Detroit bridge dispute sees rival PR efforts - lots of sound & fury about ifs, buts, & maybes

Rival press conferences were staged Friday in Detroit in efforts by the contestants to sway public opinion and mobilize political support for the two competing concepts for upgrading the leading US-Canada truck crossing - upgrading of the Ambassador Bridge or the construction of a new bridge about two miles (3km) downriver. A bunch of political heavyweights weighed in on behalf of a new downriver crossing, known by the bland bureaucratic name Detroit River International Crossing or DRIC.

(A more descriptive and snappy name is needed like Zug Bridge based on its location - editor.)

Those who appeared and spoke for the downriver Zug Bridge Friday included Michigan governor Jennifer Granholm, Detroit mayor Dave Bing, Windsor mayor Eddie Francis, former Michigan governor James Blanchard, the Canadian ambassador to the US, Oakland County executive Brooks Paterson. a Ford company manager and an AFLCIO  labor union official. The Windsor Star reported "more than 100 dignitaries and media" present, and Crains called it an "all-star lineup."

Major argument advanced for the new Zug bridge was "jobs."

Governor Granholm  has not a word about the event or her speech on her website despite claiming it an important issue, but the Detroit News quoted her at the press conference: "It's about jobs, jobs, jobs" claiming 10,000 direct construction jobs and 25,000 to 30,000 permanent jobs would be created by the bridge. Granholm called it "a no brainer."

Detroit Free Press reported the governor: "It's hard to imagine another project that has this universal support, and that means jobs….Let's get 'er done."

Patterson the Oakland county exec claimed that without the new bridge Michigan would lose truck traffic to Buffalo NY, crossings hundreds of miles to the east.

Gary Doer, Canada's ambassador to the US, said Canadians backed the project with a rally style bit of speechifying being quoted: "This is all about jobs, jobs, jobs… We're in."

Detroit mayor Dave Bing said: "This (bridge) needs to get done. It needs to get done yesterday.”

According to the AP wire service Bing claimed that "nearly a third" of working age Detroiters are unemployed, and the state's unemployment is over 14%.

Nora Moroun, wife of Matty Moroun the major shareholder in Ambassador Bridge struck a discordant note with a passionate intervention at the end that caught by surprise the organizers of the rah-rah new bridge rally.

Mrs Moroun said the new bridge would take 70% of the traffic away from the Ambassador.

"You have somebody who operates a crossing that has retained a Number 1 ranking since we owned and operated it. Now the state of Michigan and Canada want to take 70 per cent of our business. This is all about Canada wanting our crossing.

"I'm speaking as a spouse, taxpayer and business operator. We have worked with Canada and Michigan and (the U.S.) federal government and retained the Number 1 crossing in this economy. We have to be doing a lot right.

"They want to destroy our family business and government take it over."

American dream under threat - claim

She called the situation "the end of the American dream."

The Ambassador Bridge people held their own separate press conference - led by bridge company president Don Stamper. The rival bridge he said still doesn't have the needed US Government approval. 250 homes have to be cleared for the DRIC, 50 businesses and many not-for profits.

They still have to figure out how to build over salt mines and hazardous wastes, Stamper says.

There isn't the traffic to support two bridges he says, the recent "uptick" only taking traffic volumes up to 1987 levels.

As for "jobs" Stamper says Michigan DOT has said construction of the Zug Bridge can't start for ten years.

The bridge company, Stamper said, is ready now to move forward with a modern 6-lane bridge next to the 81 year old 4-lane Ambssador. He claimed the bridge company had already spent $575m on the twin span, including land acquisition, planning, design and construction.

The construction completed includes bridge approaches on both sides, according to Stamper, leaving only the $400m main span to be built.

Legal battle over approaches

Trouble for the Ambassador Bridge company is that Michigan DOT seems be winning a legal battle to demonstrate that the constructed approaches are a breach of contract and illegal. A judge has demanded a schedule for their removal by demolition.

P3 legislation

At issue in the press conference was support for Michigan House Bill 4961 providing for public-private partnerships (PPPs, or P3s).

Governor Granholm has called for a vote on the bill before June 1 to enable a procurement of a toll concession for the Zug Bridge to be gotten under way later this year.

