Better Roads Staff | August 2, 2011
No Money Down
Cash-squeezed Michigan plans a new Detroit River crossing to Canada with ‘no risk’ to its weary taxpayers
By Mike Anderson
Officially, the long-running project to eventually build a new cross-border bridge in southeast Michigan is identified as the Detroit River International Crossing – or DRIC.
For those truckers who have idled for hours on or in front of the venerable Ambassador Bridge, deadlines running out for their just-in-time loads of new auto components, the experiences at the Detroit-Windsor crossing are more like DRIP… DRIP… DRIP – as in, “Friend, you aren’t going anywhere fast.”
For the past decade, through the ups and downs of public meetings, environmental reviews, funding dilemmas and political grandstanding (all times two since what happens on one side of the river must essentially be replicated on the other), it’s that one fact – the wait – that prevails.
Well, wait not too much longer, if the new State of Michigan Administration under Republican Gov. Rick Snyder has its way. “We’re looking at the overall need to create an environment in Michigan conducive to job growth,” explains Lt. Gov. Brian Calley. “There really is just a critical need to make that freeway-to-freeway connection. We think that southeast Michigan, this particular corridor, has an opportunity to be a major international intermodal transportation hub.”
The rail crossing is in place, as is a major international airport a little further west, he says, but the key to future prosperity is relieving the ground transportation bottleneck via a new downriver crossing, directly linking to Interstate 75 south of Detroit and Highway 401 across the creek in Windsor, Ontario., providing additional access to not only Michigan’s major trading partner, but to Canadian ports positioned to relieve the overcrowding at U.S. docks. The Ambassador Bridge, first opened in 1929, is today the busiest North American border crossing and yet traffic flow often remains a mere trickle, damming the heavy flow of cross-border trade that is reflective of the continent’s modern-day manufacturing structure.
Most of the $43 billion in trade between Michigan and Ontario travels over this privately-owned bridge; the nearby Detroit-Windsor Tunnel is jointly owned by the two cities and is for local core-to-core traffic, mostly cars. The recent Gateway Project on the U.S. side has, as Lt. Governor Calley admits, somewhat improved flow from the Ambassador Bridge to I-75; the Canadian side remains an urban tangle, in which all vehicles to and from the bridge must drive along a city street, in front of homes and businesses, for about 8 miles.
The Snyder Administration, with Calley, also the State Senate President, as its lead on the border file, is pushing a Michigan bill that would set in place a structure under which “private-sector” construction and management would proceed on what would be an additional bridge owned bilaterally by the neighboring nations. “Previous attempts have essentially ignored the project itself and instead authorized an administrative department to enter into any public-private partnership that didn’t require a state appropriation – very, very broad authority that the previous administration tried to award the Department of Transportation. That’s not the sort of thing that the folks over in the legislature would normally be interested in accommodating,” Calley says during a face-to-face interview with Better Roads in his downtown Lansing office, acknowledging the imposing Italianate State Capitol building over his shoulder.
“What we’re proposing is authorization to go forward with ‘A’ project in ‘A’ location – a specific legislative authority.”
How Would It Work?
Under Governor Snyder’s proposal, Michigan would establish a new governmental authority for international trade crossings, not unlike the intra-state authority that operates the majestic, suspension Mackinac Bridge linking Michigan’s Lower and Upper Peninsula, says Calley. The new international crossings authority would form a joint venture with its Canadian equivalent that would not actually build the new $1-billion Detroit River bridge, but rather draft a concessionaire agreement that would lay out specifications for both the bridge’s construction phase and its ongoing management for a period of up to 50 years. The international joint venture would put the project out to bid, and then choose a private partner to secure financing to design, build and operate the crossing that would remain owned, as is the norm, 50-50 by the U.S. and Canadian authorities.
“It is a true private-sector project,” says Calley, challenging the criticisms of Ambassador Bridge owner Manuel “Matty” Moroun, whose Detroit International Bridge Company would like to build a second span at its site and has waged a public-relations campaign against Governor Snyder’s proposal (and a preceding legal fight against governments on both sides of the border). “The difference between this and the other, hypothetical alternative is that the hypothetical alternative, the twinning of the Ambassador Bridge, essentially grants a monopoly in a no-bid situation,” says Calley. “We’re interested in putting the power of the market behind this project. We’d be happy for the Ambassador Bridge folks to bid on this project – they’d be free to do so like everybody else – but they wouldn’t get a government-endorsed monopoly. It would be something they’d have to compete for and win.”
Bridge revenues moving forward would provide the security for the new crossing’s developer, says Calley. “The State of Michigan would not be required to either directly take on debt or indirectly guarantee any debt,” he says. “This is purely a private-sector risk, and the private sector will have to make a determination on its own: ‘Is the risk worth it?’ That’s an excellent check-and-balance in the proposal.” Interested private-sector parties would still have to conclude whether traffic patterns and international trade growth potential could support the project, “but trends make it a pretty easy answer to say, ‘Yes.”’
History Repeats . . . Sort Of
But what good is a new bridge, even one paid for by someone else, if the budget-strained State of Michigan can’t come up with the dollars for the construction necessary to accommodate the bridge? Without an I-75 interchange and border plaza, even the greatest structure known to mankind would be rendered useless.
