Officials scoff at threat of a toll rate war if 2nd bridge is built

[begingri]

BY JOHN GALLAGHER

DETROIT FREE PRESS BUSINESS WRITER


Ambassador Bridge representatives raised the possibility today of a toll-rate war breaking out if a proposed rival government-owned bridge is built between Detroit and Windsor.

Van Conway, a financial consultant hired by the Detroit International Bridge Co. to analyze the government bridge project, estimated the New International Trade Crossing bridge would fall $1.5 billion short of covering operating costs and debt service over 20 years without more than doubling of toll rates currently in operation at the Ambassador and Blue Water bridges.

He added that government backers of the NITC bridge “haven’t considered what could happen in the competitive market if the Ambassador Bridge decides, ‘OK, you’re going to take my traffic now, I’m going to lower my toll.’ ”


Continued at: http://www.freep.com/article/20110429/NEWS01/110429035/Officials-scoff-threat-toll-rate-war-2nd-bridge-built?odyssey=tab|topnews|text|FRONTPAGE

[Hypestyles]

isn't competition supposed to be good for business? I guess not when you're the Marouns... ah well..

[Gistok]

DUH!!! I've been bringing this up on just about every thread related to a public bridge....

The Ambassador Bridge doesn't have bonds to pay off [[just maintenance).... and will Wall Street be very interested in buying bonds for a public bridge, if the numbers don't add up??

Lowering his bridge tolls is Matty's final Ace in the deck.... to stop the other bridge from being built...

[luckycar]

Not so fast.The Coast Guard,Homeland Sec.,EPA,MDOT and Canada just may find that the maint. on Matty's bridge is not up to standards.A shut down,condeming or just plain dirty political hardball could stop anything from crossing the "old bridge".

[Richard]

The sole purpose of a corporation is to make money for the shareholders,new bridge old bridge it will not matter,new bridge is built and not making money who is going to pay the debt?

At least at this point with a privately owned bridge if the tolls get out of line the Gov. can step in if it is a Gov bridge what are you going to do ?

The thing that kills the whole article for me anyways is the statement of :

Meanwhile, pro-NITC backers got some help this week from a just-released study by two Canadian economics professors who found that delays at the border crossing may add as much as $800 to the cost of each car or truck produced by U.S. and Canadian automotive plants.

So I guess if the new bridge gets built then the price of a new automobile will decrease by $800 ? Yea okay

The SUV was the cheapest to build with the highest profit margin thats why they were promoted so much,savings cost to build never gets passed down unless it is a Yugo, it is just added profit.

Canada is getting the funds somewhere,and those funds cost money somebody is going to want to get paid one way or another, it is kinda the question of who is lessor of two evils,we know where and how we stand right now.Anyway you look at it both bridges will be owned by private organizations, who picks up the tab on the new bridge if it goes bankrupt?

[Gistok]

Not so fast.The Coast Guard,Homeland Sec.,EPA,MDOT and Canada just may find that the maint. on Matty's bridge is not up to standards.A shut down,condeming or just plain dirty political hardball could stop anything from crossing the "old bridge".

Your scenario takes into account IF Wall Street wants to buy the bonds to build the 2nd bridge... and if Matty lowers the fares on the Ambassador Bridge... that may not happen. Plus... the scenario you described could be litigated for years.... [[a Matty tactic)... and they could probably stay open a looooong time....

[majohnson]

The financial consultant's comments are beside the point.

The bonds related to the bridge are near certain to be repaid, regardless of whether toll revenue can fund the bond repayments.
That is true whether the bonds are issued by the State of Michigan, a Canadian government entity, or a private bridge operating entity.
Neither government would risk damaging its credit rating over a relatively inexpensive project.
Any private bridge operating entity would be too intertwined with the government to not repay the bonds, similar to Fannie Mae's implicit relationship with the federal government.
Therefore, investors purchase the bonds not based on projected toll revenue but the near certain repayment of government backed bonds.

The next question is whether the governments should fund the 4 billion dollar bridge project if projected toll revenue is unable to repay coffers.
Here the analysis is not simply projected toll revenue versus projected bridge construction costs.
Instead it is projected toll revenue plus the prevention of loss of business tax revenue plus prevention of political fallout from job loss versus projected bridge construction costs.
Obviously, the potential job loss dominates the equation even if the new bridge is toll free.

Don't get caught in the spin zone.

[Goose]

competition is good for the consumer

BUT

as evidenced by the threads here, any government interference negates any positive economical results.... same with health care, gas prices, etc etc....

the government can do what they want, when they want, to stifle the competition regardless of the economic ramifications.....

[Richard]

Take that same 4 billion dollars and use it to create job opportunities within the city and the ROI becomes much higher,even throwing 1 billion towards a rail solution to remove the heavy truck traffic from the bridge and surrounding neighborhoods.

Given the volatility of fuel prices what happens 5 years down the road when it gets to that point where it is more feasible for the suppliers to relocate closer to the source,if you remove the trucking aspect what then comes across the bridge?