In itself the P3 bill does not provide for any direct taxpayers subsidy of a toll concession, but it does authorize the state DOT to issue toll revenue bonds to support a concessionaire. Also subsidies could be provided outside the P3 law. Or with state guarantees of some kind.

Wilbur Smith study

Michigan DOT has claimed that a Wilbur Smith Associates traffic study shows the downriver bridge is justified.

This is something a of stretch.

The traffic study is just a traffic study and as Wilbur Smith themselves say, the forecasts are only as good as the assumptions used.

Their Zug Bridge study is unusual in not forecasting prospective toll revenues from the new bridge. They call it as "traffic-only" study.

Only revenue projections can throw light on whether the new bridge is financially viable.

Traffic numbers projected are quite modest for a major bridge: 18.7k vehicles/weekday in 2016, 26.5k in 2025, 34.6k in 2035. Half the traffic is expected to be heavy trucks.

The realism of the assumptions used is not at all clear. For example the WSA study projects an annual growth rate in overall border crossing truck traffic 2009-2015 over 10%/year for a 79% increase overall in only six years.

This recovery would be fantastic, but is it realistic?

Also without a comparison of prospective toll revenue streams with annual outgoings on operating costs and debt service flows there is no way to judge the financial viability of the Zug Island bridge project.

In the absence of a financial study and a private sector willingness to take on the risk to call project it seems thoroughly reckless to call the project a "no brainer."

What's fair?

At the same time the Ambassador Bridge company was never guaranteed a monopoly of traffic.

Taxpayer subsidies to a competing concessionaire would be unfair competition to the Ambassador Bridge.

But if investors are willing to provide all of the capital in a P3 procurement, then that's fair competition. The American dream doesn't promise a permanent monopoly to anyone.

Both sides are jumping to conclusions before key facts are clear.

video of the pro Zug Bridge publicity effort:

http://www.youtube.com/watch?v=XLFAm56a3Jo

on traffic-only study:

http://www.tollroadsnews.com/node/4611

P3 bill that Ambassador bridge company opposes:

http://www.legislature.mi.gov/documents/2009-2010/billintroduced/House/pdf/2009-HIB-4961.pdf

a 'peace plan' proposal:

http://www.tollroadsnews.com/node/4670

COMMENT: we're not shy about taking sides, but here both sides have valid points, and both sides are making unwarranted and sometimes outrageous claims.

The Ambassador Bridge company has been its own worst enemy in acting as if it is above the law, and in suggesting it has an entitlement to a perpetual monopoly.

The P3 legislation in HB4961 is good, though perhaps there should be safeguards against taxpayers being drawn in with subsidies and guarantees.

A simple amendment would fix that.

The state Governor is demagoguing the issue irresponsibly with wild claims about job creation, and the suggestion that spending billions on the Zug bridge is a "no brainer." 

Her "no brainer" requires major new additions to state or corporate debt - debt that it is only sensible to incur if there's a matching prospective toll revenue stream to support the debt.

That critical issue remains to be established.

The Detroit mayor is also talking nonsense in saying the bridge should have been built already.  If the Zug Bridge had just opened there would be a financial catastrophe unfolding right now, since traffic is way too low to support two bridges now and for the immediately forseeable future. It would be yet another Detroit financial disaster, yet another signal that this part of America is just a lousy place to invest in. The Mayor should be thankful for the delays.

The best way forward at this point may be to complete the permitting of the Zug Bridge, acquiring or reserving land for the approaches on the US side. On the Canadian side they should build the Windsor Essex Parkway to improve connections between H401 and the EC Row expressway and the bridge sites.

A short northern extension of the Windsor Essex Parkway would allow it to serve Ambassador Bridge traffic as well as Zug Bridge traffic. This could be toll financed and heavy trucks banned from local streets.

Completion of planning and land acquisition for the Zug Bridge would allow a 'build-it' decision to move forward quickly.

But it is unclear that actual construction of the Zug Bridge now is either necessary, or financially viable.

So at least as an interim solution the 6-lane Ambassador twin may be best - but only on the understanding it will have competition from a Zug Bridge downriver if there are signs of the optimistic traffic projections actually being realized.

TOLLROADSnews 2010-04-18 SMALL ADDITIONS 2010-04-19 10:30