BY JOHN GALLAGHER AND CHRIS CHRISTOFF
DETROIT FREE PRESS STAFF WRITERS
Today, the Free Press separates the swirling exaggerations from the truth in the border showdown critical to Michigan’s future.
On one side: Ambassador Bridge owner Manuel (Matty) Moroun, wielding the family fortune and political connections to defeat a proposed publicly owned span that would cut deeply into his business.
On the other side: the U.S. and Canadian governments, with strong support from business groups that want a new crossing between Detroit and Windsor to speed commercial truck traffic across the busiest trade crossing between the U.S. and Canada.
The weapons: muscular lobbying by the Morouns, with controversial TV ads and arm-twisting in Lansing, to convince lawmakers and the public that a second Detroit River bridge is unnecessary and a potential burden for taxpayers.
Gov. Rick Snyder and his aides have the bully pulpit to muster support for a publicly owned bridge. They say they have bulletproof legislation to protect taxpayers against use of any significant Michigan money to build a new bridge.
The stakes: control of the border crossing. And key decisions are expected in coming weeks from Lansing.
Questions about bridge battle answered amid swirling accusations
The claims and counterclaims about the benefits, the risks, the fairness and the vulnerability of Michigan taxpayers are flying in TV ads, in political caucuses, in boardrooms.
Whether to build a second span over the Detroit River or not to build?
Whether to allow Ambassador Bridge owner Manuel (Matty) Moroun to build his own twin span alongside the Ambassador, or to have the Canadian government and Michigan partner to build a new public bridge 2 miles downstream, near Zug Island?
Those are the key questions.
Today, the Free Press examines the issues that will emerge as state House and Senate committees take up the debate in the weeks ahead.
QUESTION: Do we need a new bridge over the Detroit River to Canada?
ANSWER: Just about everyone, including Moroun, agrees that a new bridge is needed to replace or supplement the 82-year-old Ambassador Bridge that connects Detroit and Windsor.
The debate is more about who would own and build it — either Moroun (who wants to build a replacement span next to his privately owned Ambassador) or a public consortium of Michigan, Ontario and the U.S. and Canadian federal governments, which hope to hire a contractor to build a new bridge in southwest Detroit near Zug Island. That plan is called the New International Trade Crossing.
Q: Why do many people oppose Moroun’s proposal?
A: His opponents cite at least four reasons.
First, they say there is a need for redundant spans in the event of unforeseen problems, repairs or a terrorist attack on one of the bridges. Many believe such a huge volume of U.S.-Canadian commerce — the busiest such crossing in North America — should not be entrusted to such an aging piece of infrastructure.
Second, supporters of the public bridge predict traffic volumes will rise to new peak levels in the next 25 years, leading to congestion unless capacity is added. This is a hotly disputed point. Moroun points out that the volume of border crossings plummeted after the Sept. 11, 2001, terrorist attacks. Traffic has been rising as the economy picks up, but it’s still only a little more than half of the totals of the late 1990s. Passenger-car traffic is down more sharply than truck traffic, as more stringent border security measures apparently have discouraged casual visitors.
A third reason is that the Ambassador Bridge doesn’t connect directly to Canada’s 401 expressway. Instead, it funnels traffic onto Windsor’s Huron Church Road, where trucks run a gantlet of traffic lights for several miles, creating problems of traffic and pollution. The public bridge would link directly to a yet-to-be-built, limited-access road called the Windsor-Essex Parkway that would tie directly to the 401. The parkway also would help 401-bound traffic coming off the Ambassador Bridge, reducing to a handful the number of traffic lights between the bridge and the 401.
Finally, modern border crossings have as much to do with the customs inspection plazas as bridges. A modern inspection plaza has dedicated lanes for prescreened and automated inspections. Such a plaza would be more easily designed, built and operated with an entirely new bridge.
Q: What would a new bridge cost?
A: The publicly owned bridge itself would cost an estimated $950 million. The customs and inspection plazas to be built on either end of the bridge and the connections to nearby expressways add major costs. In Windsor, connecting a new publicly owned bridge to Canada’s 401 via the planned Windsor-Essex Parkway would cost about $1.7 billion. Add that to other pieces (bridge, plazas, connections to expressways, and the current cost of financing) and the price tag reaches about $3.8 billion.
Moroun estimates that his replacement span for the Ambassador Bridge would cost about $500 million.
Q: Who pays for a new bridge?
A: For the New International Trade Crossing, the U.S. and Canadian governments would pay for their respective customs plazas. Canada is pitching in for Michigan’s portion. A private contractor (a company or team of companies hired jointly through bids by the Canadian and Michigan authorities) would build the bridge with money raised by issuing bonds that would be paid back from toll revenues. The same contractor would operate the bridge.
Michigan is supposed to pay to create the ramp connections to I-75, but Canada has said it will pay for that up front — with $550 million — to be paid back through tolls, making Michigan’s cost zero.
Moroun would build his own replacement span from his own resources, most likely borrowing the money and paying it back through tolls.
Q: The Moroun family has said Canada has backed away from the $550-million offer. What’s the truth of that?
