Bouchard slams second bridge span

[iheartthed]

Novine... term limits sure makes it difficult to stay current, doesn't it?

One former idiot mayor works for an IT shop in Texas another former idiot governor works for an IT shop in Virginia....

Well, the former gov now works for an auto lobby firm on K Street.

But yeah, the gov went to work for an IT firm that was founded by a kooky billionaire, and is HQ'd in the Dallas area. That company had significant operations in Detroit.

The former mayor went to work for an IT firm that was founded by another kooky billionaire[[?), and is HQ'd in Detroit. That company has significant operations in Dallas.

And both Dallas and Detroit start with the letter D.

[BShea]

Tolls collected will ultimately pay for the bridge. Money will be raised to build the bridge by selling bonds. That is not tax money. Those bond holders will be paid back through the tolls collected.

The private sector civil engineering/construction firms and the banks [[BMO, Scotiabank) that have filed official interest bids on DRIC say tolls won't pay for it, and instead they want taxpayer subsidies.

Scotiabank is already the official financial adviser for the Windsor-Essex Parkway portion of DRIC, and it's filing says the bond market and senior lenders aren't going to want to finance this based on toll revenue. Toll projects are starting to go bankrupt, too, making lenders more nervous about P3 arrangements.

This is a huge deal because it contradicts what DRIC backers have been telling the public. Yes, a few of the firms think toll can pay for it -- but they have not conducted a toll revenue projection study, and the one MDOT is doing is still ongoing and won't be given to the bidders. The people who have are sounding quiet warnings that this won't work as a P3 w/o the subsidized government payments to the private operator.

I wrote about the basic math of this in Crain's this week. It simply doesn't add up, whether you support DRIC or not. If Canada is willing to subsidize Michigan's costs at a low interest rate, and Canadian taxpayers are willing to foot the bill on what toll revenues don't cover for debt obligations and operational costs, then it's basically risk-free for Michigan.

[smogboy]

I just think the Canadian government is sick and tired of Maroun running the border crossing. And as someone who crosses somewhat regularly, I have no problem with having another choice on the border to cross. What Maroun fears is an end to his monopoly; his cash cow might dry up a little or gosh forbid, he might actually have to lower his tolls and make less profit. All one has to do is check anywhere else on the US/ Canadian border and see that we Detroiters/ Windsorites pay the highest in tolls ANYwhere along the border. And if the Canadian government wants to build a bridge to come across here [[and stick it to old man Maroun), who are we to be less than accommodating?

[1KielsonDrive]

The private sector civil engineering/construction firms and the banks [[BMO, Scotiabank) that have filed official interest bids on DRIC say tolls won't pay for it, and instead they want taxpayer subsidies.

Scotiabank is already the official financial adviser for the Windsor-Essex Parkway portion of DRIC, and it's filing says the bond market and senior lenders aren't going to want to finance this based on toll revenue. Toll projects are starting to go bankrupt, too, making lenders more nervous about P3 arrangements.

This is a huge deal because it contradicts what DRIC backers have been telling the public. Yes, a few of the firms think toll can pay for it -- but they have not conducted a toll revenue projection study, and the one MDOT is doing is still ongoing and won't be given to the bidders. The people who have are sounding quiet warnings that this won't work as a P3 w/o the subsidized government payments to the private operator.

I wrote about the basic math of this in Crain's this week. It simply doesn't add up, whether you support DRIC or not. If Canada is willing to subsidize Michigan's costs at a low interest rate, and Canadian taxpayers are willing to foot the bill on what toll revenues don't cover for debt obligations and operational costs, then it's basically risk-free for Michigan.

I guess the obvious question to be asked here is : do you trust a bank? Personally, I don't.

[smogboy]

I guess the obvious question to be asked here is : do you trust a bank? Personally, I don't.

I think I'd trust a bank over Manny Maroun.

But you do bring up a very good point here. What's been the track record of the Bank of Montreal and ScotiaBank with projects like this?

[BShea]

I just think the Canadian government is sick and tired of Maroun running the border crossing. And as someone who crosses somewhat regularly, I have no problem with having another choice on the border to cross. What Maroun fears is an end to his monopoly; his cash cow might dry up a little or gosh forbid, he might actually have to lower his tolls and make less profit. All one has to do is check anywhere else on the US/ Canadian border and see that we Detroiters/ Windsorites pay the highest in tolls ANYwhere along the border. And if the Canadian government wants to build a bridge to come across here [[and stick it to old man Maroun), who are we to be less than accommodating?

Moroun aside, the problem here is that:

1. Tax dollars will have to subsidize a new bridge because traffic won't generate enough toll money to pay for its debt. So you're paying more.

or

2. DRIC tolls will have to more than double what they are now on the AB. So you're paying more.

The experts, who have no involvement with with either Moroun or DRIC, say the numbers don't add up and the public is in for a shock. It's in the bids MDOT put online.

[kraig]

Moroun aside, the problem here is that:

1. Tax dollars will have to subsidize a new bridge because traffic won't generate enough toll money to pay for its debt. So you're paying more.

or

2. DRIC tolls will have to more than double what they are now on the AB. So you're paying more.

The experts, who have no involvement with with either Moroun or DRIC, say the numbers don't add up and the public is in for a shock. It's in the bids MDOT put online.

Very valid points. Unfortunately, with this crowd, you probably lost everyone after "Moroun aside".

[Novine]

"Toll projects are starting to go bankrupt, too, making lenders more nervous about P3 arrangements."

