McLellan: Taxpayer Money ‘Absolutely’ Shielded With NITC

MIRS News

The New International Trade Crossing (NITC) will not endanger taxpayer dollars, attorney Richard McLELLAN told a Senate panel today.

McLellan, a former adviser to Gov. John ENGLER, said he doesn’t represent anyone on the bridge issue, but was asked to testify on constitutional issues. McLellan said the Michigan Constitution is very clear that unless the Legislature asks for a vote of the people, Michigan can’t pledge the state’s full faith and credit.

Sen. Judy EMMONS (R-Sheridan), who reportedly is a “maybe” on the NITC, asked if the language in SB 0410 and SB 0411 is “tight enough” to protect taxpayer dollars.

“Absolutely,” he replied.

The Senate Economic Development Committee today held an almost three-hour hearing in what was supposed to be its last week of testimony on SB 0410 and SB 0411. It’s still not clear if a vote will be taken Wednesday, although signs are pointing to no (See related story).

Meanwhile, the committee heard from an Ambassador Bridge consultant that the NITC could destroy the current crossing.

Van CONWAY, CEO of Conway McKenzie, told the committee that the new public-private crossing could “put the Ambassador Bridge out of business.

“I wouldn’t like to see the government come into my business with all its money and competing with me,” Conway said.

He also said that building the new bridge would hurt the Blue Water Bridge, the Windsor Tunnel and the Ambassador Bridge. As he has said in the past, Conway hinted that the other entities might retaliate in some way.

“You can’t just assume they’ll let you take their business and they’ll say OK,” he said.

Conway was one of three DIBC consultants testifying today. The DIBC owns the Ambassador Bridge, which has dumped millions into opposing the NITC and wants to build its own second bridge.

Conway disclosed that he was on the DIBC payroll, but the other two consultants were not upfront. Marc LEMON, former chief counsel for the Federal Highway Administration (FWA), now works with the DIBC. So does Valerie SOUTHERN, CEO of a Virginia trucking company.

Chair Mike KOWALL (R-White Lake) thanked Southern for her testimony and offered to recommend her if she was ever up for a job. But Sen. Tupac HUNTER (D-Detroit) asked Southern and Lemon if they were or had been paid consultants for DIBC. Both said yes.

Sen. Dave HILDENBRAND (D-Detroit), the other reported “yea” vote on the bridge besides Hunter, said he was curious about that, too.

“Not that anyone would be biased in this business,” Hildenbrand said. “. . . I just think it’s important to know where people are coming from.”

Conway also said there’s a risk with any new project and the NITC “could be twice the cost.” He claimed the NITC would lose money in the first year and wouldn’t be able to pay back the $550 million to the Canadians in tolls. Conway also argued investors wouldn’t touch the project as a result.

After his testimony, Emmons deadpanned, “I would hazard a guess that your company won’t be investing in the bridge.” Conway said no.

“That’s a joke,” she said. “We can lighten up a little bit.”

Emmons said there are 15 to 17 references in the bills about keeping taxpayer dollars safe. She said the Canadian government said during the committee’s bridge site tour this summer that it would cover the cost overruns.

“It’s a startup,” Conway responded. “It will probably cost a lot more than they think.”

Then he asked if there are overruns if the Canadian government will take ownership of the NITC like the bank would a private property.

Lemon took center stage at a DIBC press conference this month, arguing that the Gov. Rick SNYDER administration hadn’t provided accurate numbers on federal matching funds.

Lemon argued at committee, as he did at the presser, that the $550 million the Canadian government is putting up that can be used toward federal matching funds wouldn’t net an additional $2.2 billion for Michigan. That’s true; that goes to money that Michigan would already get, if it were to raise enough to receive the federal match.

Lt. Gov. Brian CALLEY has said the administration has never claimed that’s new money.

Lemon also said matching funds could be cut up to 35 percent by Congress. He said “Michigan already technically has the money to meet the match every year” and doesn’t need the NITC. Lemon said no state has ever left matching funds on the table.

However, Michigan has struggled to meet it in several recent budget years. Southern who testified alongside Lemon, testified that Michigan is “incapable” of meeting federal matching funds and has “left federal dollars on the table.”

Sen. Goeff HANSEN (R-Hart) noticed the discrepancy and said that Michigan had never left federal money on the table. Southern then said there was a “threat” of not meeting the match.

Lemon testified against the NITC on other fronts. Once again, he used the DIBC argument that Canadians’ $550 million is “not free money” and there’s no detailed finance plan. He also said that Canadian labor could likely be used for the project.

He said Michigan has better options to meet federal matching funds with toll credits from the Ambassador Bridge, for instance, and redoing Public Act 51. Lemon said Michigan “clearly needs to restructure” its fuel taxes, much of which doesn’t go to matching funds.

“Michigan does not need to take away from other funds, like education, to meet the match,” Lemon said. “It simply needs to overhaul Public Act 51.”

He said Florida, Virginia and Georgia are states to model. Lemon argued the project is “risky” and the state needs a better public-private partnership act like other states, not one written without due diligence for the NITC.

Sen. John PAPPAGEORGE (R-Troy) testified that bridge traffic has been down in Michigan overall. He noted that since 1980, there’s been economic decline and the Big Three have lost market share. Conway also noted problems with the auto industry.

The panel also took testimony from members of the Willow Run Tea Party, which has been running ads against the NITC implying the Chinese government can build or own the new bridge. The group will not disclose who’s paying for the ads, with Chair Dennis MOORE saying he doesn’t know if DIBC or the Morouns foot the bill.

Dan BENIFIEL of the Willow Run Tea Party testified that the new bridge will be part of a “NAFTA superhighway,” a conspiracy theory that a secret highway between Mexico and Canada is being built. Benefiel said there’s also a “China connection” with the NITC, calling for an investigation between Gov. Rick SNYDER and his “China dealings.”

Benefiel noted that the Bay Bridge in California has a Chinese firm involved in construction and that can happen here, too. And he raised concerns about the Chinese government’s involvement. He said we “shouldn’t sacrifice our liberty at the altar of commerce.”

Moore reiterated his claim that Snyder told him the Chinese government could build or operate the bridge. He also said he asked Snyder if the bridge would be “quid pro quo” as part of a conference he was attending with Chinese officials. Moore claims Snyder didn’t answer.

Hildenbrand quipped afterwards, “All that China talk makes me feel like I’m in the middle of a campaign again.”

Pro-NITC Group Pushes Back Against Traffic #s
The coalition supporting the New International Trade Crossing (NITC) pushed back against the Detroit International Bridge Co. (DIBC) data showing the Ambassador Bridge’s traffic is down.

“The first inclination would be to ascribe this loss of traffic to the sputtering economy as it tries to recover from the recent deep recession,” said coalition spokesman Tom SHIELDS.

He notes that traffic at all other crossings rose in Sept. 2011 vs. Sept. 2010: Blue Water Bridge (7.62 percent), Detroit-Windsor Tunnel (3.39 percent), the International Bridge in Sault Sainte Marie (7.61 percent), Peace Bridge in Buffalo (1.64 percent), Lewiston-Queenston Bridge (14.72 percent), Rainbow Bridge (12.81 percent) and the Whirlpoool Rapids Bridge (37.19 percent).

“Since all of the other crossings are seeing increased traffic volumes, perhaps the decline in volumes observed at the Ambassador Bridge is the result of drivers attempting to avoid the construction both on the bridge . . . and plaza,” Shields suggested.