Michigan Bridge Returns

CHICAGO — Michigan Gov. Rick Snyder is floating a draft bill to advance a controversial and long-stalled $3.8 billion, partially bond-financed bridge spanning the busy trade route between Detroit and Canada.

The legislation would create a new bond-issuing authority that would be able to enter into a public-private partnership for up to 50 years to build and oversee what Snyder has dubbed the New International Trade Crossing project.

The authority would be allowed to issue 50-year tax-exempt bonds for the project, which would include the bridge, highway interchanges, and a new customs plaza.

But the bill limits risk for Michigan taxpayers by requiring that all debt be backed solely by project revenue and prohibits the issuance of any debt that carries the general obligation or moral pledge of Michigan or a political subdivision within the state.

The project’s cost is estimated at $3.8 billion and financing it would require a partnership ­between Michigan, the city of Windsor in Canada, and the Canadian and U.S. governments.

The bridge itself would cost about $1 billion, and would be financed, built, and operated by a private company. Toll revenue is estimated at $60 million in 2016 and $117 million by 2040, according to estimates from a study commissioned by the four governments.

Snyder’s bill revives a years-old debate that has polarized the Michigan Legislature mostly along party lines, with Republicans opposing it. Critics of the plan point out the presence of the privately owned Ambassador Bridge just a mile downriver and that the owner is moving forward with his own privately funded plan to build a new span.

Supporters say traffic on the trade route is projected to double over the next 20 years and that the project will create jobs and secure Michigan’s role in controlling what is already the busiest trade route in the U.S.

The main obstacle to moving forward has been the lack of a law in Michigan allowing the government to enter into a public-private partnership for transportation projects.

Snyder’s bill would create that authority.

The project could now have new life as Snyder, a Republican, pushes Republican lawmakers to support it, and after U.S. Transportation Secretary Ray LaHood approved the governor’s request to use a Canadian loan of $550 million as state matching funds for federal dollars.

Canada offered the money last year to help pay for construction of the interchange and part of the customs plaza on the U.S. side. The ability to use the loan as matching funds for federal dollars would help Michigan patch a shortfall of up to 50% in the state transportation budget.

Snyder announced his support for the project during his first state of the state address in January. The new bill follows his vow to limit the use of tax money for the project.

Debt service on the revenue bonds would be payable solely from project revenue, and the debt would not feature a general obligation or moral obligation pledge of Michigan or any of its political subdivisions. The state would be restricted from spending money, including making so-called availability payments to a private partner, except for certain administrative costs for eminent domain or planning and procurement costs.

The Michigan Department of Transportation would be allowed to spend money to maintain highway interchanges or other facilities besides border inspection plazas, that are included within the crossing. MDOT would also be able to act as a conduit issuer for the authority if needed.

If approved, the act would take effect June 1, 2011, and could be repealed in January 2015 if the authority has not entered into a public-private partnership by then.

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Transportation industry Michigan
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