The $131 Million Tunnel Deal

It was as I suspected could happen in the Tunnel deal with Detroit. The $75 million loan from Windsor to Detroit could have really turned out to be a $131 million transaction. How would that ever have been paid back!

More importantly, the tragedy in this entire transaction is that there did not seem to be any realization on Windsor’s side that if the new DRIC bridge was built, and if DRIC was correct, the Tunnel could lose 25% of its business. How then, could this transaction work, especially if the Detroit Mayor claimed that the City of Detroit was not on the hook if there was a default.

Now we know why Kwame said that the loan was 5% when that did not seem to be the amount that Infrastructure Ontario was going to charge according to their website. Another confusing piece of the puzzle in this transaction.

I had to file a Freedom of Information Application with Infrastructure Ontario to try and get the data on the Detroit/Windsor Tunnel deal. You see, it was such a fantastic transaction that our Mayor would not let the Public know what it was all about nor, it seems, members of the Tunnel Commission or Councillors. I assume that these people have not yet received answers to their questions or else they would have told us.

The secret is now out as you shall see in this BLOG! I can now understand why this has never been revealed and why questions have never been answered.

Our Mayor is a very clever young man. It is very clear right now to me that in certain circumstances there is no financial case to be made for this transaction. But Eddie never said that there was did he. He always talked about a “business case.” He was being “accurate but narrow” again. It is not his fault if we made assumptions that were not true. As I Blogged before

• “Eddie’s continued use of the words “business case” in relation to the Tunnel deal bothered me. It was too deliberate a choice of language that obviously could mean anything to anyone. What the heck could it mean I thought? I assumed that no one would spend $75 million for half the tunnel unless one expected to make a profit on the transaction. I did not know how that could be done so I made the assumption that the deal would never take place.
  
  It was really another “gotcha” because I did not understand what was being said. I had not been listening carefully enough. It is starting to fall into place for me.
  
  Nowhere did Eddie say that the transaction had to make financial sense. Nowhere did he say that we had to make a profit. I realized finally, in fact, that the transaction could result in a Detroit default thereby costing the City money and he could still claim that it met the terms of his business case.”

In this respect, the Mayor could almost never be wrong. Even if this deal made no financial sense whatsoever and cost taxpayers millions and millions of dollars, the Mayor could claim a victory. The business case is the public interest in keeping the Tunnel out of the hands of some dastardly private enterprise group that would cement up the entranceway to the Tunnel to keep away paying customers. Moreover, 5,000 commuters had to be protected, from what I am not sure.

However, the Mayor did slip up once when it was reported:

• "But Sutts and Francis said Tuesday they are being careful not to complete any tunnel deal that could prove costly in the years to come."

Speaking of Mr. Sutts, he and his law partners may still have a concern however because

• “Sutts said previously: "the deal will not be completed until he is fully assured local taxpayers will not be hurt. “We will be extraordinarily cautious so costs of the acquisition will be self-supporting of the project itself. That there will be no need to go to the well of the city to support this transaction."

If the numbers do not prove to be accurate and there’s a shortfall, then are Mr. Sutts and his colleagues liable based on his comment?

Of course, as is usual with Government, I did not get everything I asked for. Accordingly I have had to file an appeal to a waste a few more months of time before I get more information. However where there is a will, there is a way.

I have been able to get my hands on certain documentation that I believe shows this deal to be a bad one for Windsor Taxpayers. It never made sense to me before and it still does not make sense to me now that I have seen more of it.

I have seen what I believe to be the Application to Infrastructure Ontario. It was dated April 30, 2008. Remember that the deal was put on hold by the City. It does not appear that Infrastructure Ontario made a decision whether they would loan the money or not. My suspicion is that they would not do so. I suspect that they have told the City how much they were prepared to loan to the Tunnel Subsidiary. Again, if you recall, I speculated that the amount was in the range of $15-$20M. A far distance from $75M if I am correct.

If what I have seen is true, I can now Blog that the amount of the loan transaction was supposed to be in the amount of $75 million with Infrastructure Ontario. The borrower is the Windsor–Detroit Tunnel Corporation, the City’s subsidiary. The City expected that this deal would be concluded on July 2, 2008. The length of the transaction was 40 years.

