Thoughts and Opinions On Today's Important Issues

Wednesday, June 23, 2010

The Baird DRIC Loan Which Is Not A Loan But Must Be Paid Back Clarification

Now we know. The DRIC Bridge is an "availability payments" scheme. Forget the toll revenues will pay for it BS spewed out by the DRIC-ites. They tried to get away with that, as they try with everything, and were proven wrong. Again.

What a huge concession. Listen below as Transport Minister Baird tries to twist and turn to confuse the matter totally especially since no financial deal has been worked out.

But that is OK Senators. Sign here. DO NOT ASK ANY MORE QUESTIONS!

Ooops. Canada confirmed to Michigan Senators also that the WSA material presented by MDOT did NOT meet section 384 because it was not an investment grade traffic survey. In fact neither was their report on which the WSA Refresher was based. That, a 3rd level report, would only be prepared right before the RFP was issued and who knows when that will be done. Senator Cropsey was right again too.

MDOT's Director was wrong on this. It is clear that he did not give the Legislature the true facts. In what else was he wrong? And what else is he hiding? Say financing costs for instance?

We got nothing from Baird on that subject today either even though he told us that Canada thought the project was viable financially. Where was the proof and why didn't he present it?

Heads should roll at MDOT for this.

Nice to see Transport Minister Baird in Lansing being as sweet as Mom's apple pie. No nastiness from him.

I was shocked and disappointed: no more money from Canada to Michigan. Nothing changed except for badmouthing the Ambassador Bridge Company even more. Now we know why they cannot get EA approvals.

Baird was there to clarify everything and to tell us (and Michigan) how everything was going to be set up. You see, Canada has 50 years experience with P3s supposedly and we have all kinds of deals respecting other crossings that we can use as a precedent. EXCEPT one of the purposes of the International Bridges and Tunnels Act was to standardize all of the arrangements that Canada had since there was no set structure.

That small detail aside and notwithstanding lawsuits and NAFTA claims, work could begin right away and jobs created if only the Senate would pass the P3 Bill.

How nice for Baird to tell Michigan what the structure operating the bridge will be whether Michigan likes it or not. You see, poor people have no say. He who has the gold makes the rules.

Oh and Windsor got some bad news too. No wonder the City supported the DRIC bridge. We had NO choice. Support it or else: No DRIC bridge, No DRIC road we are told by Baird. We'd be stuck with the old road and 17 stoplights. Hmmm I wonder what that kind of tactic is called. EXCEPT that is NOT true. Here is what the Infrastructure Ontario Head said:
  • "It may end up as a road to nowhere, but the $1.6-billion Windsor-Essex Parkway is going to be a reality -- and very soon, the president and CEO of Infrastructure Ontario said Thursday.

    Whether a new international bridge in Brighton Beach ever gets built or even if Michigan backs out of the proposed $5-billion border infrastructure effort, construction will start "almost immediately" in Windsor on a new border highway in the Talbot Road-Huron Church Road corridor, said David Livingston.

    "The road is going ahead," he said."

We know now the real route---right to the Ambassador Bridge. Therefore it is NOT a road to the new DRIC border crossing after all. Why else would $1.6B be "committed" according to the Minister. EXCEPT I have only seen $400M committed by the Feds in their Budget for the road.

One funny remark occurred when a Senator asked what would happen if the Government changed and Baird gave his non-answer (See what the Liberal's Transport Critic said about the Government's waste of money in a previous BLOG of mine. I am not sure that he is onside with a waste of $5.3B as Baird hopes.) A Senator then mentioned that Baird was a politician talking to politicians. I am not sure that he took Baird's assurance seriously either.

However, here is the clarification on the $550M. Listen to it yourself. It looks like a Bridge Authority is being thrown into the picture supposedly to shield Michigan from liability. Lots of jobs for ex-politicians on that Board I bet, even term-limited or former ones too perhaps!

Now the Minister confirms that the "specific nature of the transaction has yet to be determined" when "availability payments" were mentioned so that should give Legislators a lot of confidence. He was forced to concede that availability payments would have to be made NOT toll revunue payments.

Now those availability payments to the private partner will be "performance based."

What the heck does that mean? If the Concessionaire private party are good boys and girls they will get their shortfalls paid for? Those sums are NOT tied to revenues apparently. The Bridge Authority has fixed payments we are told for 30 to 50 years for constructing, financing, operating and maintaining the Bridge. It is strictly toll revenues since where else does the Authority get its money. But the Minister said we have an availability payments regime. Are you confused? I am.

The Authority makes any profits and is responsible for any losses. The Minister did a fabulous job of mixing everything up until it was completely incomprehensible so any one could say anything and be right.

How will the Authority cover shortfalls if there is insufficient toll revenue? Default? That was not dealt with.

Seriously who would loan money to a Bridge Authority without money to pay down the financing with questionable amounts of toll revenue especially because traffic is at the 1990's level and with Ambassador Bridge competiton without a guarantee of payment from the Governments.

Oooops, it is NOT a loan although in Canada Baird said it was. Rather it is an increased equity positon for Canada that has to be paid back. HUH!!! What kind of corporate structure is that where an equity position is paid back? A loan by any other name is still a loan.

Listen to Baird for yourself and YOU try and figure out how he talks out of all sides of his mouth at the same time and what he means. I cannot.

Did you hear that little nervous cough too at the start of the recording. A give-away. I would be choked up if I had to say what Baird was saying. Remember his smile in the video when he talked about the 2-page letter. He could not hide that embarrassment either.

All I know is that most P3 proponents have already said they want "availability payments." That means Government is on the hook in the end regardless or lose the DRIC components to the bankers. That is what the P3 Bill allows in section 7(b)14!

Is Baird saying that Canada will bear the liability for availability revenue shortfall? That is a new one if so. Except that there is a cap of how much Canada will pay out even if true: the $550M. My spreadsheet shows that would be eaten up within 5-6 years of opening. Then what?

And if Baird has no interest in having a share of Michigan sovereignty, he should tell Michigan Senators that they can remove that section from the P3 Bill and some other ones as well as I dealt with in the "Canada P3 provisons" BLOG. Of course, he cannot.

What a mess. Baird just ensured that the Senators are completely confused. Who could in all good conscience approve the P3 Bill now.