Thoughts and Opinions On Today's Important Issues

Thursday, May 06, 2010

When Is A DRIC Loan From Canada Not A Loan To Michigan

Quack, Quack, Quack. If you read to the end of this BLOG, you will understand the significance of these three words.

Don't you wish that the misinformation propaganda would stop. I have the damn interview where Canada's Transport Minister Baird spelled out the loan deal!

Why are MDOT and DRIC supporters so ashamed to accept a loan from Canada? We all know that Michigan has become a have-not State under the Granholm leadership.

Is the Governor afraid that her legacy will be that of a beggar asking her country of birth for money? Heck, her hubby was not breathless when he got a nice fee from the City of Windsor, one of the border crossing proponents, when he helped out Windsor's Mayor and Council. We own the Canadian half of the Tunnel which competes against the Ambassador Bridge for business.

I hear that some people are running around with a new group of FAQs to explain what is going on in Michigan with the loan deal. Here is a Q&A dealing with loans that I saw:
Not a loan? I'll bet that you are as shocked as I am on reading that. I am sure that the Editors of the Windsor are suprised because they just wrote a big Editorial about "Ottawa's border loan."

It looks like Jim Blanchard thought it was a loan according to Crains and he was deeply involved

  • "Blanchard: Canada loan offer for new Detroit River bridge was MDOT’s idea

    The idea for Canada’s offer to loan Michigan up to $550 million to cover the state’s cost of a new Detroit River bridge originated with the Michigan Department of Transportation, former Michigan Gov. James Blanchard said."

The Globe and Mail said:

  • "Ottawa wants to lend $550-million (U.S.) to Michigan as the Canadian government seeks support for building a new bridge along the continent’s busiest commercial corridor, offering to help bail out a state ravaged by the auto sector’s slump...

    Mr. Baird said the Canadian government expects to eventually recoup its loan of up to $550-million to Michigan by collecting a portion of the state’s toll revenue from helping operate the new bridge."

Rather than quote from the media, let's hear what the Minister said right from the horse's mouth.

There...repaid to Canada, credit facility, lending, putting the money up. It's a LOAN! I am not saying it, the Minister did.

Why is everyone so concerned about loans in Michigan and not calling this a loan? Here is the answer and remember, the bonds under the P3 bill were not to be "backed by the full faith and credit of the State:

  • "General obligation bonds are issued pursuant to Sections 15 and 16 of Article IX of the State Constitution. Section 15 authorizes the State to borrow money for specific purposes only after a positive two-thirds vote of the members serving in the House of Representatives and the Senate and a positive vote of the electors in a general election."

That would never happen for this deal! The process itself would kill the deal if the public had a say.

However, other types of borrowng are allowed:

  • "Nongeneral obligation bonds are issued pursuant to Sections 9 and 13 of Article IX of the State Constitution. These sections enable public bodies to issue bonds subject to constitutional restrictions and State law. These bonds are backed by dedicated revenue sources and are not guaranteed by the full faith and credit of the State."

Here's the rub for Michigan. It looks like many of the P3 investors want "availability payments" not toll revenues as their source of income because there are fears that the tolls ie the "dedicated revenue source" will not cover the finance costs. The State Treasury is NOT a dedicated revenue source the way tolls are.

Obviously, they are right and that is why the WSA financials numbers have not been released! I bet they show that the DRIC bridge cannot be paid off unless tolls skyrocket and Matty Moroun was put out of business.

So there may not be any Constitutional way that Michigan can borrow the money never mind that Michigan's borrowing ceiling may be near its top. That is why Baird's Canadian loan cannot be called a loan.

So DRIC supporters make it up as they go along just as long as the P3 legislation is passed so DRIC can be brought forward.

Remember, if it walks like a loan, quacks like a loan, looks like a loan, it must be a loan.