CHICAGO — A controversial plan to build a new bridge spanning the busy trade route between Detroit and Canada advanced this week when the Michigan Strategic Fund approved a resolution allowing the issuance of nearly $800 million of private-activity bonds to finance the project.
The approval comes amid opposition from those who favor another proposal to build a publicly funded bridge just two miles away from the proposed private bridge.
The Strategic Fund will still need to sign off on final borrowing terms and structure before the Detroit International Bridge Co. can head to market.
“The bonds will be used to create the best border crossing in North America,” Dan Stamper, president of the Detroit International Bridge Co., said in a statement. “More importantly, no municipal, state, provincial, or federal funds will be required for the project, leaving those dollars available for other community needs that will also help stimulate the weak Michigan economy.”
The company, owned by Detroit businessman Manuel Maroun, wants to build a $1 billion, six-lane bridge that would replace the existing Ambassador Bridge, which the company also owns. The aging Ambassador Bridge is currently the only span connecting Canada and Detroit, the busiest trade route in the country.
At the same time, the governments of Michigan, the U.S., Ontario, and Canada are pursuing their own plan to build a $1.8 billion, mostly publicly funded bridge that would be located about two miles downriver.
Both projects face significant future hurdles, including securing additional permits, approvals, and financing, as well as a possible showdown in court over the competing plans.
Detroit International Bridge has yet to put together a finance team or timeline for entering the market with the bonds. The debt would be paid off with revenue from the toll bridge.
The company won approval from the U.S. Department of Transportation to use the private-activity bonds in early January.
The bonds would be authorized under the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users, or SAFETEA-LU, program. 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.