The documentation disclosed that there is litigation going on with the Tunnel. I believe it is the litigation that I have described previously where funds are being held back by the operator but I don’t do not know if that is the answer because it is not disclosed in the Application Form by the City. That litigation however is very serious because it is stated that it could impact the ability to pay back the loan. Again, something that the Public has never been told.

The transaction is really for the acquisition of the Canadian half of the tunnel. Effectively, this is allowing our Tunnel Subsidiary to pay part of the purchase price for the Tunnel that was sold to it by the City.

As you may recall the purchase price for that was determined to be slightly over $111 million. There is some kind of note receivable available for about $36.5 million leaving the balance of $75 million for which the loan application was made. It may have been structured this way so that the Province would not be accused of allowing the City to use its money for a US asset directly. There may also be a constitutional reason why it has to be done this way as well. Who knows.

All I know is that it gets into the hands of the City $75 million which they can then turn around and loan to the City of Detroit. There is no guarantee by the City of repayment to Infrastructure Ontario as set out in the Application.

One interesting comment made is that the lifespan of the Tunnel is 200 years. If the Tunnel can last that long, then why was Sam Schwartz complaining about the Ambassador Bridge's health!

The Document that I have posted up above is a Summary of the Financial Analysis regarding the transaction with Detroit. I am not certain who prepared this document ie whether someone from the Administration in Windsor or Detroit. I have to tell you as well that I am not certain how some of these calculations are made, especially with respect to Peak Amount and Peak Year.

There is a concern however that in certain cases the Detroit loan and the loan to Windsor would not be paid off until after 2082 which is approximately the term of the deal with Detroit. In one case the loan with Detroit and Windsor might never be paid off.

Below are the schedules of cash flows for various scenarios. I will let you try and figure them out for yourself. I know that they are very difficult to read. Again I do not know who prepared the tables. Note that in 2 cases, the $0 payments reflect that there is an existing lease with DCTC, or is it Alinda now, for a dozen more years.

Here is the more interesting part of the materials in my possession. The Fiscal Analysis Division of Detroit City Council took a look at the documents and analysed them too. Here are some of their comments:

• 1) the more realistic model of repayment shows that the Detroit loan is paid off in at least 75 years but mostly longer.


• 2) Detroit had a concern because the Tunnel might never ever be free of debt and could be on the hook for collateral and not be an asset free and clear on the books of the Detroit Tunnel Authority


• 3) If the interest rate was above 5%, as it probably would be based on the Infrastructure Ontario website rate at the time, then the $75 million principal amount would increase because there was an existing lease agreement with the Detroit and Canada Tunnel Corporation. There would not be enough money to meet the debt service obligations such that the shortfalls will be added to the principal


• 4) According to Goldman Sachs, the amount of the loan could increase from $75 million to $131 million by 2023.


• 5) There was concern about the economic viability of this transaction for the City of Detroit.

If there was concern on the Detroit side that this transaction did not make sense for them, then why would we enter into it if the other side might default. If that happened then where would the taxpayers of Windsor be in that case? This was supposed to be a great deal for Detroit. If they were nervous about it, then I, as a citizen of Windsor who is the lender, ought to be scared [expletive deleted]....well you can guess the last word if you remember Eddie's choice of language. This is a G-rated BLOG!

Let me be clear. I have no idea what this transaction is really all about or what the final terms were supposed to be or if there were to be guarantees and so on since it has changed so many times. I do not know what happens in the event of a default. Would the City of Windsor take over the Tunnel completely as an example. All that I have are the sketchiest of details, some of which I am sharing with you now.

And that is what troubles me. This is not an insignificant transaction. There are legitimate and serious questions raised on the other side about the economic viability of this transaction that make me very, very nervous.

Who is analysing the transaction here to protect us and to warn us if there are problems? The Mayor? Our Councillors or Tunnel Commissioners? The Audit Committee? Administration? Our outside lawyers? Or is the reality that we have NO ONE and that there are no checks and balances? Are we stuck so that we have to take it on faith that our leaders know what they are doing!

