CHICAGO — Michigan and Canadian officials Friday announced an agreement to build a new $4 billion, largely bond-financed trade bridge that has Canada taking on nearly all of the financial risk for the massive project.
The New International Trade Crossing will mean a second over-water crossing of the Detroit River between Detroit and Windsor, the busiest trade crossing in the United States. The only span now is an 83-year-old, privately owned bridge two miles upriver from the new project.
"I do a lot of announcements, but this is a really big one," Canadian Prime Minister Stephen Harper said Friday at a press conference with Michigan Gov. Rick Snyder, U.S. Transportation Secretary Ray LaHood, and other several other Canadian and American officials. "It's an investment in the future of the North American economy, in trade and manufacturing, and is a sign of our determination to move forward in a difficult global economy."
In Michigan, the agreement ends years of bitter debate over what will be one of the state's largest infrastructure projects. Snyder, a Republican, had made the bridge one of his top priorities since taking office in January 2011, but lawmakers from his own party repeatedly defeated enabling legislation.
The deal allows the governor to bypass the Legislature in part by creating an International Authority, which will issue tax-exempt debt to finance the project.
Key to the financing structure is Snyder's vow that no Michigan taxpayer money will be used for the bridge and that investors will have no recourse to Michigan's coffers if — as critics predict — toll revenue proves insufficient to pay off the debt.
Canada is so eager to build the new bridge it has agreed to loan Michigan $550 million to cover its costs, dollars that Michigan can use as local matching dollars to snag up to $2.2 billion in federal dollars for highway projects across the state.
Canada has also agreed to make annual availability payments to the concessionaire to cover up-front construction costs and ongoing operation and maintenance expenses, and act as a pledge backing the tax-exempt financing.
"We've gone through many difficult years, and we weren't in a position to do this," Snyder said at the press conference. "[The Canadians are] reaching out to help us, and the project won't cost Michigan taxpayers any money but will help Michigan taxpayers to win."
The project will be structured as a public-private partnership, with the private concessionaire responsible for building, operating, and maintaining the span for up to 50 years.
Michigan will not charge any tolls, but Canada will, with the toll revenue being used to reimburse the Canadian government for the $550 million loan to Michigan and the annual availability payments.
The International Authority will have six members, three appointed by Michigan and three by Canada.
Trade between Michigan and Canada totals $70 billion a year, and involves 237,000 jobs on the Michigan side, according to the Snyder administration.
He said the new bridge would solidify the state's future as a chief exporter, create 10,000 new construction jobs, and reduce costs for the state's domestic auto industry,
The volume of the trade volume over the bridge is greater than the annual trade between the United States and Great Britain, according to Canadian officials.
The project is expected to total $4 billion, including new interchanges, highway connections, and customs plazas. The bridge itself is projected to cost just under $1 billion.
"This is a big deal," LaHood said at the press conference. "It's a big deal for both of our countries, but it's particularly a big deal for people who want to work."