The company that runs the Indiana Toll Road and Chicago Skyway has been reported to have financial problems due to significant declines in traffic. But how is that a valid comparison to DRIC? There are a lot of "free" alternatives to cross Indiana or make ones way into Chicago. Last time I checked, no one is running ferries to allow cars and trucks to bypass a bridge to cross the river.

[kraig]

"Toll projects are starting to go bankrupt, too, making lenders more nervous about P3 arrangements."

The company that runs the Indiana Toll Road and Chicago Skyway has been reported to have financial problems due to significant declines in traffic. But how is that a valid comparison to DRIC? There are a lot of "free" alternatives to cross Indiana or make ones way into Chicago. Last time I checked, no one is running ferries to allow cars and trucks to bypass a bridge to cross the river.

There are also going to be at least two options, probably cheaper, within close proximity to the DRIC. Which will more than likely, effect its toll revenues.

[BShea]

"Toll projects are starting to go bankrupt, too, making lenders more nervous about P3 arrangements."

The company that runs the Indiana Toll Road and Chicago Skyway has been reported to have financial problems due to significant declines in traffic. But how is that a valid comparison to DRIC? There are a lot of "free" alternatives to cross Indiana or make ones way into Chicago. Last time I checked, no one is running ferries to allow cars and trucks to bypass a bridge to cross the river.

Traffic estimates have been wildly off-base in recent years for toll projects, according to this University of Texas study: http://www.utexas.edu/research/ctr/p...s/0_6044_1.pdf

Critics both locally and elsewhere are saying MDOT's traffic projections are wildly optimistic.

The math simply doesn't add up. MDOT's traffic study says the new bridge would use the same toll rates as the Ambassador Bridge. The DRIC study expects to take 34% of all border traffic between here and Port Huron. How can you make the payments on $120 million in annual debt/operations expenses [[a low-end industry assumption) on those same toll rates? You can't -- unless you raise the rates, which probably would worsen the situation, or you have a government subsidy.

Keep in mind, it's the companies that want to build the bridge that are saying the tolls won't be enough, and that they need guaranteed government payments.

[rb336]

have got to agree with bouchard on the bridge... why spend billions of taxpayer money we dont have to do something that Moroun will do for free, no public money? the whole terrorism threat theory is a load of BS.

in case you didn't know this, Manny plans to use the same type of bonds to build HIS bridge. the big difference? once we are done paying, HE will own the bridge instead of US

also, BShea, if what you say is true for the DIRC, why does the same not hold for the new ambassador? once again, WE will pay for it, the biggest difference is that Manny will own the new ambassadr span after we pay for it

Your article mentions ScotiaBank as one, but the same article lists several firms that prefer the toll model. Why did you not mention them here? The UT study is for project where truck tolls are NOT the majority

There are also going to be at least two options, probably cheaper, within close proximity to the DRIC. Which will more than likely, effect its toll revenues.

the tunnel can not take commercial traffic, the new ambassador will have the same costs for construction as the new DRIC.

once again, when paning for bridge traffic volumes, you have to look 10-15 years out. I would rather have BOTH built, because by the time some people realize that they are needed, it will be too late to do anything about it

[BShea]

also, BShea, if what you say is true for the DIRC, why does the same not hold for the new ambassador? once again, WE will pay for it, the biggest difference is that Manny will own the new ambassadr span after we pay for it

Moroun's contractors won't be asking for a taxpayer subsidy because there's no one to ask. Most of the companies interested in DRIC are seeking that very thing -- guaranteed payments from the governments. They don't want tolls.

This is not what I am saying. This is what the private sector is saying.

in case you didn't know this, Manny plans to use the same type of bonds to build HIS bridge.

The preliminary bids on the project include a variety of financing models. Bonds are just one of them. They express worry that bond rating agencies like S&P won't rate the project debt highly enough [[A+) to make it attractive enough. Governments typically get better ratings more easily on such projects than the private sector.

Some of the companies say they want to look at using export credit agencies, Transportation Infrastructure Finance and Innovation Act funding in addition to private activity bonds to fund the project.

Your article mentions ScotiaBank as one, but the same article lists several firms that prefer the toll model. Why did you not mention them here? The UT study is for project where truck tolls are NOT the majority

I identified three companies in the dozen-plus that said tolls might pay for the project. They didn't get into the comprehensive details on the financing. The companies that did, including those already involved in DRIC [[Macquarie, Scotiabank) are strongly recommending availability payments rather than a pure toll concession. BMO Capital Markets is another lender recommending the guaranteed payments.

once again, when paning for bridge traffic volumes, you have to look 10-15 years out. I would rather have BOTH built, because by the time some people realize that they are needed, it will be too late to do anything about it

That's the recommendation from Toll Roads News -- get the project ready to build, then wait for a more realistic time. Have all the legal and other hurdles taken care of, buy the land, etc. Build when the time is right. When I chatted with Matt Moroun a couple years ago [[the son), he told me they also believe there will eventually be a need for a new bridge, but that time wasn't now. The toll guys -- who have no love for DIBC -- agree with that notion.

[Gistok]

.... lest we forget... it's not the Ambassador Bridge causing the current backups... it's Customs!

[detlump]

Canada will never allow a new bridge next to Ambassador. It's that simple. The Windsor side is terrible due to truck traffic in an area with homes, a university, and a school [[Assumption). Eighty years ago this level of truck traffic was never imagined. The old bridge is falling apart and Matty knows it. Canada has already bought property for the new bridge access road and many homes and business have been vacated. It makes sense to tie 401 to the Interstate system downriver. Matty can then close the old bridge [[yeah right) while the deck is replaced and major work done.Compare the mighty Mac [[run by govt) to the Ambassador [[run by profiteer). Granted the Mac is newer, but it is in much better shape [[or NY bridges even).