CHICAGO — Michigan Gov. Rick Snyder, in his first state of the state address, revived a controversial proposal to create a public-private partnership to build and operate a bridge connecting Detroit and Canada — the nation’s busiest trade crossing.

The proposal is estimated to cost $3.8 billion and would require a governmental partnership between Michigan, Windsor, and the Canadian and U.S. governments. A measure advancing the project last year died in the state Senate amid Republican opposition.

Snyder, a Republican, urged lawmakers to take a fresh look at the project and promised that Michigan taxpayers would not be on the hook for any debt financing it.

Current plans call for the Canadian and U.S. governments to cover most of the costs of the surrounding infrastructure, namely a highway interchange and U.S. Customs plaza.

The cost of the bridge itself is estimated at about $1 billion and likely would be financed by debt from a new bond-issuing authority. The bonds would be backed by toll revenue. A private company would build and operate the bridge.

Lawmakers have spent years debating the project. The main obstacle is the lack of a law in Michigan allowing the government to enter into public-private partnerships for transportation projects.

“Forget everything you heard in last year’s debate regarding the proposed Detroit River International Crossing,” Snyder told lawmakers Wednesday night during the address. “We will present a totally revamped and highly attractive economic development proposal, including a recent agreement from Washington.”

The governor’s office will soon present lawmakers with a bill advancing the project, according to a spokesman from the Michigan Department of Transportation.

Last year, Canada offered $550 million to pay for construction of the interchange and part of the customs plaza. Snyder met last week with U.S. Transportation Secretary Ray LaHood, who agreed that Michigan could use that Canadian contribution  as state matching funds for federal money.

The ability to use the Canadian money as matching funds patches a shortfall of up to 50% in the state transportation budget. MDOT faces the loss of millions of dollars in federal funding in the absence of a local match. Last year the agency issued $40 million of short-term bonds and used the proceeds as a local match to secure the federal funds.

Michigan would use the new federal funding for transportation projects across the state, Snyder said.

Canada will recoup its $550 million investment by taking a larger piece of future toll revenue, according to a spokesman for Transport Canada.

All debt issued for the project would be backed by toll revenue generated by the bridge. Its annual revenue is estimated at $60 million in 2016 and $117 million by 2040, according to estimates from a Detroit International River Crossing study commissioned by the four participating governments.

The study projected annual operating costs of $2.8 million in 2016, rising to $3.1 million in 2040.

Under the current plan, a private concessionaire would build and operate the bridge for a certain number of years and would collect all toll revenue during that period. The governments would not begin to collect money until afterward, the Transport Canada spokesman said.

The finance plan could include a pledge from the Canadian government, and maybe other governments, to guarantee a certain amount of revenue for the private concessionaire.

Project critics note that there is already a private bridge spanning the Detroit River and its owner is moving forward with his own privately funded plan to build a new span.

The owner of that bridge, Detroit businessman Manuel “Matty” Maroun, has filed a number of lawsuits and North American Free Trade Agreement complaints trying to block the government-funded project.

Snyder also asked lawmakers to advance a bill to change the state Emergency Financial Manager’s Act. Public Act 72 is the state’s main tool for dealing with fiscally distressed local units of government.

Snyder said the current act does not allow for early enough intervention for school districts and is too vague about the powers of emergency financial managers. He told lawmakers that his administration would present them with proposed changes to Public Act 72.

“I ask for your early review and passage of this important legislation,” Snyder said. “Vibrant communities and schools are essential to Michigan’s future. Unfortunately, many face unprecedented financial challenges due to past and current economic conditions.”

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.