The deal has been hidden from us for reasons unknown by our Mayor. When were we going to see the transaction? After it was signed when it was too late? Were we going to have to file another Municipal Freedom of Information Application as with the Arena Deal and have to launch Privacy Commission appeals? If it is such a terrific transaction for us, then why isn’t the Mayor broadcasting it throughout the entire City so that we can applaud his financial genius.

I’m tired of this. I am tired of him playing entrepreneur with my taxpayer money. I have seen what he did on the East End Arena deal with the Spitfires and the naming rights and I am not happy with that. I know what he did on the Mady Garage deal and the Greyhound deal with respect to the Bus Terminal. Who can forget the cheap parking garage rates either for the Keg. And here is the $75 million Tunnel loan deal, or is it a $131 million deal, that may never ever get repaid.

Where is Council? Why are they ignoring their legal obligations? Why are they not demanding full information from the Mayor? Why are they permitting him to make proposals to the University with respect to their Engineering Complex that are not proposals? Why are they permitting him to waste money on Canal visions when we cannot pay for the Sandwich CIP? Why are they not outraged at his Jobs program in which he wants $100 million to be provided to a Development Commission that has achieved little other than wasting taxpayer money on trips overseas?

Is it any wonder that this City is out of control? Is it any wonder that we have a Council that has been fighting the Senior Levels for years with thousands of jobs and billions of dollars of investment that could potentially be lost? Is it any wonder that the Citizens of Windsor have lost confidence in this Mayor and this Council? We are the laughing stock of Canada!

The person that I blame for all of this is the Premier. He has allowed City politicians to stay in office for an extra year without allowing the Citizens a way of getting rid of them! If only we had the right of recall now.

Lest We Forget

Voice of Council

It is really very remarkable when a whole bunch of different stories on different topics all come together under one theme. Here is a good example of what I mean.

WHERE WERE THE COUNCILLORS

I noticed in the coverage by the TV stations of the Walker Road ribbon cutting ceremony that there were no Windsor Councillors present. Or at least they weren’t visible in the video to me.

I wonder if they were invited to attend the ceremony. After all it was a multi-million dollar project that closed that road down for over a year. I am sure that a number of them took abuse for the road closing so one would have thought that they should get some credit when the road reopened.

In case you are interested, they were invited. Why weren’t they visible in the video? It may be because of scheduling difficulties. Many of them probably could not attend because they were only given notice of the 2 p.m. ceremony on Friday only a few hours before it took place.

It’s Ok though. I do not want people thinking that the Councillors boycotted the session. There was no snubbing of the Senior Levels. Eddie was there, front and centre. Didn’t you see him on TV being interviewed? We heard his Voice.

THE VOICE DEFINED

If any of the Councillors do complain about not being given enough notice so that they could attend the ceremony, ignore them. They knew when they passed the Resolution giving Eddie the right to be the Voice of Council that they no longer had any significant involvement in the border file.

In going through my archives, I found a comment by the Mayor about what his interpretation is of him being the Voice of Council:

Here is something from a CKLW interview in May, 2007 where the Mayor explained what this meant. This was taken in the context of Councillor Halberstadt walking out of an in camera Council meeting where it was alleged he leaked confidential on his internet Blog. Just look at the funny comment at the end as well.

• “members of council by resolution have authorized myself to be the only person to be the lead spokesperson on the border as well as the lead negotiator on the border. And implied in that is that all members of city council through resolution will certainly allow myself to act in the best interests of the corporation and follow their instructions and their directions.
  
  Each and every one of them would like to speak on the border, each and every one of them have different opinions on the border, but given the nature of these issues and the significance of these issues, each and every one of them has certainly through resolution put their confidence in the whole, the collective whole, the collective majority...
  
  And the issue was if we all agree to a resolution, if we all agree to a course of action and you vote for that course of action, implied in that is that you are going to support that course of action…
  
  And that is an issue that we deal with all the time, not just this council but any council. When a council passes a resolution you expect the councillors to abide by that resolution…
  
  we are engaged in a very aggressive process right now where you have senior orders of government that want to impose a cheap solution on us. We have private interests that want to see their position is advanced and all those proposals compromise the city' s position.
  
