A new study says with proper safeguards, it’s true that no Michigan tax dollars are at risk if a new, second bridge is built between Detroit and Windsor.
But the study also suggests the bridge construction costs, estimated at $2.2 billion, will likely outpace projections. Further, traffic projections could be overstated. That could discourage investors, which might doom the bridge’s financing.
If the new bridge’s economic and trade benefits are as great as advertised, then perhaps the debate should switch to whether the state should consider financing part of the project.
The latest study was produced independently by the respected Lansing-based Anderson Economic Group. Although it warns that the devil is in the details — particularly the wording in
the legislation and the bond documents — the study finds the Michigan taxpayer can indeed be protected.
That finding is important in the wake of a multimillion-dollar marketing blitz by the owners of the private Ambassador Bridge. Those ads claim the public-private proposal would put Michigan taxpayers on the hook for millions of dollars.
The public-private plan, called the New International Bridge Crossing, includes a new bridge, customs plazas and connections to highways in the United States and Canada. Canada supports the project so much that it will pay upfront Michigan’s share of the cost.
The public-private funding plan is for federal funding from the United States and Canada as well as revenue bonds that will be repaid from bridge tolls. Michigan will also be able to use the Canadian loan as matching funds that will produce another badly needed $1.5 billion for Michigan roads.
So, what’s not to like?
Some argue that the government shouldn’t be in competition with the privately run Ambassador Bridge. Philosophically, that’s a decent argument, but it may be irrelevant. Because of traffic concerns, the Canadian government has made it clear that it won’t grant the necessary permits for the Ambassador Bridge’s second span.
The other objection is that it will end up costing Michigan taxpayers, particularly if toll revenues aren’t as high as projected.
That concern seems to be answered by the Anderson study. But the comprehensive study raises issues that should be at the heart of legislative debate.
The Anderson study notes that construction projects such as these often have sometimes severe overruns. The study also says that bond-repayment projections are based on what may be unrealistic traffic estimates.
If the Anderson study can see this, then so will potential investors. If they aren’t sure that they will be repaid — either through bridge tolls or taxpayer guarantees — investors could shy away from the bonds.
That’s where the debate should center: Is this bridge important enough to taxpayers to justify risking taxpayer exposure? There is an argument to be made that it is.
The Ambassador Bridge is the center of $2.2 billion in trade that passes over the border at Port Huron and Detroit. It’s by far the busiest international crossing in the country. The 80-year-old bridge has frequent lane closures for maintenance. Further, customs plazas are inadequate, causing trucks — who have already had to go through 12 traffic lights on the Canadian side — waits of up to two hours.
Not only do these delays raise business costs, they also put a hamper on future trade growth. If the second Ambassador Bridge can’t be built, then the New International Trade Company Bridge is an alternative that could boost Michigan’s future.
But it can’t be built if investors don’t believe in it. Lawmakers in Lansing have to focus on this issue. If the bridge isn’t necessary, they should make their case. If it is necessary — and we believe it is — then focus their attention on getting the job done.
This is supposed to be the business-oriented state government. Now would be a good time to start acting that way.