffic and revenue study, permitting, engineering, and other ancillary work for the Detroit River International Crossing (DRIC) so that it can solicit from the private sector requests for proposals for public-private partnerships to construct the bridge, plaza, and related infrastructure. The department shall submit proposals to the legislature by May 1, 2010. Those activities associated with the DRIC project shall not bind the state in any way to construction,
    (2) The department shall submit an investment grade traffic study to the legislature by May 1, 2010 from a reputable traffic company with appropriate experience intended to provide a detailed traffic projection for the ensuing 10 years, taking into account projected infrastructure modifications, expansions, and improvements announced.
    (3) The department shall not expend more than $2,500,000.00 from state transportation revenue sources for activities enumerated in this section.
    (4) It is the intent of the legislature to fully adopt or reject authorizing legislation by the full legislative bodies by June 1, 2010 to do all of the following:
    (a) Construct a new international crossing jointly and in agreement with Canada.
    (b) Create an authorized tolling authority.
    (c) Create a public-private partnership.

Who needs to do this now? All that the Governor's Department, MDOT, needs to do is to go to the Governor appointed Commission to get approval of its deal. Now that's a NO-BRAINER!

As I Blogged before respecting the RFPOI:

  • "Has MDOT in fact thumbed its nose at the Legislature nose by starting the process to choose a P3 operator even though there is no legislation in place and the Legislature has not approved the project going forward as their Budget Act requires."

Heck, MDOT has just told the Legislature to FO!