A: The Morouns base that claim on a statement made by Canadian Transport Minister Chuck Strahl in the Canadian House of Commons on March 23. In reply to a question, Strahl said, “We are going to spend zero taxpayer dollars. It is a P3 project. It will not have a single dollar in it.”
He was referring to the private-public partnership (P3) that will be created to design, finance, build, operate and maintain a new public bridge. The P3 (a private company or team of companies yet to be selected) would borrow the money to build the bridge and pay it back through toll revenues. Thus, the money to build the bridge will come from the private investment market.
It may be disingenuous for government officials in either the U.S. or Canada to say not one dime of taxpayer money will be spent, since normal staff time is being used on this project. But it’s also a stretch for the Morouns to claim Canada has backed away from its offer to front Michigan’s side of the costs.
Q: In a TV ad, the Moroun family says building the public bridge would cost Michigan taxpayers $100 million a year. True?
A: At this point, the charge seems like a stretch.
An anti-public bridge group plans to release details to back up this claim this week. In general, the Morouns say the losses stem from lost property-tax revenues from businesses that would have to close to make way for a new public bridge, and revenues lost at the Ambassador and Blue Water bridges as traffic shifts to the public bridge.
Q: Draft legislation from Gov. Rick Snyder’s administration is touted as carefully written to protect Michigan taxpayers from any possible liability. Will it?
A: Yes, according to Richard McLellan, a Lansing attorney and expert on legislative and state constitutional law who reviewed the draft legislation for the Free Press. He said it is strongly worded so that taxpayers won’t be on the hook if the bridge loses money. “A bridge between two of the largest economies in the world is a risk” a potential investor would have to evaluate, McLellan said. He said other state statutes have prohibited backing bonds with the state’s “full faith and credit,” so this bill would not be unusual.
Q: Wouldn’t that make it more difficult to sell bonds?
A: Yes, but the real question is whether it will make it impossible to sell bonds. Investors will decide whether to invest in the NITC based on their belief that the bridge’s future revenues would pay its costs — and knowing that Michigan taxpayers would not be liable if the project failed. Some investors, however, are attracted to such bond offerings.
Q: How would the Canadian money help Michigan roads?
A: It would be used as matching funds to receive four times as much in federal highway funds, spread over 10 years. Snyder has proposed using $50 million of the promised Canadian money as a match in next year’s budget.
Q: Is Moroun correct when he says the publicly owned bridge would kill Michigan jobs, especially at his companies?
A: The new bridge would almost certainly draw traffic and tolls from the Ambassador Bridge — one of just two privately owned spans between the U.S. and Canada. If Moroun’s revenues decline, he probably would downsize his operations.
The new public bridge would create many (estimates run in the thousands) temporary construction jobs. The convenience of a new bridge that ties directly into expressways on both sides of the border via ramps or a new Windsor highway could boost commerce and development, leading to new jobs.
Q: The Moroun family says it’s unfair competition for the two governments to use their powers of eminent domain to condemn and buy land at reasonable costs, avoid taxes and regulatory red tape, then steal what has been estimated at 75% of the traffic they now get. Isn’t that complaint reasonable?
A: The bridge isn’t your typical private endeavor. Most bridges are publicly owned. The Moroun argument has some appeal, but consider that the Morouns enjoy a virtual monopoly at the Detroit-Windsor crossings. (Cars and some trucks also can use the Detroit-Windsor Tunnel or the Blue Water Bridge in Port Huron, 60 miles northeast of Detroit).
Governments often build new infrastructure — from highways to airports to bridges — when there is a perceived need, and that often tilts a competitive advantage somewhere.
The Ambassador Bridge was built in 1929 by the equivalent of today’s private-public partnerships — a private firm acting with government sponsorship. It was sold to Moroun about 30 years ago.
It wouldn’t be a complete surprise if a negotiated settlement resulted in some compensation to the Morouns.
Q: Why is there only one other privately owned border crossing (at International Falls, Minn.) between the U.S. and Canada?
A: The Peace Bridge between Buffalo, N.Y., and Ft. Erie, Ontario, was built in the 1920s by a private company, but that company went into bankruptcy during the Depression, and a public authority took over. That’s one scenario why most border crossings today are in public hands. Another reason is that the customs and border security functions require a level of government involvement that the public demands should be in public, not private, hands.
Q: Why won’t the Canadians allow Moroun to twin his Ambassador Bridge, like he wants to?
A: With the Ambassador Bridge sending trucks directly onto Windsor’s Huron Church Road, causing traffic jams and truck pollution, Canadians want the new public bridge tied directly to the 401 expressway. That’s why the downriver bridge that avoids neighborhoods is more appealing. The Canadian government also has made clear its preference for government ownership.
Q: What is the state’s bridge authority?
A: It is a five-member body appointed by the governor — and approved by the state Senate — that would have power to enter into an agreement with Canada to build the bridge. The authority could issue bonds.
It’s similar to the Mackinac Bridge Authority, a semiautonomous entity that financed and built the Mighty Mac in the 1950s by selling $99.8 million in bonds, to be paid by toll revenues.