Thoughts and Opinions On Today's Important Issues

Friday, June 18, 2010

What Happens To The Ambassador Bridge Enhancement Project Now

What is wrong with MDOT? Do they not understand the simplest of concepts? It should be perfectly obvious that their misguided support for the DRIC bridge means the destruction of the Michigan economy.

That seems rather overstated don't you think. But it's not. It is true. Michigan has said that it absolutely, positively, for certain needs the Ambassador Bridge for the well-being of its economy. After all, MDOT claims it wants 10 lanes across the Detroit River.

If that is the case, then why isn't MDOT pushing for the completion of the Ambassador Bridge Enhancement Project as strongly as Canada is pushing for the construction of the DRIC bridge? The way MDOT is suggesting it, the two bridges are complementary not competitive.


My recollection of the Senate hearings was that when MDOT was asked what efforts they were making on behalf of the Bridge Company to help them get their Bridge built, the answer was effectively NOTHING.

I can see that you still do not understand what I am saying. It is probably because you are so wrapped up in the joyous news that the DRIC Bridge has enough revenue that it can pay its own way that you have not focused on the other big story that no one has really talked about except in passing.

I liked the Detroit Free Press as a newspaper for some time but unfortunately, it is becoming as bad as the Windsor Star in reporting news about the border file. Here is a comment that I saw in their news story:
  • "Among the highlights of the report:

    • Revenue from DRIC tolls would be $70.4 million in 2016 and rise to $238.2 million annually by 2040 — more than enough to maintain and operate the bridge and repay bonds used to build it."

To be direct about it, I have no idea where they get that information from. It certainly was not in the materials that I read from the WSA report. How could it be? There was no financing cost data supplied that I could find. Presumably, if there had been, it would have been provided in the revised chapters 6 and 7 of the WSA report.

If there was no such cost data, then merely because there are some nice numbers from toll revenues does not mean much if we do not know what the costs are. As you will recall, I did my version of a spreadsheet and at no time during 50 years was there ever enough money to pay off the bonds or even the principal because of the huge shortfalls.

If I am right about the lack of financing costs material, then this has to be a horrible misquote:

  • "Mr. Steudle said the study clearly shows that – contrary to what Ambassador officials said Tuesday at the Senate Transportation Committee – the DRIC would raise more than enough revenue to handle operations, maintenance and debt service."

That comment could not possibly have come from Director Steudle because he clearly said:

  • "This is every single thing we have,” Mr. Steudle said at a Wednesday news conference. “We really were at a point where there wasn’t going to be any action until that information was out.”

There it is. He said there is nothing more. The Senators need not ask for any more financing costs because there aren't any (unless he has seen something from Canada in another report that he is not free to release to the Legislators because of confidentiality). They are now free to dump DRIC because no assurance can be given that the State and its taxpayers will not be on the hook for making payments and being liable for unknown costs.

Anyway, back to the Ambassador Bridge. The WSA Report Summary states:

  • "The DRIC by 2025 is expected to capture 27.6 percent of the total passenger vehicle traffic across AMB/DWT/BWB (resulting in a 23.3 percent market share at the Ambassador Bridge compared to 36.0 percent under the no-build scenario) and 44.2 percent of the overall commercial vehicle traffic (resulting in a 33.4 percent market share at the Ambassador Bridge compared to a no-build market share of 65.0 percent).

    • The DRIC will by 2025 capture 34.5 percent of the overall combined traffic along the four frontier border crossings within the Detroit/Windsor/Port Huron/Sarnia region (resulting in a 27.5 percent market share at the Ambassador Bridge compared to the no-build share of 48 percent). "

That is a huge loss of business with an extremely large loss in revenues as well.

Check out this table with respect to revenues:



Income cut in half. Now that is quite a big drop of money once DRIC opens up. Here is what the Director said and it may well be accurate if the traffic numbers follow their projections

  • "Further, while the Ambassador would see a large percentage drop in its projected revenues, going from $107.6 million in 2020 without the DRIC to $57.3 million with the DRIC, that would be ample to handle operations and maintenance on the Ambassador, Mr. Steudle said."

There is a big problem that the Director forgot about. Where is the money coming from that revenue that the Ambassador Bridge Company will need to finance their $400 million for their new bridge? The Director talked about operations and maintenance but did not quantify how much money would be around that could be used to finance the construction of a new crossing by the Bridge Company. At an 8% interest rate over 30 years, we're looking at payments of about $36 million per year.

They may not have enough revenue for 25 years to be able to afford the new bridge. Can you imagine the maintenance costs on that bridge because by that time it would be almost 100 years old.

There is no doubt that the games will still be played preventing the Bridge Company moving forward until DRIC is ready to go too.

If the Ambassador Bridge Company does not have the money to pay for financing, then how can they build their second bridge? The answer is they cannot until the money is there.

What is the result... a DRIC bridge that is questionable financially and an 80 plus year old Bridge that cannot be replaced because of lack of money.

Something would have to be done and the only thing I could think of would be on-going subsidization of the DRIC bridge by Michigan tax-payers and now the Ambassador Bridge as well, a novel thought, or else the Michigan economy could be devastated since there would not be 10 lanes across the river.

Do you see what I mean? Do you understand what the consequences could be? What a complete and utter mess.

DRTP Rail Tunnel: Another Bridge Company Lawsuit/NAFTA Claim

We'll talk about STOPDRTP2 in another BLOG.

I am sure that there is no connection but the timing is so coincidental when Councillor STOPDRTP decided not to run for office again. Right after mini-Gord praised him to the high heavens in his column we received news about the old DRTP rail tunnel project that has morphed into sending hundreds and thousands of rail cars daily potentially down the CASO corridor unless we have rail rationalization that will prevent it.

Oh man, they are getting dumber and dumber.

Does Transport Canada want to make it a slam dunk for Matty Moroun to be successful in the lawsuits and NAFTA claims against them? Does Minister Baird want more actions against the Government of Canada? Don't Justice Department lawyers have better things to do?

I am certain that you saw this announcement:
  • "Windsor Port Authority, Canadian Pacific and Borealis Become Partners in Public Private Coalition

    DETROIT/WINDSOR, Ont. – June 17, 2010 – The Windsor Port Authority, along with Borealis Infrastructure, a division of the Ontario Municipal Employees Retirement System (OMERS), and Canadian Pacific (CP) have formed the Continental Rail Gateway coalition (CRG) to pursue opportunities for the development, funding and construction of a replacement rail tunnel under the Detroit River.

    The current freight tunnel, which carries approximately 350,000 rail cars each year, opened in 1909 and remains in excellent condition. However, it cannot handle double-stacked, nine-foot, six-inch (9’ 6”) containers and some new generations of multilevel rail cars used by shippers and auto manufacturers. The tunnel clearance was enlarged once in 1994 and can’t be further expanded.

    Earlier this month, the Project Description for the CRG was submitted to Transport Canada as the first formal document submitted under the Canadian Environmental Assessment Act (CEAA). In addition, work with U.S. regulators will continue on environmental reviews that began in 2009 with the Michigan Department of Environmental Quality and the U.S. Army Corps of Engineers."

Dietrich Bergmann was correct at the Senate hearings in Lansing. Who needs DRIC now when a lot of the truck traffic will be using rail? So much for the DRIC engineer reports. So much for the WSA traffic projections. So much for the revenue forecasts. DRIC is a disaster waiting to happen.

