Brian Calley Interview: The Gateway double standard, Southwest Detroit & NITC, the logistics economy and the Snyder transportation agenda

By Jeff T. Wattrick | MLive.com

When Governor Rick Snyder delivered his first State of the State address in January, he surprised almost everyone by announcing his support for the proposed new bridge between Detroit and Windsor.

Michigan Lt. Gov. Brian Calley speaks after taking the oath of office at inauguration ceremonies in Lansing in January. AP File Photo

As his administration has lobbied to win legislative approval for the project, Lt. Gov. Brian Calley emerged NITC’s top public advocate within the administration.

Last week, in advance of the state legislature’s fall session, MLive sat down with Lt. Gov. Calley to discuss the NITC’s prospects in Lansing. This is the second half of that conversation. Part one was published on Tuesday.

Jeff Wattrick: When I talked with Dr. [Roy] Norton from Canada, he made a comment to me that really made the hair on the back of my neck stand up. He said: “It is unprecedented that all three [Canadian political] parties would agree that the government of Canada should encumber the Canadian taxpayers with a $550 million liability to support a developed country’s contribution to a share of a bridge.”

It is “developed country” part that kind of got my hackles up. Should we be a little embarrassed as a state that we can’t do this on our own? I mean, we’re still the United States; we’re still the “arsenal of democracy” in Michigan. Why can’t we get this done on our own?

Brian Calley: It’s kind of interesting that there does seem to be this aversion—it’s a political problem. It’s not as much a financial problem as a political problem. We just spent—the taxpayers of the state of Michigan–$230 million on a new interchange for the Ambassador Bridge.

At the same time, the Ambassador Bridge is criticizing this proposal because the Canadians are going to pay for an interchange, and they’re afraid that in some way, shape or form down the road we might have to pick up the tab for that. We won’t, but they claim we might have to.

It’s quite an interesting contrast. They criticize us for a perceived potential contingent liability, and on the other hand, they had their hand out to say: “Build us a new interchange and plaza area and have the taxpayers pay 100% of it.” They have been getting their operations subsidized by the taxpayers of the state of Michigan.

It shows you how their influence of the political system has permeated through to where there’s such a stark contradiction between their criticism of our project and their willingness to have their hand out and take taxpayer dollars for their project.

All that just to say it really highlights the political problem we have here. That we have people in politics willing to stand up and repeat the sort of nonsense we hear out of them.

I don’t blame them. They have a monopoly. They’re trying to protect that monopoly. They figure the difference between monopoly level profits and regular level profits is pretty big. They want the government to keep protecting their monopoly and keep all competition out of their marketplace.

All the obstacles they keep putting up keep getting solved, even to the point of Canada saying: “Fine. We have so much confidence in this project, without any contingent liability from the state of Michigan, we’ll put money in and pay for the Michigan side improvements.”

It takes away any argument, but it shows you the force behind this proposal. And it’s only a matter of time [before NITC wins approval].

JW: Would you say the Gateway Project was a good investment?

BC: Had the Morouns lived up to their contractual agreement, then I think it would have been. They decided to make drastic changes in it to prevent the Canadian traffic from getting directly on I-75, as the original project entailed. Now, the courts are making them fix it. They’re going to fix it and it will get fixed, but it’s a misnomer that some people think the Gateway Project was to accommodate six new lanes of traffic at that location. It wasn’t. It was never for that purpose…

JW: Well, let me stop you there because they have agreements with MDOT that discuss a second bridge there.

BC: A replacement bridge.

JW: Ok.

BC: Not a six new lanes of traffic. The current bridge is 83 years old now. It’s not going to last forever. We all, in our shop, still believe that a viable border crossing operation at that location is important. We believe we need both bridges. The bridge we’re proposing is not enough. We still need their bridge. The current one will not last forever, so redesigning the Michigan-side plaza to make it provide for freeway connection without going through southwest Detroit neighborhoods is important. So I believe it is a good investment when the improvement they agreed to finally get made. But it’s only to accommodate a replacement bridge, not an additional six lanes of traffic.

JW: For this new bridge there is this community benefits plan. What will that entail for Southwest Detroit?

BC: We’re still working with folks in that neighborhood and representation from that neighborhood about what that looks like, it’s not really clear at this point what the final product will be.

But we know we have a model to look at, and that’s the Blue Water Bridge. I think we should all kind of expect we wouldn’t do any less at this location. I think we have other opportunities though to connect in things at this location to make it a real logistical hub.

