The Tunnel Business Case

Windsor Councillors are not required or even expected to read reports in order to approve what is to be done. In fact, it would be more expeditious if they don't because if they do read something then there may be questions that need answering. The Spitfires arena deal is a prime example of Councillors not reading the agreement and the consequences that flow from that.

The line last night that was used by the Mayor gives it all away respecting his attitude as far as I am concerned. He has no respect for the Councillors. He has only respect for the process. How else to explain the failure to defer the vote on the hybrid buses so that Councillor Dilkens and others could actually read what was being proposed so they could make an informed decision. Here is what the Mayor said as quoted in the Star:

• "It's not a question of reading a report, but a factor of requirements."

He knew before the first deferral vote when Councillor Dilkens received the Report but yet did not suggest deferral at that time. He only suggested deferring after some discussions off microphone. In other words, he wanted to make sure that all the administrative points re notice requirements were complied with so that no one could set aside the transaction but did not seem concerned with the Councillors' state of understanding or lack thereof. After all, as the City press release says:

• "Mayor Plans and Transit Board to Act"

Is the Tunnel deal any different?

The Tunnel deal is on in Detroit. The deal is off in Detroit. The reconsideration vote was illegal. The vote to set up the Authority was improper in the first place. Why, is there something in the water that local politicians are drinking that causes this administrative mess on both sides of the river!

I am so confused. Why should Infrastructure Ontario know more than Windsor Councillors and Taxpayers of the City of Windsor who may have to fund the Tunnel deal especially if something goes wrong.

• "Meanwhile, discussions between the city and the province to secure financing for the $75-million deal are "extremely preliminary," said Steve Erwin, spokesman for MPP Dwight Duncan (L - - Windsor-Tecumseh), the province's finance minister.
  
  "The city will have to provide a business case. It's our understanding that an application has been filed. It's in the very early stages."

Here is what Cliff Sutts, the City's lawyer has said back in April, three months ago and we have heard nothing of substance:

• "Residents and council in Windsor will soon be privy to more details of the multimillion-dollar transaction, Sutts said.
  
  "I've said all along from square one I will not recommend a deal to the city of Windsor that did not make business sense," he said. "My intention has not changed."

The Mayor again confirmed at the Council meeting on Monday night that no one would recommend the deal unless it is supported by a business case.

Well what is the business case, why can't we be told? Infrastructure Ontario knows. In fact, Council Marra had to record as Councillor Questions the questions that he asked as a Windsor Tunnel Commissioner back in September, 2007 that have never been answered. Why not? What is there to hide?

It appears from what the Mayor said last night that Councillors have been provided with information about the transaction, whatever that means, so they can be blamed if something goes wrong, but they have not been presented with the Business Case. That is not supposed to happen until the transaction is finalized.

Then what is it that Infrastructure Ontario has been given? Is that all wrong now and will the "on hold" application have to be resubmitted with new facts? That will delay the process even more. I wonder if the Detroit Mayor and Detroit Council are aware of this.

Our Mayor is very cute. He said that there have been no "face-to-face" meetings after the Detroit Council action flip-flopping but that some might take place this week. What about other types of meetings, for example by telephone or by videoconferencing? He did not mention those but we will see what took place once we see the City's legal bills.

Eddie is playing a very interesting game. I am sure that you and I believe that a proper business case means that Windsor should only do the deal if we know that we can make a profit on the transaction. Why else would we enter into it and use up scarce City financial resources at a time when this City is facing horrible economic deterioration?

I assume that Windsor has comfort that the Detroit loan will be paid back and that there will be no default. That however does not seem to be something that Detroit is concerned about based on the A-Channel news story. I'm not certain how that can be done since all that Windsor will receive in the first dozen years of the agreement is $700,000 a year from Alinda. If that outstanding interest is capitalized, then by year 13 almost $125 million will have to be paid back over the balance of the 28 years of the Infrastructure Ontario loan.

Increasing tolls may be the answer provided that the Bridge Company decides to increase their tolls as well and that the DRIC bridge when it is built keeps their tolls high. However, with declining volumes as can be seen over the past decade and with the DRIC bridge threatening to take away 25% of the Tunnel business, I'm not certain how that can be done. Just paying back the principal and interest should add on a dollar per vehicle per crossing. I'm having a great deal of difficulty seeing an economic justification for this transaction.

But that may not be the business case at all. Eddie seems to be making the argument that the key to this transaction is keeping the Tunnel in public hands. He is not talking finances at all. It seems that it is important to protect the 5,000 commuters and the few tourists that want to come to Windsor these days. In this version of a business case, losing money at the Tunnel means nothing because we want the crossing to be "public" and it presumably helps our local economy indirectly. I mean, those thousands of tourists that are going to come from Detroit to Windsor to go kart racing during the Grand Prix week are important to us.

No wonder Eddie claimed that the Super Bowl was going to bring in $100 million into our economy while the reality is that it brought a mere fraction of that amount. All of a sudden, Eddie jumped on the Red Bull bandwagon. I'm sure that we will see how important the Tunnel is for that kind of event at the appropriate time too.

Take another example, if those thousands of tourists go back home but stop first at the Duty Free Shop so that its sales rise dramatically, why we should be happy since it is my understanding that we get a cut of their revenue or profits as rent. In this case, it is worth our while to control the Tunnel using taxpayer money even if there is a loss on the deal so that the Duty Free Shop makes more profits so that we can get a bigger amount of revenue to make up the loss. Whew, that gets complicated but then again, that's high finance.

Hopefully, sometime this week, the City's lawyer will get clarification as to Detroit's position. What happens though if he hears the Detroit Mayor say that the deal is on while the Detroit Council says that the deal is off? Presumably, as Councillor Marra told us last night, if Detroit does not agree to put the Tunnel into the Authority then the deal has to be dead. After all, the Councillor told us that this was an integral feature of the transaction.

As you can see therefore, dear reader, a business case can mean whatever it is that Eddie wants it to mean and at whatever time he wants to make it. Not even our Council has been let in on the secret.

I wonder what the Infrastructure Ontario application says because then we would understand what is going on. We might or might not like it. Don't worry though, we won't see it. Probably too much for Windsorites who have trouble with reading anyway given our low literacy rate to understand.