  And all of those proposals will saddle the city with a position that is unacceptable so members of city council are very astutely, very prudently wanting to make sure that we follow the best course of action and they we do not sell out the city and that we do not prejudice the city's interest…
  
  the issue is that on one of his, on one of his writings he, Councillor Halberstadt indicated that the city was looking to compromise its position. I noticed that he has since then changed that but the issue is that some councillors have taken some serious, serious {inaudible} that the city is willing to compromise.
  
  I can assure you, and anyone who knows the council and knows our position on this file is that we have been consistent and we are not prepared to compromise on anything and we want the best solution for the city.’

It seems that it is now possible for the “C-word” to be uttered in that the Mayor is prepared to compromise. Perhaps therefore it is time to revoke that Resolution since time has clearly changed dramatically.

COUNCILLOR POSTMA’S LAMENT

The poor Councillor. All these people in Ward 2 slamming her for the Interim Control By-law and the permanent anti-Demolition By-law. You remember those by-laws don’t you. They prevented that gentleman in Sandwich from tearing down his garage and building a new one and also prevented some derelict homes from being torn down for the longest time.

She is getting a lot of flak for that and she wants to change things around. You see, some people believe that the real purpose of those by-laws was to prevent the Ambassador Bridge Company from tearing down their homes on Indian Road and on a couple of other streets near their bridge.

We have seen recently both the Councillor and perhaps her Wardmate relax their position somewhat. She appeared to be ready to allow the Bridge Company to tear down their homes. Councillor Jones said:

• “I would like to see the bridge company come to city council and say here are our plans," Jones said. "They might be surprised at the help they would get from the people who represent this area.”

If I was the Owner of the Bridge Company, I would graciously decline the enticement by the Councillors. I do believe that the Bridge Company would be surprised but not in the way that they would have expected after the kind invitation to come to Council.

It is no wonder that Councillor bristling Brister is terrified to appear on John Fairley’s interview show. He was able to get from Councillor Postma what would happen if the Bridge Company came to Council.

The answer is: nothing.

The Councillor at least was honest in saying that she was not sure that her Wardmate, Councillor Jones was in favour, nor was she certain what a majority of Council would do. With respect to the Mayor, she said that his position was that the Bridge Company should bring a proposal to Council to have it discussed.

They have already tried to do that but no Councillor had the decency to extend their presentation period for more than 10 minutes and accordingly they were not able to show their plans prepared by the University’s Green Corridor Group. What makes anyone believe that anything would change?

It seems to me that this is just an attempt by the Councillor to placate her Ward residents by telling them that she is trying to do something. However, when the Majority of Council turns it down, she is off the hook. It did not appear from what she said on Face-to-Face that she had done any lobbying with the other Councillors to gain their support for what she wanted to do.

In any event, if it is so important for the area, then it is up to the Mayor to contact the Bridge Company. After all, my recollection is that the City Planner has said that Administration would turn down their request for a demolition permit until after the CIP was completed.

No disrespect intended to the Councillor but what she is offering to do is meaningless. After all, who is she to speak? It is the Mayor who is the Voice of Council!

One other note of interest with respect to Heritage. She is now convinced that there is no Heritage value whatsoever in those homes. She said twice in fact that the homes on Indian were similar to the vintage of her house and obviously from her comments she did not think that her home was of any Heritage value. On that basis as well, she is not opposed to tearing down the homes

WHERE IS COUNCIL'S VOICE NOW

There is a new calamity that may have to be faced by West Enders it seems. However, the silence is deafening. Why isn’t anyone speaking out on their behalf?

Here are three recent news headlines from CKLW.

I can understand Councillor Postma’s concern. After all of the millions of dollars spent by DRIC, one would have expected them to find out that the area where they want to put their Bridge and Plaza is not contaminated. Yet, the Province will not put their jail there because of pollution fears because of heavy industrialization.

What is going on? Why isn’t the Voice of Council demanding immediate clarification? Why isn’t he demanding studies? How can he in all good conscience suggest that a jail or a bridge and Plaza be built in that area without knowing the full facts?

One needs to ask what our Mayor knows about that area with respect to pollution. After all, it is City property which was purchased by the City. I know that Eddie wants to sell the property owned by the City in that area to the Senior Levels. In fact, one of the reasons that I’ve heard that the jail did not go there was because the City wanted substantially more for the property than the Province thought it was worth.

