Thoughts and Opinions On Today's Important Issues

Tuesday, June 01, 2010

BreakingBlogNews: No DRIC Loan Coming From Canada



You can try and explain it a different way. I cannot!

NO MONEY IS COMING FROM CANADA TO MICHIGAN AT ALL FOR THE DRIC PROJECT. IT'S ALL COMING FROM SOME P3 OPERATOR THAT HAS NOT YET BEEN PICKED THAT HAS TO BE PAID BACK. FROM TOLLS? NOT A HOPE!

Have you all in Michigan ever been taken to the cleaners by Canada. One thing said in Michigan, another in Ottawa as you shall see below.

Not one single penny will be paid by the Canadian Treasury, unless it may be for bridge financing. Hey, that's what short-term financings are called (and you thought Canadian bureaucrats had no sense of humour). No wonder there was nothing budgeted for it in Canada's Economic Action Plan that I could find. No wonder Michigan needed a P3 Bill. It could NOT get any money otherwise. Canada is not that stupid to loan money to Michigan.

We come back to what this is really all about. If it is all about a P3 deal, Michigan did not need Canada to do its negotiating with a P3 operator. All of this charade was done in the end so that a P3 Bill would be passed to circumvent the Michigan Senate's opposition to DRIC. Even Minister Baird said he would have trouble getting a Bill through that branch of the Government.

What the heck is going on? Is this really how Government works? You have to follow this timeline of events of the $550M or rather the UP TO $550M offer by Canada to Michigan to pass the P3 legislation:

1) The DRIC-ites claimed it was NOT a loan



2) Minister Baird in the excerpt from his interview I posted called it a loan (see below)

3) Now Minister Baird in his session before Canada's Transportation Committee the day after the P3 Bill was passed in the House made this startling admission that puts a mockery to everything that has been said to date:

  • Hon. Joseph Volpe: Now if I can go back to your success in Lansing. I'm just wondering whether you think that the $550 million offer that you laid on the table for Michigan legislature had anything to do with your success?

    Hon. John Baird: I think there's no doubt that the State of Michigan has some significant financial pressures. That was a significant issue for Legislators. This has been done in the past, but the other way around, where the Americans' support for the Blue Water Bridge in Sarnia. I think there's no doubt that it assisted.

    Hon. Joseph Volpe: Did you ask the Auditor General whether that $550 million would pass her examination?

    Hon. John Baird: Well, the Auditor General doesn't give pre-clearances. She's the Auditor after the fact. She will not give a pre-clearance on any issue before government.

    Hon. Joseph Volpe: So did you ask the Justice Department whether it was a legitimate offer for you to make?

    Hon. John Baird: We're comfortable with it. I should underline that it's up to $550 million. It's not a loan to the State of Michigan. It'll be part of the P3 Project.

    Hon. Joseph Volpe: But it's all going to be paid for by tolls, as you put.

    Hon. John Baird: Correct.

All Michigan got was a crummy 2-page letter. Not cash. Certainly NOT from Canada. It would come as part of a P3 deal. Now wonder the Governor was breathless. This stuff was spun so quickly it must have taken her breath away. She was holding her breath to see if House Legislators would buy into this stuff

No wonder that Baird laughed in his interview when he talked about the letter. He knew it was a joke. Now we do too.

No wonder there was a need for "due diligence" in the Terms and Conditions. Those terms would be negotiated by some third party ie the P3 operator. They would NOT be negotiated by Canada and that is why they were not included as part of the letter.

Now certain words are coming home to roost. Listen carefully to what Baird says in his interview:





video



The Minister talked about Canada being a "credit facility." He said the money will be part of the financing arrangement and will be rolled into the financing arrangment. He needed a P3 Bill or else no money would ever come since Canada was not putting up a single dime! It was exactly as MDOT Director Steudle mentioned as well. As I Blogged before:
  • "I have to tell you that the so-called toll payments to pay off this $550M are another sleight of hand. What will happen is that this money will all be "rolled up" into the financial arrangement so some P3 operator will have to pay Canada back. You truly cannot believe that Canada would trust a virtually bankrupt State like Michigan to be able to pay back a half a billion dollars do you. That is exactly why Michigan and more importantly Canada needs the P3...so a private investor can pay off the credit facility and roll up this money into the financing.

    If you remember, Captian Kirk told us about this roll-up when he talked about the $100M in the first hearing. Now that Baird really explained what it means, you know who taught the Captain. Hurrumpf...the Michigan media missed that one."

No wonder that MDOT snuck in the "availability payments" section of the P3 Bill that puts Michigan taxpayers at risk on this no-brainer, riskless deal.

  • "(14) FOR ANY INTERNATIONAL BRIDGE CROSSING THAT DOES NOT EXIST AS OF THE EFFECTIVE DATE OF THE AMENDATORY ACT THAT ADDED THIS SECTION, A PUBLIC-PRIVATE AGREEMENT FOR ANY SUCH INTERNATIONAL BRIDGE CROSSING SHALL INCLUDE RISK ALLOCATION PROVISIONS SPECIFYING THE RISK ASSUMED BY THE CONCESSIONAIRE AND EACH INSTRUMENTALITY OF GOVERNMENT THAT IS PARTY TO THE PUBLIC-PRIVATE AGREEMENT RELATED TO THE PUBLIC TRANSPORTATION FACILITY, INCLUDING THE RISK RELATING TO CONSTRUCTION COST OVERRUNS AND, AS APPLICABLE, TOLL REVENUE SHORTFALLS.

    BEFORE APPROVING AND ENTERING A PUBLIC-PRIVATE AGREEMENT FOR ANY INTERNATIONAL BRIDGE THAT DOES NOT EXIST AS OF THE EFFECTIVE DATE OF THE AMENDATORY ACT THAT ADDED THIS SECTION, THE DEPARTMENT SHALL ENSURE THESE RISK ALLOCATION PROVISIONS PROVIDE FOR THE MOST ECONOMICALLY BENEFICIAL WAY FOR THIS STATE TO PERFORM THE PROJECT, WHILE MINIMIZING LIABILITY FOR CONSTRUCTION COST OVERRUNS AND TOLL REVENUE SHORTFALLS FOR WHICH THIS STATE COULD BE HELD LIABLE, AND THE DEPARTMENT SHALL SUBMIT A REPORT TO THE GOVERNOR EXPLAINING HOW THIS MANDATE WAS FULFILLED."

"Most economically beneficial," "minimizing liability, THIS STATE COULD BE HELD LIABLE." Why is there such talk on a riskless, no-brainer deal with Canada?

Michigan Legislators, you have been "punked."