Here is what Ontario and Quebec want to spend money on as does the US:

  • "Premiers hop on U.S. fast-train bandwagon
    Charest, McGuinty agree on making Quebec-Windsor line a high-speed corridor


    Now that U.S. President Barack Obama's administration has decided that a fast-train network in the northeastern states will be part of its legacy, the provinces of Quebec and Ontario don't intend to miss out on the benefits, their premiers say.

    "This is once in a lifetime (opportunity)," Quebec's Jean Charest said Wednesday. "It's a unique opportunity. It is historic and . . . we need to seize that opportunity."

    Ontario's Dalton McGuinty added: "When we build this line (in the Quebec City-Windsor corridor), it's more than just connecting 16 million Canadians, strengthening our regional economy, better protecting our regional environment. It's going to plug us in to a North American network of high-speed rail."

Can you believe it? First DIFT on the other side and now DRTP on our side would suggest that rail traffic will be ever so important with respect to transporting containers. Where is the capacity for the new bridge going to come from? Out of thin air.

Here is where real dumbness starts on Transport Canada's side that almost makes MDOT look smart. And you know what I think about MDOT.

The Windsor Port Authority is involved in this new venture. That really means Transport Canada. This means now that Canada through the Windsor Port Authority which it controls is an actual competitor for traffic against the Ambassador Bridge Company. It will be one of the owners of the project. And who knows how much money ultimately the Government will contribute to fight the Bridge Company.

Oooops, by the way, there went the Bridge Company is a monopoly argument out the window too thanks to John Baird and friends.

And what is the Windsor Report Authority's role respecting the Ambassador Bridge Enhancement Project? They have to approve a competitor's project now:



Can you now understand why the Bridge Company has said that their Environmental Assessment is being blocked by Canada? How much clearer does it need to be? Comments by DRIC-ites that the Bridge Company does not have permits ring very hollow right now.

And just so that you understand who the Port Authority is and its relationship with Minister Baird, take a look at the following:

  • "Windsor Port Authority

    Mandate


    Under the 1995 National Marine Policy, 19 major Canadian ports were deemed vital to Canada's domestic and international trade. These 19 ports were designated Canada Port Authorities (CPAs) under The Canada Marine Act which received Royal Assent on June 11, 1998. Canada Port Authorities were created to operate particular ports on behalf of the Government of Canada. In certain cases, CPAs possess the power to engage in activities related to shipping, navigation and transportation of passengers and goods. They may also be given Crown land to operate and manage, but not to own. They may, however, acquire and own land in their own name. CPAs are required to be self-sufficient and fund their operations through the revenues that they generate. Under Section 25 of the Canada Marine Act, CPAs are not eligible for federal funding, other than grants of general application or in the case of emergencies. The mission of the Windsor Port Authority is to manage, develop, and promote the Port of Windsor for the benefit of its stakeholders and ensure the general security of the port while remaining sensitive to the need for a high degree of safety and environmental responsibility.

    Appointment Provisions
    The Board shall consist of seven directors. The directors of the Authority shall be appointed to hold office as follows:

    •the Governor in Council appoints one individual nominated by the Minister;
    •the City of Windsor appoints one individual;
    •the province of Ontario appoints one individual; and
    •the Governor in Council appoints the four remaining individuals nominated by the Minister in consultation with users selected by the Minister or with the classes of users.

The Minister....oh that is the Federal Minister of Transport: John Baird!

  • "Within the Government of Canada, Minister John Baird leads the Transport, Infrastructure and Communities (TIC) Portfolio. He is the Minister responsible for the activities of Transport Canada and Infrastructure Canada. The portfolio also includes the following:

    •17 Port Authorities."

It is so ridiculous. Weren't the DRIC people consulted by the Minister before the announcement was made? Probably not because the Minister is the only one who is supposed to know anything in his Department and why would he bother telling the underlings. They have been completely cut off at the knees by this announcement. Who cares if they have been made to look stupid?

The failure to produce complete financials plus these rail announcements make the whole process before the Michigan Legislature look completely ridiculous. Moreover, Canada has known about this since 2009. Was that in the 2009 WSA Refresher that Canada has never revealed either?

All of the protestations by the Bridge Company against Canada's unfairness have just been proven true. Now you know why lawsuits and NAFTA claims have been started. It is the only way to get justice against Canada.

Now I can understand the Port Authority being involved in this project, on some basis, although I don't know what it really is since "Canada Port Authorities were created to operate particular ports" and "CPAs are required to be self-sufficient and fund their operations through the revenues that they generate."

How can the Port Authority find the funds to invest in this project that really does not seem to have anything to do with the operation of a Port? Oh wait a minute, I know how it was done:

  • "The port authority will take an equity stake in the tunnel, but Byington declined to say how much.

    Talks to add the port authority to the project began after a May 2009 multi-model conference in Windsor, Byington said. It’s participation in the effort is expected to ease the regulatory and financing process, she said."

I wonder how much the Port Authority will pay for their equity position. I wonder if their payment will be "in kind" because as a Government Body their "effort is expected to ease the regulatory and financing process."

I wonder if the Minister will talk to the Justice Department about the appropriateness of the Port Authority receiving equity on this basis. I remember that he forgot to ask the Justice Department about the $550 million offer to Michigan and whether it met the requirements of the law in answer to a question by Member of Parliament, Joe Volpe, about it.

Gee, that suggests to me how easy it was for the DRIC people to get their approvals on both sides of the river. I wonder who eased their regulatory and financing process.

Some people have said that there is a strong smell in the Delray area of Michigan because of all the pollution. I have to tell you there is a very, very strong odour right across the river in Windsor as well right now.

Thursday, June 17, 2010

DRIC Revenues BUT No Costs, Again

WHERE'S THE BEEF?

Where is the financial data necessary for someone to make an informed decision? Once again, MDOT has not released key information about the DRIC financing relevant to make a determination whether the P3 Bill should be passed.

This is asinine. Why do the Senators have to beg for information that should have been given to them already. Nothing really different has come out after the three page handout that Transport Canada prepared for the Senators, not MDOT. Well, at least that is what the DRIC-ites told us:
  • "Transport Canada outlines how the DRIC project will be financed"

I guess that Captain Kirk and his friends aren't smart enough yet to figure out how to do this and they have to let Canada do all the work even though they are not yet an Instrumentality of Government of Michigan. Surprisingly then, MDOT is to be given the absolute power to enter into P3s without, it seems, the skill-set to do so.

BUT LEGISLATORS DON'T ASK QUESTIONS according to the DRIC-ites.

I am sorry. It is different. They have added some pages to the old report that was submitted previously so that the Senators have to try and figure out what changed and waste more time doing it. There was also an update of an earlier report and I guess that the Senators have to go through that as well, all several hundred pages of it, and try and figure out what is different.

That should keep them busy this weekend.

I am sorry but this is NOT the job of a Senator. This is MDOT's job. MDOT's role is to present all relevant information fairly so that the Senators can perform their legal obligation to taxpayers.

BUT LEGISLATORS DON'T ASK QUESTIONS

Frankly, if I was a Senator I would not bother talking about the P3 Bill any longer. I would table it and refuse to vote on it until such time as MDOT provided all the relevant information in a nice neat package that is easily understandable. Blame it on MDOT and the term-limited, lame-duck Governor!


Why couldn't Senators get a simple table like this that I found on the web from Wilbur Smith for a bridge in Alaska that gives out all the relevant information in a very simple form.

What's the big deal about secrecy. This was all released publicly in Alaska for the Bridge there. Why shouldn't it be done for the Bridge to Nowhere here?