Well, thankfully for the folks at the State Capitol in Lansing, there’s a rainbow that extends a couple of hours east into Canada. Authorities in the neighboring country will loan up to $550 million for the Michigan-side improvements, “to the joint venture itself, not to the state,” says Calley.
“And this is not without precedent. Back when the first Bluewater Bridge was built (at the mouth of Lake Huron, linking Port Huron to Sarnia), the roles were reversed. Michigan was interested in having a crossing at that location, the Canadians didn’t have the money to do it, and so Michigan fronted the money. And the tolls from the Bluewater paid back Michigan.
“It would be the same thing this time: The tolls after the developer is paid go to pay Canada for the Michigan-side improvements to connect the bridge.”
Calley emphatically challenges the suggestion that this arrangement would provide an unfair advantage to any new competitor in the Detroit-Windsor crossing market. “We, the taxpayers of the State of Michigan, spent hundreds of millions of dollars on an I-75 rebuild, redesign and interchange for the Ambassador Bridge,” he says. “The only difference between our project and their project is that the Michigan taxpayers subsidized the Ambassador Bridge owners to connect their bridge and Michigan taxpayers won’t have to subsidize the new bridge.”
Despite the freshness of the Snyder Administration, elected this past November and inaugurated on New Year’s Day, there’s clearly murky water under the bridge when it comes to the feelings about the Ambassador and its staunch 84-year-old owner, Moroun, who bought the iconic structure in the late 1970s. The Detroit-Windsor Bridge is the only privately-owned border crossing between the U.S. and Canada. Even that shiny new Michigan-side Gateway Project has left controversy, “because the bridge company contracted by the state reneged on the contract and put a gas station in the middle of the plaza, creating a new bottleneck,” says Lt. Governor Calley. That will, he says, be rectified through court action. “In the meantime, Michigan employers suffer yet again at the hands of the bridge company owners.”
Pay It Forward?
If and when Governor Snyder’s plan receives authorization from the Michigan legislature – “and people across the street have been willing to look at this proposal with a fresh set of eyes,” says Calley – obtaining the Presidential Permit for the border crossing should not pose a problem. “The Obama Administration has made it clear that expanding exports over the next 10 years is a priority.”
The go-ahead won’t, says Calley, be the only benefit coming out of The District for Michigan. The Great Lakes State’s gas tax revenue is declining to the point that, he says, next year the state is projected to leave federal matching dollars on the table. However, when the proposed joint venture with the Canadian authority spends the funds required for the Michigan-side interchange and plaza projects to accommodate a new border crossing, it will count as the state spending on federal-qualified roads, securing the federal match moving forward and drawing down about $2.2 billion for road-and-bridge projects throughout the state. “With the gas tax, we have been a donor state forever,” says Calley, “and now is the time to close that gap.”
On the Michigan side, construction jobs during the actual bridge project would total about 10,000, he says, but the longer-term effect of an expanded international logistics hub is exactly the type of foundational restructuring the region needs. “It makes a statement about southeast Michigan, and Detroit in particular. Our goal is to set Detroit on a different path, a path to success. We believe in the future of this state and we believe in the future of Detroit with the proper leadership,” he says, “and this project will be a real boost.”
Beyond there, “I’m truly excited about the prospect of Michigan actually taking a piece of the benefits from global trade. Over the years, we have been more of a victim than a beneficiary of such things,” says Calley. “This really gives us an opportunity to profit from, to benefit from, to grow jobs from international trade, reversing this trend that we’d seen in the last generation.”
A bridge to the future, if you like.
Little Time to Wait
Michigan Lt. Gov. Brian Calley talks passionately about the global opportunities a new Detroit River International Crossing (DRIC) could create for his state. But, he is quick to remind, this is also a local issue.
Indeed, to truly comprehend what border crossings mean to the immediate populace is to understand that people on one side of a river will line up every single day just to head off to work, to shop, to socialize, to even just go to a ball game on the other side. They may be from different countries, with different cultures, but there is a common community for folks on both sides.
In southeast Michigan, for instance, there is such a nursing shortage that hundreds of nurses drive across from the Windsor side every single day, says Calley. A massive snowstorm last winter shut down Highway 402, the Canadian freeway that runs to the Bluewater Bridge at Sarnia-Port Huron, shifting even more truck traffic than normal further south to the Ambassador Bridge and thus heavily backlogging the crossings in the Detroit-Windsor area. Hospitals in Michigan depending on the 24-hour care provided by nurses were left in a near-crisis situation as many of those nurses sat snarled in traffic.
The same storm caused a U.S. auto plant to temporarily shut down – its production parts stuck at the border. “That’s a big deal,” says Calley. “The impact of these crossings is far and wide. Our economies are so intertwined that as far as I’m concerned there’s not an interest for Michigan that is substantively different than the interest Windsor and really that whole side of the bridge has. Our destinies are tied together.”
One in eight jobs in the immediate southeast Michigan region depends on trade with Canada, and incredibly that rate jumps to one in seven a few hours away in western Michigan. A new bridge will not only secure future growth by removing a trade barrier, says Calley, but will protect the 230,000 current jobs in the state that depend on cross-border trade. “We’re in a very risky situation where we have one bridge that handles so much of that now. If there was anything that even for a short period of time shuts down the Ambassador Bridge, there would be a catastrophic economic collapse.
“I don’t think you could overstate how dramatic the impact would be on the Michigan economy.”
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