Thoughts and Opinions On Today's Important Issues

Tuesday, May 25, 2010

More Border Stories

Here come some more of them


P3s are on the House agenda again today. Does anyone know yet which proposed Bill is to be considered or is it all to be a big guessing game?

Remember how the DRIC-ites bragged about their process. Well I am waiting to see the newest version of the draft P3 Bill to be sprung on Michigan Legislators in the last possbile second so no has a chance to think.

Moreover, the very same MDOT that says there will be transparency in the PPP process is the same one that won't let the Bill be seen in advance of voting. Now THAT is a confidence builder.

In addition, I love this quote from MDOT's Captain Kirk:
  • "He also said MDOT will keep the revenue estimates secret until after the final bid process so that the bids remain competitive. That includes keeping the revenue estimate, and how much the bridge needs to generate, secret from lawmakers for now...

    MDOT says that the financing will be complex and that it’s not yet known how it will be put together, so using back-of-the-envelope estimates is risky."

Is MDOT mad? Will legislators allow them to get away with this especially with the proposed P3 Bill?. Complex financing and elected officials are to know nothing about it!

That has to be unconstitutional and if it is not, it ought to be.


Even the US government back in 2001 messed up re traffic volumes for this area:

  • "Intelligent Transportation Systems at International Borders

    Spanning the Detroit River between Downtown Detroit andWindsor, Ontario, the privately owned Ambassador Bridge is a single span facility with two travel lanes in each direction, and toll facilities to capture revenue. The bridge is the single busiest international land border crossing in North America, serving as a portal for 27% of the approximately $400 billion in annual trade between Canada and the U.S.

    In 1997, 2.7 million trucks crossed the bridge, a 50% increase since 1993. This volume is expected to double again by the year 2012. A substantial portion of this trade supports the manufacture and distribution of automobiles. The Detroit International Bridge Company, owners of the facility, plan to add an additional sixto-eight lane span, which is projected to be open for use by 2012."

Note though the expectation was that a twinned bridge would be open by 2012. There was no thought of a DRIC bridge for capacity reasons. Why not? Consider this which has been virtually ignored by DRIC-ites:

  • "The successful deployment of federal systems on a privately owned bridge crossing was the result of an effective public/private partnership that relied on extensive coordination of 11 stakeholder groups..."


    Planned second bridge span and highway improvements to facilitate travel to and from the bridge are likely to have a significant impact on traffic flow...

    FOT Lessons Learned

    Ambassador Bridge International Border Crossing System (ABBCS)

    Implementation of a system such as ABBCS, in conjunction with a carefully selected lane assignment scheme, has the potential to significantly reduce the length of vehicle queues on the bridge during peak traffic periods, reducing the time necessary to transverse the compound by as much as 50%. Reconfiguration of the entry roadway into the Customs compound from one lane to two would have an even more pronounced effect, allowing participating vehicles unhindered access to equipped lanes.

    Simulation results indicate that the Dedicated Commuter Lane concept has the potential to positively impact traffic on the bridge, provided all equipped lanes are open to all vehicles."

That sounds a lot cheaper than $5.3B


It just cannot get any funnier. I am not an analyst and I could figure it out by doing some math. From Crains Detroit, a devastating story for DRIC-ites:

  • "DRIC traffic study questioned by industry insiders

    An infrastructure investment analyst is sounding warnings about the border traffic estimates being used to justify the proposed $5.3 billion Detroit River International Crossing, and believes the bridge will need taxpayer subsidies to be built.

    The study, mandated last year by the Michigan Legislature, was conducted for the state by Columbia, S.C.-based engineering and planning firm Wilbur Smith Associates, which has an office in Lansing.

    It estimates that border traffic locally will grow significantly in the next decade, especially commercial trucks. It’s currently at 1987 levels, with increases shown this year, but remains at half of its peak level set in 1999.

    “The infrastructure investment community considers the Wilbur Smith study wildly optimistic. There’s not a lot of confidence in the traffic demand study,” said Brian Chase, an investment analyst on large infrastructure projects for the Washington D.C.-based International Finance Corp., part of the World Bank Group.

    Chase was formerly a financial/legal analyst with Los Angeles-based Nossaman L.L.P. which specializes in toll road issues...

    Toll industry analysts have estimated that a typical 30-year construction financing arrangement, along with yearly operational costs, would mean about $120 million in annual bridge debt — probably not sustainable under the traffic projections in the study...

    The nearby presence of the competing Ambassador Bridge means tolls could be much more expensive than what the border currently has — or DRIC would require a taxpayer subsidy to avoid default...

    Skepticism about the study makes DRIC nearly impossible to finance based solely on tolls, Chase said.

    “I can’t think of a single financial investor that would take the (traffic) demand risk,” he said.

    Even with Canada’s offer to pay up to $550 million of the state’s DRIC costs not covered by federal or private financing (money that Michigan requested), there’s still going to be public cost on this side of the border, Chase said.

    “There will be some sort of U.S. taxpayer subsidy, either at the national, state or local level,” he said. “I think it’s reckless to say the project will not require some sort of U.S. taxpayer subsidy. If the project’s being sold on that basis, it’s problematic...

    Political, civil and business community backers of the joint U.S.-Canadian crossing, which has a $2.1 billion estimated price for its bridge and $5.3 billion cost overall, have said that tolls will repay the construction debt and operational costs. The majority of civil engineering/construction firms and financial agencies that have expressed initial interest in DRIC say they have doubts about tolls and traffic, and prefer guaranteed government payments instead, called availability payments"


Pressure is really on to have a vote on the P3 legislation:

  • "Detroit-Canada bridge vote on hold in Michigan

    Supporters and opponents of a proposed bridge to connect Detroit and Windsor, Ontario, are waiting to see if Michigan lawmakers will vote on legislation that would allow the state to get involved with the project...

    The legislation would permit Michigan's transportation department to enter into a relationship with Canada and a private project developer.

    Michigan lawmakers face a June 1 deadline to approve bills allowing Michigan to join the new project, but that deadline is self-imposed and can be changed."

Sure if the Law is changed. Lord save us from that!


All of these people from industry rallying for a DRIC Bridge. Very impressive.

One question though

I wonder how many of them will be willing to pay the actual tolls required to finance the crossing, up to 4 times higher than today's Ambassador Bridge tolls.

Or will we have to listen to not only David Bradley whinge about high tolls so that taxpayers will get stuck paying but the people from Chrysler and Ford as an example as well. They were too spoiled I guess from looooooow Blue Water Bridge tolls which just doubled. After all they have a misdesigned plaza which requires over $500M to finance.


So full of errors and omissions. I had to write this on their website when I read it:

  • "Your Editorial is shameful.

    -it is a shame that you have chosen not to categorize the $550 million "loan"

    -it is a shame that you have not reviewed the terms of the P3 legislation to show how taxpayers would be screwed and how Canada would be granted governmental powers in Michigan

    -it is a shame that you did not report that most P3 financiers did not believe that the DRIC bridge could pay its own way with toll revenues so taxpayers would be on the hook

    -it is a shame that you did not mention that trucks can only use 2 bridges in Buffalo and that we have 31 Customs truck lanes NOW

    -it is a shame you are still spreading the MDOT debunked myth re Buffalo competition

    -it is a shame that you did NOT disclose that the new bridge in Buffalo is for traffic flow not capacity

    -it is a shame that you did not mention that most traffic projections for this area have been wrong

    -it is a shame you did not mention that the Bridge Co. would use their money for construction not taxpayer money making their proposal truly riskless and a no-brainer.

    What a shame for your readers"