BUT LEGISLATORS DON'T ASK QUESTIONS

Now Governor Granholm and MDOT Director Steudle:

  • Would you like a "mortgage" that lends you more than the value of the DRIC Bridge?
  • Would you like it structured so that your first payments are extra low?
  • If the mortgage weren't structured that way, would you be unable to afford the payments?
  • Are you convinced that truck traffic will continue to rise?
  • Do you have a poor credit history?
  • Congratulations if you answered "Yes" to most or all of those questions! You're an ideal target for a subprime DRIC bridge financing!
That is how CBC described a US sub-prime mortgage deal.

It is just like what is being proposed in Michigan for the DRIC except no one has been told the payments yet.

BUT LEGISLATORS DON'T ASK QUESTIONS.

Now we get an elongated 3-page revenue report with no costs again so Legislators should be satisfied, right.

To try to be helpful, I did another spreadsheet.


I made these assumptions:
  • started at at $1.5 billion although that amount might be low
  • debt would be 90% of the amount of money involved
  • the P3 partner would put in equity in the amount of 10%
  • took the rate of interest at 8% for a 50 year deal, assuming no re-financing
  • the rate of return on equity at the high end of the range, 18%, because of the Ambassador Bridge competition and traffic projection risks
  • took the start toll number and increased it by 6% per year
  • calculated the cost of the operations of the Bridge based on the Blue Water Bridge percentages also increasing by 6% per year. The operations amounts are probably low considering that major repairs need to be done every few years on a bridge.

Now I know that the Director said that the toll revenues can pay off the financing but I'm not sure how.

BUT LEGISLATORS DON'T ASK QUESTIONS

I have a huge "blimp" payment required at the end of 50 years of over $28B or another refinancing will have to be done to keep this in private hands for who knows how long. No paydowns of principal ever take place because of Lansing-izing (ie capitalizing) shortfalls. The P3 Bill permits that remember.

You can check out my spreadsheet at http://www.scribd.com/doc/33173970/DRIC-Financials

Okay, okay, okay. What do I know about anything? So forget about my spreadsheet. What would an expert have to say? Well we already know. The vast majority of the P3 proponents who responded to the DRIC RFPOI told us in very plain language

  • "The toll revenues ain't gonna cut it."

For most of the proponents, they demanded State "availability payments." In other words, the taxpayers have to pay the money up front and try and collect the tolls back themselves to reduce the amount of their liability.

Oh my goodness, minimizing liability, that is what the P3 Bill allows MDOT to do. Now you know why that Section 7B (14) is in the P3 Bill.

BUT LEGISLATORS DON'T ASK QUESTIONS

Surely by now the Senators have had enough. Director Steudle has had two kicks at the can and still has not revealed all the relevant information. The costs of the project including the financing and operational ones are still kept secret.

He is deliberately hiding that information because he knows what the result would be, or rather that is the inference that I believe that Senators have to draw. If the true financial information had been revealed months ago, then the DRIC project would have died.

MDOT and Transport Canada are bluffing it out, hoping that no one will call them on it. First give out a simple three-page memo that provides incomplete financial information. Then give out hundreds of pages of information that provide incomplete financial information. Then watch the media run stories like:

  • "Bridge skeptics now have the details"

Then let the DRIC-ites and their followers like the Governor, the $630 per hour ex-Governor, the Detroit Chamber, L. Brooks, the auto companies and OTA's David Bradley whine and cry and talk about 10,000 jobs again and try and put the pressure on to pass defective legislation so that MDOT can enter into a dumb deal with no legislative oversight.

BUT LEGISLATORS DON'T ASK QUESTIONS

There is more to talk about in another BLOG. Now we know why there are rules about the content in hamburgers. What MDOT has given us is not 100% beef but a bit of meat and a lot of filler!

How To Cook The DRIC Traffic And Revenue Books

We are starting to see more details coming out from MDOT re revenues. I'll do more about what has been released soon.

Watch for the headlines though with the big income from tolls numbers. Unfortunately, from what I have seen so far, no costs numbers are given.

The inference has to be drawn therefore that taxpayers are on the hook for any deficiency through availability payments! That is why they were not disclosed.

After all, that is what the vast majority of P3 proponents told MDOT. They were NOT going to face traffic uncertainties and Ambassador Bridge competition at their risk with only toll revenues!

Another inference that can be drawn as well is that no one would ever invest in this DRIC project now because the costs far outweigh the revenues considering the risks.

What I wanted to do today is cast doubt on the entire WSA study. The revenue numbers are only as good as the traffic numbers and I don't know if they are any good. After all, the Canadian WSA report is still hidden.

I think the numbers may have been so determined so that only good results would come out. After all, the Auditor-General in Ontario showed us how that could be accomplished in his review of a hospital P3 deal.

That can be done depending on how the criteria for a study are determined. What are the rules under which the consultant is to operate?. Depending on the criteria almost any result can be achieved.

As an example, if one wanted to eliminate the DRTP truck proposal, merely say as the DRIC engineers did that you absolutely need 4 lanes of traffic along the corridor not 2 lanes. Bye-bye DRTP.

If you want to eliminate the Ambassador Bridge, claim that Sandwich will be wiped out by a huge plaza that your consultants chose to deal with not the Bridge Company's real plan. Bye-bye Matty.

Here is how it could have been set up for the WSA traffic numbers. You decide if I am right or not. Clearly, the revenue numbers must follow along with them and are pre-determined as well.

There are some interesting revelations as well as you shall see that really make one wonder what the game is and what is not being told to us and why. There is still much that is being buried and hidden from Legislators.

The Request for Proposal is fundamental. It sets out what exactly must be done and how. Those are the rules of the engagement for the consultant. Naturally, it can pre-determine the outcome:



This is the RFP back in 2007 which Wilbur Smith won to do a Traffic and Revenue Forecaster.

Without seeing the whole document, what did WSA provide for MDOT: a forecaster or an ad hoc report. Does it meet the investment grade traffic survey requirement of section 384?

Clearly what was handed in did not since we now have revenue numbers that were deleted before. MDOT made the decision to separate the report into 2 documents artificially, not WSA, one of which, the revenues, the MDOT Director said he did not have to provide.

Here is what WSA was asked to provide under the RFP:



Here is a problem though. WSA did a Refresher of the 2008 report only and that was the report handed in by MDOT.:



Why didn't they do a Refresher of the Refresher in 2009 of the original 2008 report when traffic was crashing but only a Refresher of the 2008 report? Their US Report to MDOT was not submitted until February of this year.

Presumably then the WSA report presented by MDOT to the Michigan Legislature did NOT meet the section 384 requirement right off the bat since it was not current but based on old out-of-date data.

Has the Legislature been misled and if so why? What are the consequences if they were?

This section tells you that Governments had already made up their minds in 2001 that capacity was needed based on old data and old reports that I have shown in other BLOGs bore no relationship to reality. In 2001, we had 9/11 but before that traffic had already reached its peak. The Governments wanted a NEW crossing supposedly. The Ambassador Bridge had been eliminated in 2001!


The RFP proponent is already being told what the answer is to be and what numbers are to be used to achieve it. They are being given the criteria upon which their Report is to be based in order to give the desired results.

There is a disconnect with actual numbers but who cares.

Presumably the 2014 date was picked since the DRIC bridge was to be completed by 2013. We know that is not going to happen. The start date could extend until the 2030's as I have shown before. So how reliable are the numbers if the start date has changed? Again, a disconnect with reality.

But it is more than that. The intention of the traffic projection is to base it on never never land mathematics. They deliberately want the forecaster NOT to look at traffic volumes from 1999 to the present date because it would show that the traffic projections are incorrect and are crashing. By forcing the forecaster to start in 2014, it means it must start using the incorrect assumptions.

