The Newest Tunnel Deal

More on the Tunnel. It is getting so tedious already because we are kept in the dark about everything.

Here is the form of a new Tunnel deal purcolating in the mind of the Detroit Mayor and staff. Why anyone would think that this makes any sense for Windsor taxpayers is beyond me. We risk a major economic crisis if we borrow $50 million (or will it be still US$75 million) to do this deal:

• "[Joe Harris, the city's former auditor general and new chief financial officer] said that selling part of the city's revenue from Detroit's half of the Detroit-Windsor, Ontario international tunnel could bring in up to $50 million.
  
  The Detroit City Council had shot down a similar tunnel plan by Kilpatrick due to missed deadlines and unanswered questions about the deal."

I do not remember that kind of a deal ever being discussed seriously previously. Why would anyone be interested in buying a revenue stream, especially in the amount of $50 million, in an asset that will lose a substantial part of its business if the DRIC Bridge is ever built, up to 25% of it. The revenues at the Tunnel are hardly booming now.

What is completely absurd is that, according to the latest update in the Communications Package respecting the Tunnel Plaza Improvements, nothing is being done of any significance for that. All that we know is that the costs of the Project have increased dramatically for reasons unknown and that there is no agreement amongst the Governments involved as to who will pick up the excess costs. And Tunnel volumes are still falling.

Could it be that nothing is being at the Tunnel at this time since Governments do NOT want a solution. If there was one, then one of the DRIC issues---congestion on the road system---would have been solved! We cannot have that now can we! Keep those traffic tie-ups going.

If Detroit wants to do the same kind of transaction as we had heard about before, Windsor would be required to buy the revenue stream and if there was a deficiency, then Detroit would not be on the hook. Presumably, it would be Windsor's risk. I did not see anything that would suggest that the City could take over Detroit's half of the Tunnel if there was a default.

If Eddie's reason for getting involved in the Tunnel is to prevent private interests from controlling it, this does not achieve his objectives. The City of Detroit could always sell its interest in the Tunnel to someone. Granted, the purchase price would not be significant because of the revenue stream deal, but in the end the Tunnel would not be owned by Detroit any longer.

I would expect that the new purchaser would be looking for ways to find the City of Windsor in default in the deal. It would not be a happy relationship

It would be a terrific transaction for Detroit given the meltdown in the financial system but a horrible one for Windsor if in fact anyone would finance his transaction for us in the first place.

I know that Windsor taxpayers are a friendly Bank for our politicians---giving them our money whenever they ask at a Zero rate interest so they can squander it on arenas, legal fees and canal visions but I do not remember us agreeing to be one for Detroit too!

Just so you don't forget, here are some facts that have been reported in the press over the last few years that scare me when someone talks about the City buying Detroit's revenue stream:

1. The City's former budget chair, Councillor Bristling Brister said to Gord Henderson some time ago that he cannot provide any details but there are major issues pending involving the Windsor-Detroit tunnel that will consume "a significant amount of taxpayer resources." All such "issues" have never yet been revealed publicly by this open and transparent Council.
2. We know that the Tunnel Ventilation Building had a cost over-run of $7 million. What other issues does the Tunnel have due to its age.
3. A US magazine article calls the Tunnel "a unique security risk, which makes Customs and Border Protection officials nervous. For those of you who take the Tunnel, the concern should be obvious.
4. That same article states that US Customs has said that the Tunnel doesn’t meet their requirements.
5. The City's $30 million Tunnel Plaza Improvement proposal creates a giant parking lot to get cars off of City streets but does not move one single vehicle though the Tunnel any quicker. Who knows when or if the public will ever see the final plans.
6. Why would anyone use the Tunnel to cross the border once the Bridge Company's Ambassador Gateway project is finished. The Bridge Company has added new lanes at the Border that almost equal the number of lanes that the Tunnel has now.

The situation is not a happy one at the border either with the passport issue, the no smoking by-law, the strength of the Canadian dollar, price of gas and strong Casino competition from Detroit. Tunnel volumes and revenues have had problems over the past few years. Here is a fascinating quote that was published on February 23, 2005 in the Star:

• Mayor Eddie Francis plans to ask at Thursday's tunnel commission meeting that consideration of a recommended toll increase be put over until next month.
  
  Francis, who is chairman of the commission, said that two councillors are unable to attend and "out of respect for their opinions, I expect to request a deferral."
  
  With tunnel traffic down by about 10 per cent in 2004 and showing no signs of rebounding, the proposed hike from $3.50 to $3.75 and from $2.50 US to $2.75 US are expected to generate an additional $600,000 annually.
  
  The commission will be presented with three options when they deal with the issue:
  
  - If no toll increase is implemented, it will require a $4.45- million transfer from capital reserves to fund an expected deficit in 2005 and $1 million annually in future years.
  
  - If the recommended increase is approved, it will still require a $3.8-million transfer in 2005 and between $400,000 and $600,000 in future years.
  
  - And if tolls were increased to match those on the Detroit side, it will require a $2.5-million transfer this year and between $500,000 and $900,000 from 2006 to 2010.
  
  No matter which option is chosen, it will mean a reduction in the annual dividend paid to the city which is $6.6 million."

This is just the tip of the iceberg as far as I am concerned about the Tunnel. As I said before, we ought not to be focusing only on the Ambassador Bridge when looking at the border. The Tunnel, while not as visible or as controversial so far, has many more stories still to be told.

It is time that the Mayor and Council drop this deal and start solving the many problems that the City has. If, according to Council Postma, we don't have enough money for the Sandwich Community Improvement Plan which has dominated this Council for so long, then we don't have enough money to help get Detroit out of its financial woes. Let's solve our problems first.

Our Mayor was not elected to be a border operator but to administer this City properly. I know that it is not as much fun as playing with $75 million of taxpayer money but he was the one who decided to take on the job. If he cannot handle it because it is too difficult a job for him, he always has the option to resign and let someone else do it.

It is time for this young entrepreneurial foolishness to end already.