Michigan Gov Snyder's application to US Government for presidential permit for NITC bridge suggests need for legislative cooperation

July 12, 2012
By Peter Samuel

2012-07-12: The US Department of State has posted Michigan Governor Rick Snyder's application for a presidential permit for the  New International Trade Crossing (NITC) bridge, and it reveals new details as to the arrangements envisaged for the controversial project. Some could pose obstacles, notably a commitment that the NITC "connection to the interstate system" approach roads and the interchange with I-75 "will be maintained by the Michigan Department of Transportation."  The NITC bridge site is nearly 2 miles, 3km downstream of the Ambassador Bridge on the Detroit River.

State law presently prohibits the spending of any state funds on the new bridge project and Governor Snyder has said the project won't cost the state taxpayers a dollar, because the Canadians are carrying all the costs.

Not mentioned in the agreement document, the permit application contains this: "The proposed governance structure includes the creation of (a) separate International Authority by the State of Michigan, the Michigan Strategic Fund, and the Michigan Department of Transportation on the Michigan side, Canada and the Crossing Authority on the Canadian side."

It seems unlikely that Governor Snyder can participate in the NITC International Authority and appoint members by executive order only. He is likely to require some state legislation, you'd think.

Isn't the "State of Michigan" more than the Governor? Time will tell.

The duties of the International Authority, the permit application says, include several sensitive issues like:

- "Set(ting) parameters for the recoupment by Canada of the funds it has advanced for the NITC."

- "Limit the liability of the parties."

- "Establish the framework for the equitable distribution of excess toll revenue following
recoupment by Canada of the funds it has advanced."

The "Financial Structure" as outlined in the permit application shows one of the responsibilities of the Canadian government's Crossing Authority as being "Acquisition of Michigan Lands and Construction of Interchange (with I-75.)"

A Canadian government entity in Michigan acquiring land and building a major interchange seems to need some state enabling legislation.

The financial structure also says the Canadian Crossing Authority is to "reimburse (the) Canadian Government from toll revenues for (the) land acquisition and Michigan interchange costs, availability payments and imputed cost of funds."

The Canadian Crossing Authority will almost certainly build the US Federal Inspection Station (FIS.) US authorities would prefer to build and fund their own but budgetary prospects rule this out. They will negotiate a lease.

The document envisages the availability payments P3 to operate the NITC bridge proper to be "40-50 years."

Truck traffic growth of 128% by 2035

Also of interest on traffic it says: "Total traffic volumes crossing the Detroit River in 2010 were 10,844,048 vehicles. This is down from the peak year of 1999 when 22,048,681 vehicles crossed the Detroit River using the Ambassador Bridge and the Detroit-Windsor Tunnel. Forecasts for the Detroit River crossings, by the NITC study team, call for future annual traffic volumes to reach 26,800,000 by 2035, which will exceed the capacity of the existing crossings. Because the existing crossings are currently operating below their maximum capacity, the proposed NITC bridge, if constructed, is not expected to 'induce' new traffic merely by its presence. Such a phenomenon is frequently observed in congested areas when new roads are constructed (or additional lanes are added to existing roads) and the additional demand that was being suppressed by the former congestion manifests itself." (p23)

The projection is for a 2.7% annual average increase in truck traffic  2004-2035 from 3.53m trucks to 8.06m truck, is a rise of 128%.  These numbers exclude the Blue Water Bridge 60 miles to the north of Detroit and competitive with the Detroit River crossings for longer distance traffic. Car traffic on the other hand is forecast to rise quite slowly. Oddly they don't give the numbers, but we guess you could get them by subtraction.

Strong growth of truck traffic is justified in part on an argument that ten year periods of no-growth such as 2000 to 2010 have occurred twice previously and don't reflect a longterm trend.

No threat to financial viability of existing crossings claimed

The application says contrary to the belief of the Ambassador Bridge company that the financial viability of none of the existing crossings is threatened by the new bridge: "Based on Table 2 below, Michigan does not believe that the financial viability of any of the existing crossings is threatened by a NITC bridge." p31

They assume the NITC will charge "comparable tolls" to those in effect at the Ambassador Bridge and Detroit Windsor Tunnel.

Large variation in forecasts  single vs nested logit

They show very different  results for single logit modeling and nested logit, the former based on greater sensitivity to time saving than the latter. (see nearby)

The permit application lays out a seven year schedule for opening the bridge of which some of the Year 1 work could be accomplished still this year (2012.) That would make 2020 the opening year.

Under 'Financing' they say engineering consultants retained by Michigan DOT and Transport Canada developed preliminary cost estimates of $2.15 billion in 2009, of which $1.3 billion was work on the US side and $0.85 billion on the Canadian side.

A P3 Concession Agreement is envisaged by the Canadian Crossing Authority under the oversight of the International Authority) with the Concessionaire being responsible for arranging the financing for the bridge, but paid annually set fees, the Government of Canada taking the traffic and revenue risk.

The Canadian government has committed to an upfront additional investment of up to $550 million to cover costs of the US portion of the project - including the US interchange and the US Plaza (other than the inspections facilities.)

Canada to build, bear losses

"Canada has also pledged to fund annual Availability Payments to the Concessionaire which will be used to operate and maintain the bridge and to repay the Concessionaire's financing costs and provide a return on its investment. Both Canada's additional equity investment and its Availability Payments will be recouped by future toll revenue," it says (p39.)

On the Canadian side of the border, the new 12km, 7.5 mile 2x3 lane expressway-standard access road named Windsor Essex Parkway will run between the bridge plaza and Highway 401 - a $1.4b shadow-toll P3 project between Ontario and a concessionaire, the project jointly funded by Canada and the Province.

The application says Michigan DOT "has already placed the NITC project into the SEMCOG (Southeast Michigan Council of Governments) Long-Range Plan, as required by FHWA regulations."

Michigan is said in a diagram (Figure 14, p40) to have zero capital costs for the project.

The project got a US record of decision - finalizing environmental and planning permits - January 15 2012.

see list of documents with Michigan application:

http://www.state.gov/p/wha/rt/permit/canada/application/index.htm

see copy of Michigan application:

http://www.state.gov/documents/organization/194997.pdf

Crossing Agreement signed June 15 2012:

http://www.state.gov/documents/organization/195000.pdf

TOLLROADSnews 2012-07-12

Further Reading


Leave a comment: