CHICAGO - The battle over dueling proposals to build bridges between Detroit and Windsor, Canada, is heating up following the U.S. Department of Transportation's recent approval of nearly $800 million in private-activity, tax-exempt bonding to help finance a replacement for a developer's existing private bridge.
The approval last month to sell $787 million of debt came a week after the DOT gave final environmental approval for a competing plan also backed by the federal government, as well as Michigan and Canada, to build a bridge less than two miles south of the privately owned Ambassador Bridge.
Both projects continue to face significant hurdles, including securing additional permits, approvals, and financing, as well as a possible showdown in court over the competing plans.
The public bridge proposal is a joint effort by Michigan and the U.S. government and the Ontario and Canadian governments, and is estimated to cost $1.8 billion for the U.S. side. The bridge would likely be financed and operated as a public-private partnership.
The two plans have both been in the works for nearly a decade, even as border traffic has started to decrease over the last few years. The busiest trade corridor in the country, the Detroit-Windsor border currently features two entry points, the 80-year-old Ambassador Bridge, and the publicly owned Detroit-Windsor Tunnel. Both see heavy commuter and commercial traffic - particularly trucks hauling auto parts - and bridge officials reported nearly three million crossings last year. Michigan accounts for half of U.S. total trade with Canada, according to state officials.
Under the plan pushed by local businessman Manuel Maroun, his company, the Detroit International Bridge Co., would build a new six-lane bridge to replace the aging, four-lane Ambassador Bridge, which he owns. The proposal includes a new welcome center on the Detroit side and links to local highways. The existing bridge would remain open for emergency situations or special uses, according to company officials.
Construction would be financed with proceeds from the sale of $1 billion in private-activity tax-exempt bonds authorized under the Department of Transportation's $15 billion pilot program aimed at providing tax-exempt financing help for public infrastructure through private investment.
The program is authorized by the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users, or SAFETEA-LU, which was signed into law in 2005 and expires Sept. 30. The law allows state agencies to finance highway and intermodal freight transfer facilities and bridges with tax-exempt private-activity debt that does not count against a state's private-activity volume cap. Projects must be approved by the DOT.
In early January, the department approved Maroun's request to issue $787 million in private-activity tax-exempt debt to finance the replacement bridge. Last June the U.S. DOT also approved the sale of $213 million of tax-exempt bonds to finance infrastructure work on the Detroit side of the bridge.
Detroit International Bridge Co. has yet to issue any of the bonds for the project, and has so far financed on-the-ground construction work with cash. Before it can sell the bonds, the company needs to secure additional approval from U.S. and Canadian agencies. It also needs to win final approval to issue the bonds from the Michigan Strategic Fund, which would act as conduit issuer.
"We're very excited and gratified that the initial application was approved by the government, and we're moving forward with the details," said Mickey Blashfield, director of government relations for the Detroit International Bridge Co. The company plans to return to the Michigan Strategic Fund this month to lobby for final approval of the $213 million and for approval of an inducement resolution of $787 million, he said.
The company has yet to put together a finance team or timeline for entering the market with the bonds, Blashfield said. The debt would be paid off with revenue from the toll bridge. The company declined to disclose annual revenues.
It also needs to secure approval from the U.S. Coast Guard, as well as possibly other agencies.
"We've done everything that's on the ground. We're still waiting for final environmental clearance from the Coast Guard to be able to move forward with the second span," Blashfield said. "We expect that anytime, literally any day now."
With infrastructure work nearly complete, he said the company is ready to begin building the replacement bridge as soon as possible.
Meanwhile, the governmental bridge plan - dubbed the Detroit River International Crossing project - won its own victory a few weeks ago when the U.S. DOT gave its final environmental approval. The approval comes after five years of reviews, studies, and public hearings.
The so-called record of decision was hailed as a victory by Michigan officials. In a statement, Gov. Jennifer Granholm said a new border crossing would fuel the state's economic recovery and create a more efficient and safe international crossing. Officials estimate the project would create 10,000 construction jobs and more than 30,000 indirect jobs during the building period.
Under the government plan, a new bridge would be built about two miles south of the Ambassador Bridge. Construction would include a new border inspection plaza and interchange connecting it to I-75.
U.S. officials have estimated the cost of their half of the project at $1.8 billion. According to Detroit River International Crossing documents, the costs would be covered by several sources. The bridge itself - the half financed by Washington - would be paid for with a combination of public and private dollars. A private company would use toll revenue to build, operate, and maintain the new span, while a newly formed Border Transportation Partnership would provide public oversight of the crossing.
Officials from the Michigan Department of Transportation did not return phone calls seeking additional funding details.
The U.S. DOT's environmental approval - the final environmental clearance on the U.S. side for the project - means the federal government can begin acquiring land and planning construction for the proposed new bridge. The plan would require the acquisition of a significant chunk of land in the Delray neighborhood in southwest Detroit, and residents are already protesting the move. Reaction has been mixed among Michigan legislators, who would need to sign off on the financing side.
Maroun has also threatened to file a lawsuit blocking the bridge, according to reports.
"In this day and age when state and federal funds are pretty tight, it doesn't make much sense for the state to build another bridge when the concrete has not even dried on our project," Blashfield said.
He noted the somewhat conflicting roles the federal and state governments are playing in both competing bridge proposals. "There certainly are elements of a conflict that are present given the state's regulatory role and its advocacy role for another crossing," he said.
Assuming the public project is able to clear its hurdles, construction is currently scheduled to begin in 2010, with an official opening planned for 2013, according to the Michigan Department of Transportation.
The Canadian government, which remains strongly opposed to the Maroun bridge plan, continues to move forward with its end of the plan, including its own environmental reviews and construction of a new highway to link with the proposed bridge.