In other words, you have to take a chunk of traffic from the Blue Water Bridge or this won't work.


I find it interesting that the main emphasis in the section “the Selected Proponent may need to an undertake some or all of the following tasks” is on REVIEWING. In other words, take the numbers as given, no original work is needed (remember an investment grade traffic survey can take a year WSA told the Senators and the first report was to be done in a much shorter time, about 5 months) and do nothing more.


Why haven't we seen the Refresher of the Refresher of the original report? Isn't this the more significant report since it updated everything?

As you can see, more questions, more doubts. more suspicions, no answers.

Are the numbers real? Can they be relied upon? Are full page disclaimers the norm for WSA now or is it just for the DRIC project?

Too many people are involved in this. No wonder the broth may have been spoiled.

Wednesday, June 16, 2010

Brister Says Good-Bye

Poor John Fairley.

He will never have the Councillor formerly known as Councillor Budget on his show. Or maybe he will now since Dave Brister no longer has to fear making a complete fool of himself in public any more once John started questioning him.

Poor Gord Henderson.

He won't get to see the big battle after all considering his inexplicable to me Brister boosterism:
  • "But anyone who thinks this means the 2010 coronation of Ward 4 Coun. Bill Marra is back on schedule should give that a second thought. There will be no free ride. There will be a war, a vicious, take-no-prisoners struggle and I'm placing early money that it will be between Marra and Ward 1 Coun. Dave Brister.

    Brister told me in his rookie term that he had no interest in the top job. And he's still circumspect about his intentions. But what I'm hearing, from people close to him, is that if Francis does pack it in to go make some serious money, Brister will not stand idly by and let Marra claim this (dubious) prize without a fight."

Circumspect---naw, Brister did not have the guts to tell anyone that by electing him, we were getting a lame-duck Councillor.

Poor Edgar (Eddie) Francis.

He won't have anyone around to take the fall for the arena fiasco. Or actually he will now that Brister is going.

Happy CUPE.

They got rid of one hardliner who was afraid to run after his dismal performance on costing taxpayers a fortune during the 101 day strike and can now target on getting rid of the others.

In his good-bye email, did he have the guts to say he was NOT running. Nope:

  • "Today, I am announcing my intention to not seek a seat"

Political to the end.

I was debating in my mind what I should say about one of the most divisive members on Council especially after I received phone calls from a number of his colleagues after the Star story came out. They were celebrating the news.

Then I thought of it. Two words:

GOOD RIDDANCE!!!

Brister Good-Bye Email

Today, I am announcing my intention to not seek a seat in the upcoming October 25th municipal election.

I want to thank my family, friends, Mayor Francis, Windsor City Council and the residents of the community for their support over the past two terms. I have thoroughly enjoyed my tenure as a member of Windsor City Council and I am proud of the many accomplishments of the past 6 ½ years.

I am committed to a promise which I made to my family at the start of this term, that I would not seek re-election in the fall of 2010 and I am looking forward to exploring new opportunities in our community.

Matty Please RAISE Your Tolls

And someone seriously wants DRIC-ites to run a border crossing. Oh my goodness.

The latest myth out by the DRIC–ites is that the Bridge Company is going to “raise” tolls
  • “To compensate for this loss in traffic there will probably be a very large increase in tolls at the Ambassador Bridge for, likely, the remaining life of the bridge.”
Well of course they have to say that including the use of the words "very large increase." They have to try and divert attention from the fact that MDOT has not released the WSA revenue forecasts yet although something is to be issued today the Senate hearing was told. Moreover, based on math alone the DRIC tolls will have to be about four times higher than that of the Ambassador Bridge to begin to pay off their financing costs.

As I showed on my Excel spreadsheet, with revenues on average at about $80 million, the DRIC Bridge would never be able to pay for its financing costs and at the end of its term, the amount outstanding on principal alone would be gigantic. Michigan taxpayers would have to pay for that.

Of course, the DRIC-ites haven’t got a clue what they’re talking about. They raise the issue of tolls at the same time they talk about the Bridge Company spending millions of dollars to keep their crossing maintained properly.

Unfortunately, and I guess it is because they have never run a border crossing successfully, it costs money to do so. The Bridge Company does not have the taxpayers to rely upon for an unlimited sum of money and therefore must pay for the maintenance of its bridge from revenues paid by those who cross over. Regretfully, doing that, and planning for the future, sometimes results in tolls having to be increased.

To me that only make sense. But why rely upon what I have to say. Let’s look at what the internationally known traffic guru out of New York City has to say, Gridlock Sam, about public bridges:
  • MANHATTAN BRIDGE
    “By the late seventies, the cash-strapped city had skimped on painting for decades, and rust never sleeps. In 1986, it was discovered that the four cables slung over the towers (made up of 9,472 wires each) were severely corroded. Some components of the anchorages, where the cables are pinned to the riverbank, were half-gone. “We came so close to losing the bridge,” Schwartz says (an emergency closure, repairs, and the institution of a strict preventive-maintenance program followed).”


  • On the nation TV program, the Today Show, after the Minnesota Bridge collapse
    "Vieira:
    …wondering, worrying that the bridge they might have to cross—to go to work, to go to the store, whatever—could possibly collapse. Do they have a, a legitimate worry?

    Schwartz:
    Well, they have a legitimate worry in the sense that their government officials should be taking care of these bridges. No government official should accept anything above one percent in terms of structurally-deficient.

    Vieira:
    But we’re close to thirteen percent—seventy thousand bridges in this country. How did we reach that point?

    Schwartz:
    We reached that point because we neglected our infrastructure. We didn’t do the very basic things. A bridge is like a machine. It needs to be cleaned; it needs to be oiled; it needs to be lubricated in various parts. It moves with a load—it goes up and down; it slides with the changes in temperature. And we need to treat it properly. Imagine driving your car without ever oiling it, greasing it and waiting until the engine seizes up. That’s what we’ve done with our bridges...

    The bridges built in the ‘50s and ‘60s and 7’0s were the sleekest. It was the beginning of the use of computers in bridges, and the result is we didn’t get bridges with redundancy...

    So, if you’re going over a bridge that was built prior to World War II, you’re probably in pretty good shape...

    If you pay a toll, by the way, on a bridge, your bridge is safe. They, they’re taking care of it; they’re doing the daily maintenance."

Michigan has a terrific track record of maintaining bridges too. NOT:

  • "Transportation officials failed to inspect some bridges, looked at deteriorating bridges less often than required by state law and did not check for erosion under bridges over rivers, Michigan's auditor said Friday.

    The more than 10,000 bridges owned by the state and local governments must be inspected at least every two years.

    An audit released Friday said more than 1,000, or 10 percent, of routine bridge inspections were not completed on time from October 2006 through September 2008. Cities, counties, villages and townships were the main culprits in failing to inspect bridges on time.

    The audit also said 112, or 59 percent, of 190 underwater bridge inspections either were not done or were not done on time.

    By violating state law and federal regulations, the Michigan Department of Transportation could lose federal funding and approval for future projects, Auditor General Thomas McTavish said.”

I guess the DRIC-ites ignored this with the low tolls at the Blue Water Bridge that had to be doubled recently:

  • What factors went into increasing the toll?

    A. … The Blue Water Bridge has many upcoming preservation and long-term maintenance needs including bridge painting ($10 million), redecking the second span ($40 million), redecking original span ($50 million), and 3.) the plaza expansion project ($583 million).

    Will there be other toll increases in the future?

