At Canadian Border, a Bridge to Prosperity

The Wall Street Journal

Billionaire Businessman Is Expected to Win Key Permit Allowing Him to Build a New Private Toll Span Between Detroit and Ontario

 

DETROIT—Billionaire businessman Manuel "Matty" Moroun is poised to move a step closer to tightening his control of traffic across the Detroit River, one of the continent's busiest and most economically vital border crossings.

Mr. Moroun, whose Detroit International Bridge Co. owns the Ambassador Bridge connecting Detroit and Windsor, Ontario, is expected this week to win approval from Canadian customs authorities for a key part of his plan to build a second span over the same stretch of water. By contrast, plans for a competing, publicly owned bridge have stalled amid concerns over the potential cost to taxpayers.

At stake are tens of millions of dollars of annual toll revenue and a critical link in the U.S. auto industry's supply chain.

Customs authorities' go-ahead for a new bridge plaza to be developed by Mr. Moroun—including toll booths and customs-inspection buildings—would all but clear the way for his company to seek a final environmental permit from the Canadian transportation department to build the new six-lane bridge, adjacent to the existing one. The permit is one of the few regulatory hurdles remaining before construction can begin.

"This was the big enchilada," Mr. Moroun's son Matt, vice chairman of the bridge company, said in an interview. "We are now 80% of the way there."

Some $1.2 billion worth of goods cross the U.S.-Canada border each day, a quarter of that over the Ambassador Bridge. Much of the traffic is trucks carrying auto parts or finished vehicles between the two countries.Chrysler Group LLC, which has factories in Windsor and Detroit, moves more than 1,300 shipments across the border daily.

Last year's traffic flow of 6.4 million cars and trucks generated about $60 million of annual toll revenue for the Morouns' bridge company.

The public project, meanwhile, has broad backing from U.S. and Canadian officials and from the Michigan Department of Transportation. But despite pleas from Michigan Gov. Jennifer Granholm and an offer from Canada to subsidize the state's construction costs, Michigan's Senate adjourned this month without voting on a bill to advance the plan.

Political and business leaders on both sides of the border see a new bridge as an essential backup to the Ambassador, which opened in 1929. Their preferred route is the six-lane Detroit River International Crossing, or DRIC, a project that would cost about $5.3 billion. The DRIC would cross the river about three miles south of the Ambassador and would be built and operated by a public-private partnership.

Backers of the DRIC say it would open in January 2016 and generate $70 million of toll revenue during its first year, while speeding the flow of goods between the U.S. and Canada. The Morouns' twinning plan, they say, wouldn't add enough capacity because it would involve mothballing the older span.

To build support for the DRIC, Canada has offered to pay up to $550 million of Michigan concrete construction costs, which it expects to recoup through tolls.

But the DRIC can't move forward until Michigan's state Senate passes a bill authorizing the creation of the public-private company. Only then can Michigan's transportation department begin acquiring land and building infrastructure, a process that could take years.

Republican state Sen. Jud Gilbert, chairman of the transportation committee, said he won't bring the bill to a vote until it sufficiently protects the state if toll revenue falls short. "We are working to try and construct some legislation that ensures the taxpayer won't be on the hook," he said.

That puts the Morouns' timeline well ahead of the DRIC. They control huge swaths of land in Southwest Detroit and have already invested $500 million in upgraded access roads and toll plazas on both sides of the border. That infrastructure is built, though it remains closed pending resolution of a property dispute in Detroit.

The Morouns propose to build a new six-lane span and then close the old four-lane span for refurbishment. It would reopen only to accommodate overflow traffic. Matt Moroun says his company would cover all construction costs and could open the new span in as little as three years after receiving Canadian approval.

With the bridge-plaza go-ahead in hand, his company could seek the final environmental permit within a couple of months. "Best case, we would get the permit sometime this year. Worst case, we would have to wait until next year," Mr. Moroun said.

James Kusie, spokesman for the Canadian transport minister, said there is no specific time frame for a permit approval. He added that the Canadian government still strongly favors the DRIC. "We believe it is in the public interest to construct a new Detroit River crossing that is subject to appropriate public oversight," he said.

Mr. Gilbert said he hasn't given up on the DRIC either. He said he is continuing to work on a revised bill, but declined to say when it might be introduced. He added that if Mr. Moroun begins erecting a second span before the DRIC project gets moving, the entire issue of a new bridge would be up for reconsideration.

Oh! Canada Tries To Corner American Bridge Tycoon

Forbes

New shots fired in the war with Manuel ''Matty'' Moroun.

How much do Canadians hate Manuel "Matty" Moroun, the billionaire owner of the Ambassador Bridge connecting Michigan and Ontario?

So much so that Canada is offering to put up Michigan's share of the construction costs for a new $2.2 billion public bridge that would compete with Moroun's private crossing.

Michigan's Democratic Gov. Jennifer Granholm is delighted by the $550 million offer, saying it would create 10,000 construction jobs for her state, which is grappling with a $1.5 billion budget deficit. Moroun is outraged, claiming Canada is trying to put an Arab-American citizen out of business. He plans to sue Canada under the North American Free Trade Agreement.

