Shared Border Management

Oh my goodness. Can the border news get any worse for Eddie Francis and his team of advisors. Why he said on CKLW that they are working aggressively around the clock on the $75M tunnel deal.

That deal may be in serious trouble now if they are not careful. I wonder if they have phoned the Government of Canada, their proposed financial partner, on the latest problem to get relief so that their project has a chance of being successful.

I know that some concern has been raised by a few people in Windsor about how the deal can be financed. A small detail, I know!

Let's overlook that the Bridge Co. offered only $20M for a 100 year deal while Eddie offered $75M for a 75 year deal that may not start until 2020 because that is when the Alinda-Detroit management agreement ends. I wonder what his "unnamed" advisors had to say about that.

Assuming that Alinda stays around until 2020, how would Windsor make a penny to pay off the $75M that it has to pay upfront since Alinda receives most of the Tunnel revenues as manager. If Windsor just allows the debt to grow for the next 13 years and then the deal is that it starts paying off interest and principal at that time, then the real purchase price at, say 5% interest compounded, is $141.5M. If the idea is to raise tolls on the Canadian side to pay some of the principal and interest during that 13 years, well you know how much traffic was lost when the tolls were increased last year!

In any event, the issue du jour now is Shared Border Management (SBM). My suspicion has always been that the need for the expansion of the Tunnel plaza has little to do with traffic jams (queuing in the Tunnel solves most of that) but rather has to do with reverse customs or perhaps SBM.

The taking of land for the expansion is needed on the Canadian since room is so limited on the US side.

Rep. Louise M. Slaughter, a Congresswoman in New York State is a champion of SBM. A Press Release of hers describes the concept in this manner:

• "In order to address the emerging security and traffic issues arising from 9/11, Canada and the United States agreed to the Smart Border Declaration in December 2001. The Declaration's aim is to enhance the security of the US-Canada border, while facilitating the flow of low-risk people and goods. Under that Declaration, the two governments agreed on December 17, 2004 to issue a framework to put land pre-clearance in place at the Peace Bridge. The pre-clearance pilot, often called Shared Border Management (SBM), would involve the relocation of all United States primary and secondary border operations for both commercial and passenger traffic from Buffalo to Fort Erie.
  
  The Peace Bridge Authority has made clear that for SBM to be included as part of the capacity expansion project, Canada and the United States must reach a final agreement no later than May 2007. If no decision is reached by then, the Peace Bridge Authority will eliminate SBM from their capacity expansion project and proceed to work with the City of Buffalo on a traditional customs plaza on the US side."

The Peace Bridge does not have to wait until May. The concept is dead now!

• "Carolyn Thompson, (associated press)
  
  BUFFALO, N.Y.–Plans to improve traffic flow at one of the busiest border crossings by relocating U.S. customs inspectors to Canadian soil fell through today when U.S. Homeland Security Secretary Michael Chertoff broke off talks with Canada after more than two years...
  
  With all inspections taking place on the roomier Canadian side, cars and trucks would be able to flow without stopping toward the New York State Thruway after crossing the bridge into Buffalo...
  
  It was unclear today how the development would affect plans for construction of a new, larger Peace Bridge to replace the existing three-lane span."

Isn't that similar to what would have happned at the Tunnel...quicker movement to the Detroit expressways after clearing US Customs here. It might have given the Tunnel a competitive advantage over the Bridge.

Now one can ask...how will the ending of SBM impact the Tunnel expansion and what effect will it have on the rapidly decreasing Tunnel traffic volumes.

Here's the brilliance of the Bridge Co.'s ABPC plans that I have mentioned recently... not only will trucks be cleared faster but also fewer Customs agents will be needed to do paperwork inside the Customs offices for truck clearances. Those agents are now able to be freed up to work the customs booths to clear passenger vehicles more quickly. Again a huge competitive advantage for the bridge! Less waiting means quicker clearances which makes the bridge the crossing of choice!

One final word, the "greening" of trucks may make the DRIC traffic projection numbers fall some more. Trucknews.com reports:

• "A recent study by the Canadian Trucking Alliance (CTA) and Natural Resources Canada claims extended double trailer configurations...represent a fuel savings of 55% when compared to single-trailer configurations...a reduction of 260 million litres of fuel and 730 kilotonnes of greenhouse gases per year....Additionally, the longer configuration could reduce the number of trucks on the road by between 6% and 10%, CTA says."

I'll tell you what is also fascinating. The Bridge Co. did all of this including enhancing security and quadrupling capacity at a cost of a few hundred thousand dollars not the billions that DRIC would have spent. I guess it makes a difference--perhaps one has to think and act smarter--when the money comes out your own pocket-book and not that of taxpayers.

That's why whatever Eddie is planning, and we can only guess what it is, scares the heck out of me. He is being an entrepreneur with OUR money. What kind of knowledge does he have operating a border! If we had listened to him, Sam's Horseshoe Raod would have been built as a truck parking lot at a cost of hundreds of millions of dollars. Instead an expenditure by the Bridge Co. of a few million dollars and opening up booths solved the truck backup problem!