    A. This toll increase is a necessary step to ensure there is enough funding to:
    • maintain the daily operations of bridge (i.e., toll collections, traffic management, snow removal),
    • conduct necessary major bridge maintenance projects (i.e., painting and redecking), and
    • implement the plaza expansion project.

    The need for future toll increases will be evaluated based on a number of factors including; the recovery of our state and national economies, future traffic volumes, and how much additional funding can be garnered for the plaza expansion."

Perhaps DRIC-ites prefer to read this instead:

  • “International bridge upgrade overdue: Joint bridge authority looks to Ottawa for new customs plaza.

    The Sault Ste. Marie Joint International Bridge Authority is looking to Ottawa to pick up the cost of upgrading the antiquated 1960s-era customs plaza on the Canadian side of the St. Mary's River.

    A master plan released this summer places a $40-million price tag to re-design the plaza to accommodate vehicle traffic and install more efficient and modern customs inspection facilities.

    But bridge manager Phil Becker says the authority is hard-pressed to invest any significant money in the project.

    The 4.5-kilometre span is jointly operated by the State of Michigan and the Saint Mary's River Bridge Company, an arm of the Canadian government.

    The authority relies entirely on revenue from truck and automobile traffic for the bridge's upkeep. Mounting maintenance and operating costs, combined with stagnant traffic levels, have put them in a cash crunch.

    "Traffic is half of what it was 10 years ago and we're totally toll-funded with no operational subsidy from any governmental unit," says Becker.

    It has forced them to put off a preventative maintenance project to re-deck the bridge for 10 to 15 years.”

As for me, I would feel a lot better if Matty continues to manage the best border crossing between Canada and the United States even if, shudder, it costs me a little bit more to cross over safely in the future.

PS.

Here is the Bridge Company press release about the work to be done and their comments on increased tolls:

  • The following is a statement from Matthew Moroun, vice chairman of the Detroit International Bridge Co., about the Ambassador Bridge deck replacement project:

    The Ambassador Bridge awarded the contract for its deck replacement project to Walter Toebe Construction Co. of Wixom, Mich. Toebe is one of the leading contractors in Michigan for major civil projects, including the Ambassador Bridge Gateway Project.

    Work for the project began in May when the contractor and the engineering firm began collaborating to order materials, develop staging plans and other pre-construction activities. Actual work on the bridge is slated for the first week of July.

    During it’s 80-year history, the Ambassador Bridge has paid for all construction, maintenance, repairs and inspections through tolls paid by customers using the bridge. The Ambassador Bridge has never used taxpayer funds, unlike the proposed $5.3billion Detroit River International Crossing (DRIC), which will require taxpayer subsidy.

    “We have no plans for a toll increase at this time, either for this project or in general,” said Matthew Moroun, vice chairman of the Detroit International Bridge Co., which owns and operates the Ambassador Bridge.

    Like any bridge, the regular maintenance of the Ambassador Bridge requires periodic lane closures. The deck replacement project is no different. Three lanes will remain open at all times for traffic and construction will be coordinated so there will be no backups.

    The deck replacement project represents an investment of more than $20 million in the city of Detroit and will generate more than 300 jobs.

    “This project is a real plus for Detroit,” said Moroun. “Yet, the MDOT propaganda machine behind the taxpayer-supported DRIC will stop at nothing to spin this into a negative. It’s really unfortunate when someone belittles a private investment of this magnitude that creates this many jobs.”

The Suspense Is Underwhelming

Will this make us a world-class city along with our New York-style parade? Only one more week to wait for the big news.

Hmmm, will we have a celebration downtown if we are in?

If we get a position on the board, will this make Edgar a Monopolist?



If we make it, then perhaps Edgar (aka Eddie) can pitch other products too to Windsorites as part of his Mayoral tasks the way he did for Hasbro.

If he is quoted as saying "****WOW!!!" if there is good news, then Slap Chop's Vince, watch out. You could be in big trouble with Edgar around.

Tuesday, June 15, 2010

Who Needs Jack Lessenberry Columns

I must admit I never understood why the Star needed his column in the first place. If I wanted to read about what goes on in Michigan then I had the Detroit newspapers as an example where I could go to find out the information I needed.

I know about him primarily because he writes on the border file. Accordingly, his name pops up periodically when he writes about what is going on with the crossing. To say that he is anti-Moroun is probably an understatment as you shall read below. I can only recall one column that he's written about the border that was published in the Star.

He is an interesting fellow. According to him, he has
  • "a master's degree in journalism and has made a living doing various forms of it for more than 30 years."

He is also a is a professor of journalism at Wayne State University and according to the Director of the Journalism Program , Jack is

  • "Brilliant, knowledgeable, witty, sometimes sarcastic, and smarter than 98% of us."

I expect that as an American journalist and professor he is well versed in First Amendment rights under the US Constitution:

  • "Congress shall make no law...abridging the freedom of speech, or of the press."

Here is what he wrote in a column about a dispute involving lawyer Geoffrey Fieger and his dispute with some Michigan judges:

  • "Personally, I find the language repulsive and think it lowers the level of political discourse, and adds to the coarsening of our culture. Dorothy Parker would have found a much more elegant and memorable way to skewer a bunch of boobish judges.

    Yet people have a perfect right to say lots of things that make you, and me, squirm...

    But he has a constitutional right to call judges whose rulings he doesn't like whatever he wants, no matter how crude.

    So does everybody else."

Therefore, I found what he wrote about Helen Thomas in the Star quite interesting:

  • "On May 27, on Jewish Heritage Day at the White House, she told a blogger with a video camera that the Israelis should "get the hell out of Palestine," and go home to "Poland, Germany, America and everywhere else." He eventually posted it on the Internet.

    Then it went viral. What she said sounded like it questioned Israel's right to exist, and evoked dark memories of the Holocaust. Within two days her agent dropped her; she was uninvited as a commencement speaker, she lost her job, and plans for a gala 90th birthday celebration at the National Press Club were cancelled."

He called what she said the following:

  • "What she said was indefensible, regardless of what you think about Israeli policies. Her words were ugly, harsh, inappropriate."

He went on however to talk about the other side of her and ended the column quoting her and saying:

  • "The great joy of journalism is that it is a an education every day. You have to keep learning, and you can never let up. I just think of how lucky I am to be in the profession I love. And I have been so fortunate to have a job I love. We all know we are only as good as our last story, and every day I get a report card. You never "arrive."

    The tragedy is, as she might have known, you can suddenly flunk out, and when that happens, there is seldom any reprieve. I asked her once, when she was a mere 81 or so, if she'd ever retire. She looked surprised. "Me? I hope not! I want to die with my boots on." But then she paused, and shook her head. "You never know."

I did not see his rousing support of Helen Thomas and her right to free speech that we saw when he was defending Mr. Fieger. He wrote in another column but not in the Star:

  • "Helen Thomas has screwed up, big-time, and it is fine to be angry. But only if you remember that she is also the reason women today can join the National Press Club and the Gridiron. To err is human. Maybe we shouldn’t forget that forgiveness is, as well."

After the controversy, to her credit, Helen Thomas apologized and then resigned as a columnist for the Hearst newspaper group. However, the issue was this. Her comments, according to Jack:

  • "sounded like it questioned Israel's right to exist, and evoked dark memories of the Holocaust."

So what should one say about what Jack wrote in one of his recent columns about the Morouns:

  • "For whatever mysterious reason, he [Name of Senator] has vowed to kill the DRIC, and supports Matty building a new one.