That doesn’t mean additional state resources. That means connecting in other resources and entities to this place. You’ve got this new transportation asset that will be very valuable for economic development in the long-term for the area.

We’re trying to look at it outside the scope of the just the bridge because the private concessionaire comes in, is it going to have to meet all the permit requirements and environmental things—truck routes, vibration control, noise control, pollution control—all that’s part of the permit process. That’s part of the community benefits package. The concessionaire has to do those things in order to build the bridge.

At the same time though, we think the overall benefits of the bridge itself will be far-reaching and have the potential to transform an area that has been decimated for generations.

JW: If you could kind of game out a little bit, if this bridge doesn’t get built and we’re left with the tunnel, the Ambassador Bridge and Blue Water as the only crossings in Michigan, what happens economically?

BC: I think what happens is we get to a point of capacity, and as a practical matter the road that takes you from the Canadian side of the Ambassador Bridge to the 401 is at capacity already, and the plaza is at capacity already today, even though the bridge itself isn’t. What happens is when a company that’s already in the state of Michigan is looking at where to expand, they have to look at it and say: “Well, I have to get to Canada so maybe I do Ohio instead, and then I can go through Buffalo.”

[Buffalo] operates far more commercial traffic lanes at 69% of the traffic—profitably, by the way.

So maybe Ohio gets that business. That’s the gradual shift that you’ll see. As companies in Michigan expand, as a practical matter, they’ll have to expand someplace else.

JW: The advocacy for the NITC seems to be part of a larger transportation agenda on the part of this administration. Can you talk a little about that?

BC: Yeah, management of roads on a peninsula this far north—lake effect snow and the freeze/thaw cycle—is harder than it is in other places. So we have a real challenge in front of us to maintain an effective transportation system.

The reason we think this project fits so well in it is because we have some short and long-term problems garnering the resources to maintain the transportation system. Part of that is maximizing the federal drawdown. This solves that problem for about ten years for us. We’re very interested in moving the project along because it does have the side benefit of fixing roads and bridges through the federal drawdown all over the state. That translates, even with very conservative multipliers, into thousands of jobs.

Now, beyond that though, this is also an opportunity for us to grow around a strategy to be an intermodal transportation hub. You think about the ports on the east and west coast of our country, take New York for example, those are so outside of capacity that they can’t get much more activity there. Yet the trade in and out of this country continues to increase each year.

If we could connect in the rail, the water, the surface transportation, the air transportation with our great international airport–think about the ability to take a piece of the international trade and all the activities that happen around that—Michigan would be perfectly positioned.

It’s not just Michigan who enjoys Canada as their largest exporting market. There are 34 other states that also enjoy Canada as their biggest export market. The logistical and warehousing business that needs to be someplace, why not Michigan? Why don’t we employ a growth strategy that creates conditions for that to happen?

You look at a lot of the success they’ve had in Southeast Asia, it’s been growing around a supply chain. You get a piece of a process and say: “Well, what happens right before the piece that we have, or what happens right after that piece, and what’s stopping it from happening here?”

You know, to grow along the supply chain, but it only happens if you’re part of it in the first place. So the potential to grow is unlimited. We look at this as the opportunity to expand the growth potential of the companies that are currently in Michigan, but then also capture additional pieces in the value-add process.

This project could be a vital component to that. Transportation assets are so integral to making that happen. That’s why you see so many business groups advocating for a comprehensive transportation solution, like the Michigan Chamber of Commerce. It’s what is required for the success of their members.

JW: One final question, you mentioned rail. Last week there was an announcement about higher speed rail to Chicago. When that was announced a month or two ago, Secretary LaHood talked about maybe better utilizing the rail tunnel to Canada, what’s going on with those two projects?

BC: The problem with the rail tunnel to Canada today is can’t handle double-decker [freight trains]. It’s too short. When containers go by rail they’re double stacked. So when they hit Detroit, they take one off. They go across and unload it. They come back, put the other one back on and back and forth. It’s doesn’t work.

But, again, just like this one, we know there is a tremendous amount of private sector interest in investing the money in the bridge. At least 30 companies from around the world are interested in investing the money to make it happen. The same thing with the rail tunnel. It’s going to take a private sector investment in order to make that happen, but it appears to me [there’s] a great amount of interest in making it happen.

More important, a high degree of need as well based on—even with the hassle of stacking and unstacking containers that I described—it’s still utilized quite a bit. That tells me the demand is there. If they’ll put up with the hassle of that process, there’s a strong demand. That’s another potential that, just because of its location, this is the kind of hub that no matter what type of thing you make or distribute, you can center it here and get it out to where it needs to go.