It is all about the flow of commerce,no studies on the most efficient way to move that across the border? Is any bridge the most efficient and economical form?

The property that was purchased by HS and customs for freight inspections is not even anywhere near the bridges so what is next?

[kraig]

The sole purpose of a corporation is to make money for the shareholders,new bridge old bridge it will not matter,new bridge is built and not making money who is going to pay the debt?

At least at this point with a privately owned bridge if the tolls get out of line the Gov. can step in if it is a Gov bridge what are you going to do ?

The thing that kills the whole article for me anyways is the statement of :

Meanwhile, pro-NITC backers got some help this week from a just-released study by two Canadian economics professors who found that delays at the border crossing may add as much as $800 to the cost of each car or truck produced by U.S. and Canadian automotive plants.

So I guess if the new bridge gets built then the price of a new automobile will decrease by $800 ? Yea okay

The SUV was the cheapest to build with the highest profit margin thats why they were promoted so much,savings cost to build never gets passed down unless it is a Yugo, it is just added profit.

Canada is getting the funds somewhere,and those funds cost money somebody is going to want to get paid one way or another, it is kinda the question of who is lessor of two evils,we know where and how we stand right now.Anyway you look at it both bridges will be owned by private organizations, who picks up the tab on the new bridge if it goes bankrupt?

Finally, I've been waiting for two years for someone else to understand that this is not a good vs. evil situation. You have Maroun on one side trying to make as much money as possible and you have the Corradino Group, slickly hiding in plain sight behind a bunch of governmental agencies, on the other side trying to make as much money as possible. From 1998 until 2004 everyone was in agreement with the DIBC getting a second span until the Corradino Group start spreading cash around for the DRIC.

[Magnatomicflux]

I dunno. If I were a truck driver, I would want to take the fastest, most direct route...which will be the NITC. Drivers will pay the tolls if it means not going thru 18 stop lights, cross traffic, bottle necks and pedestrians along Huron Church. Plus, trucks are restricted to using only the center lane on Huron Church. And everyone keeps forgetting...Windsor will not allow Matty to build his bridge...period. Is there some legal thing Matty will be able to use to force Windsor to let him build it? Why hasn't he pulled it out of his hat already if there is? Hell.....I can see Windsor putting speed bumps every 200 feet down Huron Church if Matty can build just to push the traffic to NITC. lol
Every aspect of the Canadian Government is on board with this.....something that almost never happens, especially when it comes to spending money. Houses have already been bought and torn down. Environmental type construction [[drains/habitats, etc) have already begun, portions of the freeway are already started.

Who pays for it if it fails? Probably Canada. We started it, we'll probably bite the bullet, cause we're like that. Will tax payers bitch? Yup.....and then we'll get over it. You really think the bean counters in the Canadian Gov havn't thought about all this before dedicating over a billion dollars to a single project? I bet the trucking associations that are pushing this have thought about it as well.

[GOAT]

Since Windsor/Detroit is the most expensive crossing between the two countries, I would welcome a bit of a reduction in toll. Maroun, please go back under your bridge...we've all had enough of your disgusting family including your little seed of a son.

[hhockey]

I am not taking sides but in a way i can understand Maroun fighting the dric. He is a running a business which is about to take a major hit which in turn will result in laying off his employees both at his bridge and his trucking company. I am not worried about his loss of money but feel for the employees who will loose their job once the new bridge is built. He probably isn't concerned about the employees as much as his money, but hay lets have a little feeling for the little people who will surly be in on loosing end.

[SWMAP]

How many employees at the Bridge? Not even hundreds. More like dozens. And how does it follow that the trucking and trucking-related businesses would be negatively-impacted by a competing public-owned bridge to Windsor?
I am counting DIBC employees in my head and I count a few part-timers at the toll booths [[about 10 booths operating at peak times) and some people in the duty- free store and a few people in the offices and some outside maintenance and security. Most of the jobs are low-paid part-time. The DIBC is not labor-intensive. Some of the higher paid jobs were held by relatives of Moroun's sisters.

[hhockey]

If i'm not mistaken one of his trucking companies is directly in the path of the new bridge, which i am certain the state would take under imminent domain, thus the loss of jobs. To be honest I am not sure how many people work at the bridge but i would think its more than a few dozen.

[Sandhouse]

If it's built, the new bridge would pave over a corner of the former Yellow Freight terminal. It's closed - no one works there. Maroun bought it a year or two ago as part of his program to control as much riverfront land as possible. This property allows him to resist selling to the state for the competing bridge, forcing it to go through condemnation proceedings and dragging out the new project as long as the courts will let high-priced condemnation lawyers get away with.

Any jobs at the Ambassador Bridge duty-free gas station are there only because the trade has been diverted away from tax-paying Michigan gas stations and truck stops. Every gallon sold at the Bridge diverts about 60 cents away from the Michigan School Aid Fund and road funds directly into Maroun's pocket, destroying jobs elsewhere in the state.