The acrimony between Moroun and bridge opponents on both sides of the border has been going on for years. His critics say Moroun is a monopolist who ought to be subjected to government oversight. Moroun says his privately held Detroit International Bridge Co. is better at running the border crossing than any government entity.

The Ambassador, a four-lane, two-mile span connecting Detroit and Windsor, Ontario, over the Detroit River is a critical juncture between the U.S. and its largest trading partner. An estimated 40% of all commerce between the two countries passes over the bridge. But it's 81 years old and in need of replacement.

Moroun wants to build a $1 billion twin span adjacent to his current bridge, then shut down the Ambassador for maintenance and reopen it only to relieve congestion. He'd issue private activity bonds to pay for the construction, which would be repaid with toll revenues.

Ambassador Bridge Committed to Second Span

AP

Detroit -- As the company that owns the Ambassador Bridge announced a deck replacement Friday afternoon, it remained committed to building a second span after it failed to receive an essential permit this week.

"A request for bids for the deck replacement will go out within the next two weeks," said Detroit International Bridge Company president Dan Stamper.

"We expect construction to begin in May and take two years to complete because we will minimize the impact on traffic using this most vital international crossing."

The announcement of the replacement project on the 80-year-old span that connects Detroit and Windsor came late Friday afternoon.

The DIBC said there should be "little or no disruption to traffic" with the majority of the work being done one lane at a time during off-peak hours.

Stamper also said the DIBC is still fully committed to building its proposed Ambassador Bridge Enhancement Project, a privately funded six-lane replacement.

According to Stamper, the DIBC's commitment to the new span stands despite the U.S. Coast Guard's return of permit paperwork earlier this week that could indefinitely delay the start of the bridge. The Coast Guard said it returned the permit due to unresolved land acquisition issues between the DIBC and the city of Detroit.

The Ambassador Bridge remains the No. 1 international crossing in North America, carrying more than 25 percent of the trade between the U.S. and Canada.

According to the DIBC, the bridge carried 4.2 million cars and 2.3 million trucks in 2009, down from 8.9 million cars and 3.4 million trucks in 1999.

Ambassador Bridge Owner Offers State Deal on Aid

Detroit Free Press

Already locked in litigation, Ambassador Bridge owner Manuel (Matty) Moroun, and the Michigan Department of Transportation have found yet another issue to disagree on.

That issue is the local match that MDOT must come up with to qualify for federal highway funds. Short of cash, MDOT estimates it will have to forgo $475 million in federal aid for roads and bridges in 2011 because it lacks about $84 million in local matching funds.

Moroun said he can help. Federal law allows MDOT to count private investment in certain projects as the 20% local match for U.S. aid. Moroun said he has invested roughly $400 million in work on his bridge since the 1990s that could qualify. If accepted by U.S. highway authorities, that could bring in about $1.6 billion in federal aid in coming years.

The private investment is known as "toll credits" because the work was done on a tolled bridge. MDOT in the past has used toll credits generated by three publicly owned bridges -- the Blue Water Bridge, the Mackinac Bridge and the International Bridge at Sault Ste. Marie -- to match federal aid to pay for local bus systems and the like.

Toll credits are used widely by other states as well.

But MDOT balks at using Moroun's toll credits. For one thing, MDOT spokesman Bill Shreck said, Moroun has never presented a full accounting of his investment at the bridge -- something he would have to do for his toll credits to qualify as a match for federal aid.

"When they've offered in the past, they've never, ever submitted the forms," he said.

Another problem is that toll credits are "like Monopoly money," Shreck said. They provide a match on paper but don't provide actual cash. So if they triggered the 80% federal funding, MDOT would still be 20% short of full funding for any given project.

There are other disagreements, but the biggest divide is MDOT's support for other bridges that compete -- or would compete -- with the Ambassador Bridge. In a recent interview, Moroun cited MDOT's twinning of the Blue Water Bridge in the 1990s, and its support for the proposed Detroit River International Crossing bridge in southwest Detroit as MDOT's attempts to siphon off up to 75% of Moroun's toll revenue.

Moroun criticized MDOT's role in the DRIC project, a proposed publicly owned bridge less than two miles downstream from the Ambassador Bridge, as "absolutely a tremendous waste of money."

Moroun's position: He'll allow his toll credits to be used as a local match for federal aid only if MDOT promises not to use that money to support competing bridge projects.

"We've said we'll give those to you when you demonstrate that you're not going to use this money against us," said Mickey Blashfield, head of government relations for Moroun.

This disagreement over toll credits takes place against the backdrop of Moroun's years-long feud with MDOT over rival bridge projects. Today, attorneys for MDOT and Moroun are expected to go before Wayne County Circuit Judge Prentis Edwards for a hearing on Moroun's lawsuit that is attempting to block MDOT's participation in DRIC.

Carmine Palombo, director of transportation for the Southeast Michigan Council on Governments, said Moroun and MDOT need to call a truce.

"I have been trying to suggest that they need to sit down and talk because it's just going to escalate," Palombo said. "The state can't afford this, financially or any other which way you look at it."