Snyder expected to announce deal to build new Detroit River bridge

Posted on June 12, 2012

Gov. Rick Snyder on Friday will announce in Detroit a deal to build a $2.1 billion Detroit River bridge to Canada, Crain’s has learned.

Details about the announcement haven’t been disclosed, and the governor’s press staff had little to say this morning.

“We can’t confirm any agreement or announcement. As soon as we have news to share, we will,” Sara Wurfel, Snyder’s press secretary, wrote in an email.

The governor and various elected and appointed officials from Michigan and Canada, along with representatives from the auto industry and private sector, are expected to be on hand for the announcement.

Sources familiar with the situation, speaking on the condition of anonymity, confirmed that the announcement is scheduled for Friday.

Snyder has been in talks for some time with Canadian officials on how a deal could be crafted that bypasses the Michigan Legislature, where enabling bills for the bridge project died last fall largely because of Republican opposition.

On May 10, Snyder met in an office at the Canadian Imperial Bank of Commerce building in Windsor to discuss the bridge plan with U.S. Ambassador to Canada David Jacobson, Canadian federal Transportation Minister Denis Lebel, Deputy U.S. Transportation Secretary John Porcari and a deputy administrator of the U.S. Federal Highway Administration.

In a move that may be designed to set the stage for Friday’s announcement, on Thursday, the Ann Arbor-based Center for Automotive Research will release a study touting the expected job creation and economic impact of a new bridge. The study will be unveiled in Detroit, Lansing and Grand Rapids.

The Friday announcement will come the day after the Legislature is scheduled to adjourn for the summer.

It’s expected that Snyder will use the Michigan Strategic Fund as a conduit to build the span, rather than go through the Legislature, sources familiar with the matter previously told Crain’s.

Since enabling bills died in a state Senate committee last fall, Snyder has been seeking a way to authorize Michigan’s participation in the $2.1 billion New International Trade Crossing project without going through the Legislature — where his fellow Republicans have long opposed the span.

The governor’s office repeatedly has declined to discuss specifics.

For the past several weeks, speculation has been that the Snyder administration will use what is known as an interlocal agreement to get the joint Canadian-Michigan bridge project under way.

The Michigan Strategic Fund is an autonomous economic development board that has the statutory ability to help finance a project such as the NITC and has been a party to interlocal agreements.

Michigan’s Urban Cooperation Act of 1967 allows two or more governmental units to enter together into deals — interlocal agreements — for shared services, including transportation and infrastructure, without having to seek legislative approval.

The law permits interlocal agreements with other states and Canada — deals that require approval from the governor rather than the Legislature.

It’s unclear which agencies would be signatories with the Strategic Fund in an interlocal agreement. Likely candidates include any new agency created by the state to oversee the bridge, along with the Michigan Department of Transportation or Transport Canada.

The Michigan Strategic Fund was created in 1984 to promote economic development. An interlocal agreement between it and numerous other local government agencies established the quasi-public Michigan Economic Development 1999.

The state appropriations used to fund the MEDC go through the fund.

The Strategic Fund has the authority to sell a limited amount of tax-exempt private activity bonds on behalf of private companies building projects for public benefit. Such bonds could be some of the financing that a concessionaire would use to build the bridge.

The public-private partnership project would be jointly owned by some type of board or commission composed of Michigan and Canadian appointees, who would oversee the span’s construction — including plazas and ramps — and its operation. A private sector concessionaire would build and operate the bridge itself.

Bills authorizing the Michigan Department of Transportation to enter into public-private partnership agreements are what died in the Legislature last year, and those bills were considered the enabling legislation for NITC. Such P3 agreements are more common in Canada — the $1.4 billion Windsor-Essex Parkway expansion that leads to the NITC site is a P3. In the United States, they have been used only sparingly.

The NITC bridge would link I-75 and Ontario’s Highway 401 between Detroit’s industrial Delray neighborhood and Windsor’s Brighton Beach area.

The I-75 highway interchange is predicted to cost $385.9 million and the U.S. plaza $413.6 million. The nearly $1 billion bridge itself would be financed by the concessionaire, and the remainder of the $2.1 billion price tag is the Canadian portion of the project.

Canada has offered to cover up to $550 million of Michigan’s portion of the project and assume any operational deficits. Toll revenue would cover the capital and operational costs, planners said, and Canada would collect Michigan’s toll share until the $550 million is paid off.

Construction is expected to take 48 to 52 months, backers have said.

By: Bill Shea, Crain’s Detroit Business