Gordie Howe International Crossing

MDOT responds to last minute desperation resolution from the Ambassador Bridge board

Dear Members of the Michigan House of Representatives:

This letter provides responses to claims made by the Detroit International Bridge Company in their letter dated May 17, 2010.

Claim: The Ambassador Bridge is the only border project that protects Michigan and its taxpayers from any financial or other liability.

Response: The only project that protects Michigan and its taxpayers from any financial or other liability is the Detroit River International Crossing (DRIC) as a result of the offer by Canada to cover Michigan’s costs on the project. On the other hand, the record of the Ambassador Bridge owners is just the opposite. Their failure, as confirmed by the courts, to complete the Gateway Project as agreed, has exposed the Michigan Department of Transportation (MDOT) to the refund of hundreds of millions of dollars to the Federal Government because the Gateway Project is so incomplete it doesn’t work as agreed. Further, the Ambassador Bridge owners are engaged in multiple lawsuits against MDOT and the U.S Government that continue to consume taxpayer resources. The Ambassador Bridge owners have not prevailed on a single suit.

Claim: No matter how it is spun, Michigan taxpayers are left with huge financial and other liability.

Response: MDOT and Canada are confident that DRIC will mean no debt costs fall on either nation’s taxpayers. As stated by James Kusie, Director of Issues Management and Parliamentary Affairs of Canada’s Transport Minister “…over the duration of this concession, toll revenues are expected to cover the private capital and financing costs as well as operations and maintenance costs.”

Claim: The responses to MDOT’s “Request for Proposals of Interest” are suggesting availability payments NOT financing via tolls.

Response: The Ambassador Bridge owners fail to cite which two of the largest transportation infrastructure developers in the world have to say about financing DRIC:

“The appropriate business model for this project is a Public-Private Partnership where the developer is responsible for traffic risk and is granted the right to retain toll revenues.” Cintra
“A preliminary financial analysis based on the traffic forecasts prepared by Wilbur Smith on behalf of MDOT, and a series of assumptions revealed that the project (excluding the customs inspection plazas) can be financially viable without a government subsidy under a 50-year concession. While this analysis is preliminary in nature, it is our assessment that toll revenues should be sufficient to cover costs for the bridge, the U.S. interchange and the toll plazas currently estimated at US $1.48B (estimates derived from Appendix B of the RFPOI) Meridiam
So, if these responses were part the formal bidding process to engage a private partner to build DRIC, only Meridiam and Cintra would remain in competition. From these two, the one successful bidder would be chosen. In the end, Michigan taxpayers will have no financial exposure with DRIC.

Question: Why would Michigan support DRIC while it is failing to maintain its roads and

bridges?

Response: As Governor Granholm has stated “..this project is a no brainer” because all of

Michigan’s costs will be covered by Canada. This includes use of any federal highway formula funds. So, road and bridge projects are not affected at all anywhere in the state by Michigan’s involvement in DRIC.

Claim: The proposed Ambassador Bridge second span has only red tape delaying implementation and construction.

Response: The Ambassador Bridge owners do not have a valid application submitted to Canada to build this project. The application is designed by law to protect the health and welfare of its citizens and protect the environment–doing that is NOT red tape. When a valid application is submitted to Canada, it will take years to gain all approvals.

The Coast Guard is the U.S. agency charged with granting or denying the approvals necessary to permit the Ambassador Bridge to construct a second span. The Coast Guard issued a letter on March 2, 2010, “…to the Detroit International Bridge Company (DIBC), terminating the U.S. Coast Guard bridge permit application process for the proposed Ambassador Bridge Enhancement Project (ABEP) ….(because) .. despite several meetings between the Coast Guard and DIBC and its counsel there has been no movement by DIBC or other involved entities on those issues which resulted in (placing the project in) abeyance (on June 15, 2009). Developments since the issuance of the abeyance letter include several ongoing lawsuits between DIBC and state/federal agencies and a court decision that ruled DIBC does not have the necessary property rights to construct the bridge.” In Canada, the Canadian Transit Company does not currently have any approvals necessary to proceed with construction. In addition to the requisite approval of its environmental assessment, the Canadian Transit Company will require a number of regulatory approvals, including approval under the International Bridges and Tunnels Act and the Navigable Waters Protection Act.

Claim: The Ambassador Bridge owns all property on both sides of the river needed to complete its span except for a ¼ acre parcel of contaminated park (which has been closed to the public for more than 10 years) owned by the city of Detroit

Response: Public parks are protected by federal law. The Bridge owners have illegally seized this park as if they are not bound by the laws of the land. Likewise, they claim they are a “federal instrumentality”. The U.S. Attorney has petitioned the federal courts to have the Bridge owners cease that claim.

Claim: Past and future capital investments by the Ambassador Bridge are eligible for “Toll Credits” which can be used as local matching funds to U.S. federal funding for road and bridge repairs.

Response: The Ambassador Bridge has refused to make any information available to support its claim, after multiple requests from MDOT to do so. On the other hand, expenditures on DRIC will be readily available for public review and, as such, available to gain “Toll Credits” for use on other projects throughout Michigan.

Claim: The Ambassador Bridge has invested $500 million to fulfill its obligation to replace the original span.

Response: The claim of a $500 million investment is unsubstantiated. And, it is a different claim than made in testimony before the Michigan Legislature on May 19, 2008, when the Ambassador Bridge representatives stated “…the Ambassador Bridge has invested over $500 million–a half billion dollars–in property acquisitions on both the U.S. and Canadian sides of the river.” Just as in the Toll Credits instance, talk is not substantiated.

Claim: The Ambassador Bridge owners are fully committed to the Gateway Agreement.

Response: If this claim were true, there would not be multiple lawsuits on the Gateway Project to require enforcement of the agreement because the Bridge owners failed to complete the project as agreed. This position has been ratified by decisions of Judge Edwards.