    Virtually nobody else agrees ... except Matty's paid employees and kept politicians. And, of course, Nora. "My husband does homework every night and he is fighting two countries," she pleaded.

    Aw, c'mon, sweetheart. You ain't got nothing on Eva Braun. Why, her husband fought almost the whole world, and plotted feverishly every night too. The world also wanted to do him in.

    Well, OK, their marriage lasted only one day.

    Nora, by the way, is not the only person who thinks Matty is misunderstood. There are those who think he is not human at all, but the last living Eryops, a primitive amphibian that lived half in and half out of the water 300 million years ago. Eryops was between five and six feet long, weighed about 200 pounds, and had a large head. It was thought to be a slow-moving predator with many teeth and little, upward-turned eyes.

    Now I am not saying that I believe Matty Moroun is a prehistoric, slime-dwelling amphibian. Not at all. It's just that, well, we haven't seen his birth certificate."

"You ain't got nothing on Eva Braun," "her husband fought almost the whole world, and plotted feverishly every night too. The world also wanted to do him in," "their marriage lasted only one day."

Disgustng and disgraceful? Was his comment uncalled for and unneeded and doesn't it evoke the same kind of thoughts that the Thomas comment created?

Can we agree at least that

  • "What he said was indefensible, regardless of what you think about Moroun's position on the border crossing. His words were ugly, harsh, inappropriate."

Let's see what Jack wrote in the past about this kind of comparison being made:

  • "Think it’s outrageous to compare George Bush and Adolf Hitler? Two years ago, I would have thought the same thing. Hitler was a murderous psychopath who nearly destroyed the entire civilized world.

    Nobody in this country, I have long stoutly maintained, should ever, ever be compared to the Nazis."

Considering his own words, will Jack have the grace to follow what Ms Thomas did and apologize to the Morouns personally and then resign?

The Myth Of Campaign Donations

Why did they do it, the big spread in the Sunday paper with old news? Heck one paper had already gone back 21 years for their big exposé while another went back a decade.

Darn Detroit Free Press.

What will the demonizers of Matty Moroun do now? How can they fill up their columns with smears now? They might have to go out and do some actual reporting of the facts.

I must admit that the Free Press surprisingly had a new and different angle which will make some Moroun foes angry, probably helped along by Dan Stamper's letter to them and a paid ad in the paper.

The paper destroyed the myth of Matty Moroun buying and owning politicans to get his way.

  • "He doesn’t control the Legislature or Congress...

    Far from showing any direct connection between political contributions and support for Moroun...the Free Press review suggests the giving has had middling success."

What a disappointment. The best that can be said now is:

  • "Moroun and company aren’t Michigan’s biggest givers to politicians and causes.

    But their contributions are noteworthy."

Noteworthy! Give me a break. What kind of a word that is if one wants to vilify! It takes all the fun out of it.

In fact, oh the shame of it, Moroun is very much like others in the way he donates. He is not unique. How absolutely boring:

  • "Like many businesses and businesspeople, Moroun, majority owner of the Ambassador Bridge, hedges his political bets, giving to both parties, often tipping more to the party in power."

Frankly, he is in the minor leagues of political donations as I shall point out subsequently. Imagine, the newspaper had to go back 13 years to find out all of the money that he and others had spent so that the amount would exceed a million dollars. The Free Press also had the nerve to point out that others in the State are bigger contributors:

  • "As a whole, Moroun's contributions are far less than the millions of dollars provided by political powerhouses such as the GOP-supporting DeVos family of Grand Rapids or the Democratic-backing billionaire Jon Stryker of Kalamazoo."

All of these Republicans and Democrats who are supposedly in his back pocket these days strangely don't appear as recipients of his campaign funds. Could it possibly mean that they are people of principle and actually believe that the DRIC project and P3s as written in the P3 Bill may not be good for the State and taxpayers. Impossible, that cannot be can it?

  • "And some of Moroun's most loyal backers, such as state Sen. Alan Cropsey, R-DeWitt, and Rep. George Cushingberry, D-Detroit, haven't received a dime from Moroun and Co., but still they have argued passionately against the DRIC."

This comment in the Free Press story and what followed intrigued me. Was the Free Press trying to tell us something:

  • "Corporations across the country are known for giving with an expectation of support on key issues. A U.S. Supreme Court decision this year allows corporations to spend directly for candidates they support.

    Former Michigan Gov. Jim Blanchard -- a Washington lobbyist and former recipient of Moroun campaign cash -- is a consultant for the DRIC. He and his wife, Janet, have given to Democrats for years, donating nearly $140,000 to federal campaigns and about $125,000 in Michigan (much of that to his own unsuccessful race for governor in 2002).

    Employees of the Corradino Group, consultants for the Michigan Department of Transportation on the DRIC, have given to campaigns around the country, though less than $20,000 in Michigan, according to the National Institute on Money in State Politics."

Why was the Free Press so shy in doing a graphic of this giving. I did one and it showed the name of one recipient of their cash. You know his role in the P3 Bill don't you and his support for DRIC:

I am sorry to say that Matty is NOT good at the contributions game:

  • "Senate Republican Campaign Committee director, Matt Miner, said there's no quid pro quo.

    "He knows you don't ask for things when giving," said Miner"


  • "House Republicans balked at supporting the DRIC, which could give government too much power and end up costing taxpayers, he said -- not because of contributions."


  • "Asked whether a check from Moroun means more than from someone else, Bouchard's campaign manager, Ted Prill, said it's no more important than "the $5 check I'm looking at on my desk right now."


  • Getting politicians to commit can be tricky.

    "It just doesn't work that way,"

Let's be honest, Matty needs to learn from the superstar political contributors. He needs to take a look at what the Major league contributors do if he wants to get anywhere. Let's look at one example: Canada's Transport Minister John Baird.

He has a limitless supply of money to give out: taxpayer dollars. He has all kinds of people that he can draw upon to achieve his objectives: bureaucrats. He has access obviously to the most powerful person in Government in Canada, his boss the Prime Minister. His boss has access to powerful US Government figures like the US Presidents (Bush and Obama with whom he has discussed the DRIC bridge on several occasions) and the Governor of Michigan whose breath he took away.

Now he does not dare give money to any particular person. That would be very awkward and much too obvious. His alternative---he tries to influence the entire Legislature in one fell swoop by offering $550M in a riskless, no-brainer deal! A breath-taking action.

In the Free Press story about influencing politicians, there was this throwaway line about Baird's $550M offer:
  • "Finally, Stamper equated Canada's offer to loan cash-strapped Michigan the $550 million it needs for its half of the bridge to the "most unethical of all financial influence."

$550M and only one crummy paragraph compared with a full page story on Moroun respecting over a million dollars over 13 years. Now that is good stuff to keep the attention off of Baird!

Let's see, Matty's contributions equals about $140K per year. For the amount that Baird offered, it would take Matty just over 3900 years to match the Transport Canada Minister. That is about how long it would take Michigan to pay for the P3 DRIC bridge.

Minister Baird was honest at least about why the money was offered: to get the House to pass the P3 Bill and that it helped accomplish that. Can you imagine the outcry if Moroun gave money specifically to kill the Bill. His son said his lawyers told him he could NOT do that and that he never would!

But here is the real genius of a superstar contributor. He does not put up one single penny of the $550M although everyone thinks he does. It's like the person who announces a big pledge at a telethon to get the publicity but never honours it.

All this Canadian superstar does is send a two-page letter and a breathless Governor to tell Legislators to support the Bill and they fall over themselves to do so. Now that is style. That is grace.

