CHICAGO - The Michigan Strategic Fund Wednesday tabled a request to issue nearly $800 million of private-activity tax-exempt bonds on behalf of a company planning to build a bridge spanning the busy trade route between Detroit and Canada.
The fund's move follows an ongoing debate over two separate proposals to build international bridges just a few miles from each other on the Detroit River.
The Detroit International Bridge Co., a private company owned by local businessman Manuel Maroun, sought the fund's assistance to help finance a new $1 billion, six-lane bridge to replace the aging Ambassador Bridge, which Maroun also owns.
At the same time, the governments of Michigan, the United States, Ontario, and Canada are pursuing their own plan to build a $1.8 billion, mostly publicly funded bridge that would be located about one mile downriver.
On Wednesday, the 11-member Strategic Fund board postponed voting on an inducement resolution considering Maroun's request that the fund issue $787.4 million of private-activity revenue bonds to finance construction of the bridge. The fund's decision came after several state legislators who favor the publicly funded bridge testified against the request.
Fund spokesman Bridget Beckman said the board, which includes state Treasurer Robert Kleine, wanted answers to a number of outstanding questions before voting on the resolution. She added that the board would "be open to taking it up again at a future date."
The company won federal approval from the U.S. Department of Transportation to use the private-activity bonds in early January, and faces a March 6 deadline to secure the state fund's approval to act as conduit issuer for the deal.
The company will hold a conference call today with the Strategic Fund's board to answer questions and determine whether the board will agree to a special session to reconsider the issue before March 6, according to Mickey Blashfield, director of government relations for Detroit International Bridge.
The company will also consider whether it can "modestly extend" the U.S. DOT's March 6 deadline, he said.
"There are definitely some ugly politics here, but the bottom line is, this isn't a referendum [on the bridge proposal], this is a vote on an inducement resolution," Blashfield said.
Even if the company is thwarted in its attempt to use tax-exempt bonds, the new bridge will be built, he added.
"If we have to go to market and pay a higher interest rate or use [existing operating] funds, it's not going to stop the project," he said. "It's just that the state won't have the opportunity to demonstrate that it's supportive of private investment here."
The company 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 private-activity bonds would fall under a federal authorization under the U.S. DOT's $15 billion pilot program aimed at providing tax-exempt financing help for public infrastructure through private investment.
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.