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Original article URL: http://bridgemi.com/2012/10/final-arguments-on-proposal-6/
30 October 2012
Proposal 6 is a constitutional amendment to require a public vote before the state of Michigan could participate in an international bridge or tunnel project. The proposal is aimed at the Next International Trade Crossing, a bridge between Detroit and Windsor that will compete with Manuel Moroun’s Ambassador Bridge for freight and passenger traffic. For full Bridge coverage of Proposal 6 — and the other statewide ballot proposals this year — visit our Ballot Mania page. Advocates were asked to make their case on how to vote on Proposal 6:
No: Prop 6
By Pat O’Keefe/O’Keefe & Associates
Gov. Rick Snyder presents the proposed New International Trade Crossing as an integral part of a strategy to transform Michigan into an international hub for logistics and distribution.
As a business owner who specializes in helping others make sound financial decisions, I share the desire to make Michigan a better place to do business. Unfortunately, my extensive review of documents, studies and raw data related to the NITC has led me to conclude the project would be bad for Michigan.
Peeling back the layers of this multi-billion- dollar project reveals overwhelming uncertainty and a startling lack of analysis that calls into question claims of a “free” bridge.
First, there is no demonstrated need for a new public bridge to Canada. The studies supporting the NITC make unreasonably optimistic assumptions about future traffic volumes, ignore correlating economic trends and directly contradict actual crossing data over the past 10 years.
Traffic forecasts are prepared by firms like the Corradino Group and Wilbur Smith Associates; these firms also have millions of dollars in engineering contracts from Michigan on the very projects they were asked to forecast traffic. Is it any wonder these forecasts show the new bridge is needed?
I cannot imagine a private-sector CEO making a $2.1 billion investment without incorporating the most recent data into forecasts, vetting the financing structure to withstand likely revenue and cost variations, and fully considering less expensive and more predictable alternatives.
Second, while the state has spent more than $40 million to study the NITC, it has not published any financial forecast demonstrating its economic feasibility. Why not? My analysis leads me to conclude the NITC is not economically viable.
Due to the NITC’s high costs and the absence of foreseeable traffic to generate revenue, Canada will not recover its spending on the bridge for at least 50 years, if ever. Michigan will not see NITC profits for a similar period due to its debt owed to Canada from the initial $550 million “loan.” Without revenues, how will Michigan fund road maintenance and future improvements to the NITC?
In addition, the government will lose an estimated $747 million from lost toll and tax revenue from the Blue Water Bridge, Detroit-Windsor Tunnel and Ambassador Bridge, with Michigan’s direct loss being approximately $325 million. Michigan’s recent and planned investments in these existing crossings is more than $700 million. Why has no comprehensive analysis been conducted on optimizing use of the existing crossings or taking into account the reduction in truck traffic if the proposed $400 million Detroit-Windsor rail tunnel is built?
Finally, there is a strong possibility the NITC will cost more than estimated. A recent study of large infrastructure projects revealed a 61 percent average cost overrun on such projects. The operative agreement regarding the NITC does not address who will cover Michigan’s cost overruns. And Snyder this week now admitted that he does not have Canada’s promise in a legal document, significantly increasing Michigan’s exposure beyond the $550 million loan Canada has softly agreed to contribute. If Michigan foots the bill, it will directly impact Michigan taxpayers. If Canada covers these costs, it will further delay – or eliminate – Michigan’s ability to ever participate in NITC toll revenues.
Until the full cost of the project is properly vetted, taxpayers will have potential risks and costs associated with the NITC. Snyder owes the public more information than he has supplied.
A “yes” on Proposal 6 will help force the governor to provide the public with more transparency and analysis on the above mentioned issues that raise serious concerns regarding the logic for and viability of building a new bridge.
Editor’s note: The study O’Keefe conducted of the bridge project was paid for by the Detroit International Bridge Co., which owns the Ambassador Bridge.
Bridge welcomes guest columns from a diverse range of people on issues relating to Michigan and its future. The views and assertions of these writers do not necessarily reflect those of Bridge or The Center for Michigan.