If you read Baird's letter and listen to what he says, the money is really put up by a third party--the P3 Investor! Nothing is put up by Canada.

But that is a mere detail

The Free Press story is not going to change anyone's mind. I guess it was merely just a set-up for Monday's anti-Moroun, pro-DRIC Editorial.

Monday, June 14, 2010

How Michigan Legislators Got Fooled

Don't feel bad Michiganders. You need to understand how Canada operates so that you can look a gift horse in the mouth. Let me explain the technique.

You do not read the lines in a Canadian Government letter. You have to read what is between them to understand what Canada is really saying.

You do not listen to what a Canadian Minister says to Michigan politicians and the media in Michigan but rather what he says to the home folks in Canada to minimize the payment of $550M to a struggling US State which might not be able to pay it back.

And of course, you do NOT read what the traditional media say. You look to find what they did NOT report, matters that go to the heart of how Michigan taxpayers are screwed.


An offer, a loan, increased financial participation, call it what you will....Michigan will get none of it as a freebie. Riskless and a no-brainer, do not make me laugh.

A 2-page letter and a breathless Governor is all the House got for passing a P3 Bill. I wonder how little the Senate will be promised to pass the Bill? Or is Moroun vilification, father and son, enough?

Not a penny of cash from Canada (unless it is merely short-term bridge financing) since there will be no agreement on the terms and conditions of whatever it is that Minister Baird offered. Or rather NO agreement until after the Michigan Senate approves the P3 Bill and then MDOT and the P3 operator can agree with what MDOT determines in its complete discretion with no legislative oversight.

That's the game isn't it. Circumvent the Senate. Get the P3 Bill passed and Canada is home-free. And all it cost was to send a letter to the Governor. Canada gets to control all of Michigan trade and becomes an Instrumentality of Government of Michigan for much less than the $24 to buy Manhattan. The deal of the 21st century.

MDOT discretion includes matters of shortfalls and risks on construction costs overruns and toll revenues:
  • "SEC 7B.(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."

How were Michigan Legisltaors fooled. It was easy to do . You had to read Baird's letter carefully and then you had to listen to what he said in Canada, not in Michigan, when it was explained.

Here's the letter:


Did you hear anywhere in Michigan about the need for a deal with a future private partner? We heard about the expectation that the US Feds would kick in several hundred million dollars but nothing about a P3 partner contribution. Canada will never have to put up a cent even though you thought it was $550M.

Here's the interview:




video


Note what was said around the 1 minute mark: "credit facility," the money will be part of the financing arrangement and will be rolled into the financing arrangment, the need for a P3 Bill. Again, someone else is paying or there is no deal at all. Canada puts up nothing even though you thought it was $550M

Here's the Canadian Transportation Committee comment:

  • 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."

The Minister completely reversed himself! It is all part of a P3 deal, not a payment from Canada. Even though you thought it was $550M.

There, there...don't feel so bad. You learned.

BLOGExclusive: "Mich-Can Bridge would be in receivership today!"

It looks as if Wilbur Smith Associates knows a lot more about the Windsor/Detroit border than they have told us. In fact, if they know a lot more, perhaps that is why they have kept quiet the results of past traffic reports prepared by them if my information is correct. The results may well be another in a list of traffic projections that completely misread future border traffic and bear no relationship at all to actual numbers.

That may be as well why one of the DRIC RFPOI submitters has been so quiet about its past involvement in the border file. Read on!

It is no wonder that the DRIC-ites want legislators to "Stop Asking Questions On DRIC Forecasts."

We found out in the Senate hearings that Wilbur Smith Associates did the traffic forecast for the Blue Water Bridge. We also know now that traffic on both "twinned" bridges there has never reached the numbers compared with the time when there was only one bridge. Thank goodness for P3 operators and investors who might have put in funds that it is a "Governments" bridge and with low tolls as well (until recently when they were almost doubled), or it could be broke today. Their investment would be in the toilet and who knows what the bondholders would have done with the crossing.

Hmmmm, a riskless, no-brainer consequence that no one has wanted to discuss relating to Canada's $550M DRIC offer. I am sure you can guess why not as well as I.

Now the BLOGMeister has learned exclusively that WSA also did the original traffic forecast in the 1990's for the Mich-Can International Bridge Company, one of the key border proponents at one time for the new bridge between Windsor and Detroit.

In case you have forgotten what that project was:



It was a venture between Fluor Daniel, a huge American engineering and construction company and a group of Canadians whose job it would have been to operate the border. Here is how Fluor describes its approach in its documents to the DRIC RFPOI

  • "Fluor’s approach to construction of large projects is typically a balance of self-perform and sub-contracting to meet our clients’ goals for local participation and still deliver the project in the most cost-effective manner. In order to control project schedule, we typically self perform work on the schedule critical path. Our experience has shown that local firms and disadvantaged business enterprises (DBEs) deliver competitive prices, provide the depth of knowledge of local conditions that drive project success, and bring diversity of experience and knowledge that provides better solutions. We subcontract to local contractors who have resources in the area and clearly understand working conditions and local requirements and norms. This benefits our clients because the efficiency of working with local contractors reduces project costs and it benefits the local economy, which fosters local acceptance for the project and enhances the local perception of the client."

When looking at the DRIC project results today, what is remarkable is its similarity as to location and as to approach with that of Mich-Can.

Wilbur Smith Associates are not the only ones keeping quiet some information. Fluor was one of the parties that submitted a proposal for the DRIC Bridge. You would have to have lots of patience to read their proposal because it is the last one in the 521 page document submitted by MDOT. The placement is very interesting to me.

Nowhere in their submission does Fluor state its role with the Mich-Can bridge or reveal traffic projections. It really is a humourous when they say the following:

  • "We have followed the Detroit River International Crossing Project with great interest since its conception and have already advanced teaming discussions with potential partners, local subcontractors, and key local consultants for the pursuit and execution."

Note the following comments from the Fluor proposal and you will get a hint from what was learned in the past:

  • "Availability Payment Concession – Using this approach, Fluor (or the Fluor team) would be responsible for the design, construction, financing, start-up, and operations, maintenance and rehabilitation of the project but would not take traffic risk in its compensation structure. We would size our availability payment to amortize project debt, pay OM&R costs, and generate a return on equity invested...

    Lower cost of financing than a true toll road because traffic risk is assumed by the public sector...

    Confirmation of the financial feasibility of the deal structure (if toll road, plan of finance; if a subsidy is needed, quantification and sourcing)"

The BLOGMeister has been told by sources that the Mich-Can orginal traffic study was done by WSA in the 1990s. Their pro-forma balance sheets were built on "growth." In fact, the Mich-Can people spent several days in New Haven where WSA is located and apparently, no one ever guessed that a slowdown might occur.

As it was put to me:

  • "Economics 101 was forgotten by those gurus."

Note from the comment I placed above. The plan for the Mich-Can Bridge was to open in 2001. By this time, traffic had peaked in 1999 and was beginning to slow down even before 9/11.

The shocking comment made to me was

  • "If the parties had built the bridge according to the schedules they received, they would be in receivership today!"

Is it a surprise that the track record of WSA is 50-50 and that they insert a full-page disclaimer in their Refresher report?

One of the Michigan Senators asked whose numbers he should trust. With all due respect to WSA, unless they can provide clarifying information, their report should be tossed out. It does not meet the requirements of section 384 anyway.

MDOT must require WSA publicly to deal specifically with key issues relating to traffic reports and provide satisfactory answers. It is not sufficient for a WSA representative to appear in front of the Senate merely to say that he did not work on other projects and so cannot answer any questions about them or that other reports are confidential. Failure of WSA to do so should result in their report being ignored.

