Michigan Bridge Hangs in the Balance

A bridge owner has bankrolled a campaign to delay a major state-sponsored infrastructure project. For full election coverage, visit the 2012 Election Center.
by | November 2, 2012

Nov. 7, 2012 7:59 a.m. Update: With 94 percent of precincts reporting, 60 percent of Michiganders rejected Prop. 6 to require a statewide vote on a new bridge to Canada.

For full election coverage and analysis, go to Governing's 2012 Election Center.

Earlier this year, Michigan Gov. Rick Snyder and Canadian officials unveiled a long-awaited infrastructure plan that seemed almost too good to be true for Michigan taxpayers: the cost of a new toll bridge between the two entities would be entirely fronted by Canada.

Michigan officials say the proposed $950 million bridge won't cost state taxpayers a dime. Not the structure itself. Not the highway interchanges. Not federal inspection facilities. Not the design, the maintenance, or the operations.

Is Canada being particularly generous? Not exactly. The deal is the result of a conflict between Snyder and his state legislature, which has previously been unwilling to fund the project. Canada is betting that the bridge will be such a good investment that it’s willing to front the money.

Supporters of the project, known as the New International Trade Crossing, say it's a slam dunk for Michigan taxpayers that provides them with the benefit of new infrastructure without the costs or risks. But it might not see the light of day, if one opponent has its way.

Michigan voters will decide on Election Day whether to enact a new policy requiring a statewide election for all new international bridges, including the NITC.

The ballot proposal is being backed by the wealthy Moroun family, which controls the privately-owned Ambassador Bridge and would see its monopoly in the area threatened by the new project.

Snyder has argued that the existing Ambassador Bridge is too narrow and too congested. He also says it's important to have a second crossing in the event of an emergency. State officials as well as the business community have touted the NITC as key to the state's economic future.

A group called The People Should Decide -- which is financially backed almost entirely by Moroun-controlled holding corporation -- is advocating for a vote on the project.

The campaign warns that the state risks spending money on the infrastructure that could have otherwise been used to pay for teachers, cops and firefighters. It insinuates that the project jeopardizes Michiganders' safety because state officials will divert funding for emergency services towards the project (no state official has made such a proposal). It also makes vague warnings of "hidden taxes" to pay for the bridge

That campaign has drawn strong rebuke from a variety of observers,  including the state's top newspapers, which call the ads disingenuous. "It's all nonsense," the Detroit News writes. The Lansing State Journal calls the campaign a "a blatant attempt to bamboozle Michiganders into protecting the selfish interests of a single family." The Detroit Free Press calls it "a new standard for dishonesty and demagoguery in pursuit of the Morouns' financial self-interest."

In a conference call with reporters earlier this month, supporters of the vote proposal say the state has released unreliable traffic projections for the project, which means the bridge might not bring in the revenue that supporters expect. They also warned of potential cost overruns of the project. Yet they failed to articulate how, exactly, that would be passed on to Michiganders, given the structure of the deal with Canada, in which the state's northern neighbor takes on the risk.

Robert Sedler, a law professor and consultant to the Ambassador Bridge ownership, argues the agreement can be amended at any time with the consent of all parties, and in the future Michigan might decide to pay for the project after all. Why Michigan would do that is unclear.

He warns of the legal liability the state would have if the bridge collapsed, says Canada could walk away from the project at any time, and argues that the agreement violates the state Constitution.

Ken Silfven, a spokesman for the governor, says those with a financial stake in the Ambassador Bridge don't have a leg to stand on.

The agreement prohibits Michigan from paying anything toward the project costs, and in the event of shortfalls and overruns, the concessionaire -- which would signed a contract to design, build, finance, operate and maintain the project -- would be the one at risk, not the state, he says.

The deal will be structured so that Canada will guarantee the concessionaire a certain sum of money over a period of years, and the country will reimburse itself from the tolls it collects. In other words, it's up the concessionaire to ensure its business model is such that it receives a return on the investment it makes in the project.

"The binding agreement absolutely says that Michigan has no financial responsibility for any project costs," Silfven said in an email to Governing. "So if it should happen that costs escalate, Michigan has no financial exposure."


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