Making Connections in Michigan

Making Connections in Michigan

Barely two weeks into his first term, Michigan Gov. Rick Snyder threw his support behind a new bridge between Detroit and Windsor, Ontario, giving new hope to supporters.

Financing the $5.3 billion bridge is a problem, but a unique deal with the U.S. Department of Transportation could move the project forward.

Some 25 percent of the nearly US$250 billion in truck-borne trade moving between the U.S. and Canada crosses the border at Detroit. A plan for a new bridge — the Detroit River International Crossing — to replace the 80-year-old Ambassador Bridge has been circulating since 2004. DRIC last year gained widespread bipartisan support among Michigan political and business leaders as a major investment in future international trade. The Canadian government strongly supports the plan, and offered to advance US$550 million to cover Michigan’s share of construction costs.

Shortly after his inauguration, Snyder and Kirk Steudle, director of the Michigan Department of Transportation, met with U.S. DOT Secretary Ray LaHood. The federal highway financing formula requires states to put up 20 percent funding from non-federal sources to get the 80 percent federal share. LaHood agreed to Snyder’s proposal to use Canada’s $550 million as the state’s share. There is nothing in the federal rules that would not allow Canada’s money to be used as the state’s “non-federal” portion of the span’s financing.

“There were a bunch of projects we didn’t have enough money to build,” Steudle said. “The governor has come up with a way to make sure we have the matching funds to get at $2.2 billion worth of federal aid.” Without it, the state would be forced to raise motor fuel taxes or fees, further burdening Michigan taxpayers already beset by an 11.7 percent unemployment rate, more than 2 points higher than the national average.

The Ambassador Bridge is the only span to Canada between Port Huron, Mich., and Buffalo, N.Y. — by comparison, there are four bridges between Buffalo and Fort Erie, Ontario. The Ambassador’s owner, billionaire trucking magnate Manuel “Matty” Moroun, vigorously opposes DRIC, saying it would create unfair competition from a government-owned bridge. State news organizations last year reported Moroun used generous campaign contributions to Republicans who controlled the state Senate to kill legislation necessary to advance the DRIC project.

“Gov. Snyder came in with fresh eyes and looked at the whole deal,” Steudle said. “He looked at hundreds of pages of documents and came up with his own conclusion that this was the right thing to do for Michigan.”

Legislation will be introduced to give the Michigan DOT the authority to enter a public-private partnership for construction of the bridge. It’s similar to legislation state senators killed last year, but the 2010 bill allowed the state to enter into public-private partnerships statewide; this year, the bill will focus strictly on DRIC.

The state and Canada would establish an international commission to oversee the bridge and enter into a long-term — maybe 35-year — contract with a concessionaire that would build the bridge, Steudle said. The state is obligated to build access routes from the existing interstate highway.

Detroit International Bridge Co., operator of the Ambassador Bridge, proposed a second private span as an alternative to the public project. Steudle said he has endorsed the company’s proposal twice. Having two spans at Detroit provides an additional layer of security, and assurance that traffic will be able to flow in case one crossing is blocked.

“At some point, companies are going to ask, why do they want to take the risk of putting their business in southeast Michigan or Windsor. If something happened to the one crossing, they’re out of luck,” Steudle said. “They’re going to make the decision to go to New York, to Buffalo.”

Canada is aggressively touting the volume of international trade with Michigan. The state leads 33 others in trade with Canada. In 2009, Michigan exported $14.9 billion in goods to Canada, while importing $28.4 billion.

DRIC critics say the new bridge targets future economic growth and won’t solve the state’s immediate needs. Traffic across the Ambassador Bridge dropped after new security measures were put in place after the September 11 terrorist attacks. The recession took another toll on traffic, but commercial crossings are rebounding, up 20 percent from 2009.

The U.S. DOT’s Bureau of Transportation Statistics reported that in October 2010 trucks carried $11 billion worth of Canadian imports, up 11.6 percent from October 2009, and $15.5 billion in exports, up 13.7 percent year-over-year. Trucks crossing the Ambassador Bridge accounted for 25 percent of the volume.

“The increase in truck traffic is bouncing back up; it’s higher than what we projected,” Steudle said. “Congestion is coming back, and if we want to continue to be a global hub for commerce, then we have to have the infrastructure in place.”

Contact R.G. Edmonson at bedmonson@joc.com