Senators need to ask themselves if they should trust MDOT's judgement on matters so important as P3s and border crossings when their consultants are not free to disclose relevant information!

I have no idea if they were asked to sign a "coflicts" statement but here is one that I saw that the DRIC people asked for from other Consultants:

  • "CONFLICT OF INTEREST

    A commitment is required from each Consultant to maintain objectivity, avoid conflicts of interest, and abstain from financial entanglements that would create the appearance of a conflict of interest. ...

    Additionally, the Consultant and its Affiliates agree not to have any public or private interest, or acquire directly or indirectly any such interest in connection with the project, that would conflict or appear to conflict in any manner with the performance of the services under this Contract."

Questions have now been raised in relation to Wilbur Smith Associates about the following matters:

  • Acting for the Mich-Can International Bridge Company in doing a traffic study but not revealing the information obtained, presumably because it is a confidential still to that party and therefore cannot be released. How bad were the results of the traffic projections compared with actual traffic?


  • That is precisely the situation that WSA has in relation to the Canadian Government Traffic Report that it prepared which was the basis of its "Refresher" for Michigan, information for which, including revenue forecasts, they cannot reveal without Canada's permission.


  • A local office of WSA signed an advocacy advertisement supporting the construction of the DRIC bridge.


  • If WSA signed a conflicts statement similar to the one above, would they have a significant problem


  • WSA acted against the interests of the Ambassador Bridge Company in both Port Huron and in Buffalo.

No wonder the DRIC-ites are demanding that we

STOP ASKING QUESTIONS ON DRIC FORECASTS.

Who knows what we will find if we keep on asking questions and digging deeper. It appears as if we are merely scratching the surface right now.

Michigan Legislators: "Stop Asking Questions On DRIC Forecasts"

Ho, ho, ho. Ha, ha, ha. He. he, he,

I have to stop laughing so hard. My sides hurt. I cannot believe what the DRIC-ites are saying. They are pathetic. From the absurd to the ridiculous.
  • "Finally, with Michigan having no financial cost or risk because Canada accepts all of that, it’s time to stop asking questions on the DRIC forecasts and start putting people to work!"

Seriously, that is what they are saying to the Michigan Legislators. Stop doing your job, act in a negligent manner and allow a foreign country to take over the main border crossing into your State, no questions asked.

Are they mad? Can they be that insulting? Are they serious?

Or rather, have they conceded that the gentleman from Wilbur Smith Associates failed in his mission in front of the Senate at the recent Hearings. He could not convince Senators that they should "trust" him with his traffic numbers. After all, he was forced to concede with respect to his firm's track record that 50% of the time they overestimated the traffic and 50% of the time they underestimated the traffic. In other words, read their huge disclaimer against liability for forecasting on their Refresher and wonder why they are being paid for anything.

However, the real reason that the DRIC-ites are so concerned about DRIC traffic forecasts is clearly that they are suspect. If there was no concern about them, then the gentleman from WSA would have answered several of the questions asked of him by Senators. Instead he said that he could not do so without getting permission from Canada first because after all it was THEIR report.

Of course, this means that MDOT has not complied with section 384 because they have not presented to the Senate an investment-grade traffic survey but rather a Refresher of some report prepared for Canada by WSA which report has never been made public. No one knows therefore what that report says, what the underlying assumptions are or what the results are.

It is all so secretive. AND SO BAD! No wonder the DRIC-ites do not want questions asked about it!

Naturally, if more questions are asked, say about the revenue forecasts, why that would be even more embarrassing to everyone. I'm still waiting for someone to tell me that my $200 billion figure for the "blimp" payment at the end of the 50 years is wrong i.e. the amount that would be owed on the DRIC bridge during the "ramp up period" of 50 years because at no time will the annual revenue ever exceed the annual financing amount. Money is Lansing-ized errrr capitalized and added to the outstanding principal forever.

I really don't want to go through the DRIC materials but I will do so once because the latest missive from them is so ridiculous that I am surprised that someone would actually distribute it:

1) Canada is taking no financial risk. Even assuming that money is going to be offered by Canada, which it is not, the amount of money being offered is to be paid back.

2) all that Canada has offered so far is a two-page letter which sets out no Terms and Conditions so no one knows what will happen in the end

3) we already know now that this money will not be paid by Canada but by some P3 operator as this will be rolled into the financing and requires an agreement with MDOT

4) "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, and later was with Washington D.C.-based private equity firm Carlyle Group."

Nossaman in case anybody wonders is the law firm advising MDOT.

5) even though the DRIC-ites keep saying it "absolutely no financial risk or exposure for the State of Michigan" they cannot prove that considering the section of the P3 Bill that deals with risk allocation. That provision in itself would allow for "availability payments." In other words, Michigan taxpayers would be at risk

6) even assuming that there was no financial liability on the $550 million, that is only about one third of the costs that would have to be paid out on the US side for the P3 DRIC project. That amount is at least $1.5 billion. Who is responsible for the balance... Michigan taxpayers presumably since most of the proponents who answered the RFPOI wanted availability payments not toll payments as the basis of them being involved in the project in the first place.

Oooops, the DRIC-ites forgot all about that extra billion dollar risk.

7) Canada can be so "confident" about WSA because it will be a P3 operator who puts up the money for the $550 million, not Canada.

8) DRIC-ites say

"Investment grade forecasts... are typically more conservative and rigorous than forecasts developed to determine whether there is a need for a project in the first place. Investment grade forecasts typically include data that takes months and months to gather and analyze."

WSA admitted that they did not spend months and months doing so but rather just did a "refresher." So much for their so-called investment-grade traffic study.

If this study is so brilliant, then why can't Michigan legislators see it? Why has it been hidden from them as well as from Canadians since I filed a Freedom of Information request and was opposed by the Government?

9) it gets worse for the DRIC-ites:

"For P3 projects with private financing, investment grade forecasts are used by governments to build their financial business case. In doing so, Canada is absolutely confident in the project’s need that it is ready to move forward with funding."

Canada may be confident but since MDOT has chosen not to release the revenue forecasts, how can Michigan be confident? If the financials are so positive, then what does MDOT, and Canada, have to hide?

If the WSA revenue numbers are $60 million, then explain to me please how a P3 project on the American side costing $1.5 billion can be financed without a huge increase in tolls that would drive away traffic or Government guarantess supported by taxpayers.

10) "Owned by Michigan – Built by Michigan Workers" Lots of a bald assertions made by DRIC-ites except he who has the gold makes the rules. Where is anything that they have suggested been put in a legally binding agreement.

Remember, that there was a big issue with respect to Canadian steel to be used in the United States in the past. US protectionism was viewed as an impediment to our steel being allowed into the United States. Guess whose steel will be used on this project if Canada puts in the gold.

"Canadian steel producers and builders say they have “grave concerns” about a U.S. proposal that would call on major public works projects to favour U.S. steel over imported metal.

“There’s no question about it that some of our members and even non-members export work to the U.S. and it’s a substantial part of their business,”

As I showed in the Baird interview, the only jobs that he talked about were for workers in Windsor and Essex County. Not a word about jobs for Michigan workers.

How good is the word of Canada and Ontario and their commitment----that $300M mentioned was to have been used for building the road to the Ambasssador Bridge. Ask them how much they spent on that road! Not a penny.

The DRIC-ites asked:

  • "Question: Now, with Canada taking all the financial risk, why are there still questions on the DRIC traffic forecasts?

Now you have 10 good reasons why!