That is beside the point. I cannot believe that Mayor would offer polluted property where people would have to reside if they were jailed or work whether it was at the jail or at the border crossing. On the other hand, perhaps the Mayor felt that this could be a good example of Brownfield redevelopment and this entire area would make a good test case. Of course if it was heavily polluted, the cost of cleanup could be horrific.

Now that the one hand of the Province has made such a serious allegation about the area, I expect that the other hand of the Province through DRIC will have to make a full investigation of the lands, probably including drilling more bore holes at a cost of millions of dollars, to ensure that this area is suitable. That should cause a major change in the the DRIC timetable, increasing the time for final resolution for many months.

Dwight will not be happy for that delay after giving his vow of the start date just the other day. Even for a Provincial Liberal Government Minister, that is breaking a promise very quickly!

If they choose not to investigate then isn’t the entire Environmental Assessment flawed such that the Minister of Environment will be forced to throw it out.

It seems to me that the Enhancement Project is looking better and better after one DRIC mess after another is discovered.

The Real Border War Has Started

When the Greenlink banner at the front of the City Hall Chambers comes down, will that be the sign that Eddie has surrendered completely? Will the Voice of Council then be silenced forever? Will it be total capitulation or will the Senior Levels be gracious in victory and allow the Mayor to save face?

The phony war is over and the first shot of the real war has begun. What will the Mayor of our small town do now? He asked for it and now he’s going to get it.

Instead of being a participant in the process, he has squandered all of the goodwill that the public generated at the time that he was first elected. I am certain that you remember when the Premier and Prime Minister were eating out of his hand in the good old days. Do you remember when the US Ambassador was so cooperative?

Look at us now, squabbling with everybody and achieving little of what the Mayor has spent millions of dollars trying to accomplish:

• Schwartz report—failed
• Full tunneling—failed
• Greenlink—failed
• Son of Greenlink—another failure.

Backing off, backing off and compromising. The “C” word was always the City’s position. Councillor Valentinis has in effect told us so on Face-to-Face recently. That is why Councillor Halberstadt was dumped on for revealing the Mayor’s strategy inadvertently. Now Eddie is not compromising; he is pleading.

That is what happens when one bluffs and loses. It is the immature way to negotiate. Demand everything and then back off to what you really want. That only works when one is in a position of power, which this City was never in. It only works when the other side does not understand your game.

I am certain that you saw the ad in today’s Windsor Star run by the DRIC team. Unless there is something in there that caves in to the demands of the Mayor with respect to Schwunnels, then Eddie has lost. Just to be blunt about it, the DRIC Road had 1.8 km of “coverage” previously. It still has 1.8 km of tunnels today. If that is not a slap in the face to our Mayor, then nothing is.

Of course, we can assume that there have been secret negotiations going on between the Senior Levels and the Mayor that even Council does not know about. How else to explain the conciliatory tone by the Mayor over the past few weeks.

Expect of course that Eddie will declare a victory at the appropriate time, no matter what happens. How else can he justify the waste so far of almost $5 million of taxpayer money? He will explain it in the same terms that he did about public interest with respect to the waste of the money over the Tunnel deal.

It was not a waste of money. He was keeping the Tunnel in public hands at a cost of over $1.2 million.

Just like with the DRIC Road, there was a nonexistent enemy against which the Mayor had to protect us. Or at least that is his justification for another failed transaction in which he was involved.

I can just hear it now. The Mayor will gloat and say that because of him, Windsor is getting the most expensive road in Ontario with parkland and quality-of-life solutions that no one else in the Province has been able to achieve. He will claim that he knew that he could not get full tunnelling or Greenlink but that he used them as a negotiating tools. He will say that he will press to get back all the money that the City has spent on legal and consulting fees as part of his settlement.

This is the CAW approach to negotiating. Claim a victory when you have absolutely lost. He has learned so well from his role models, Buzz and Ken Sr.

Of course, what will have been achieved, if in fact this most expensive road is ever built, is commendable. The problem is that it should have started by now so that the thousands of infrastructure jobs would have been created already and so that people would not be losing their homes or thinking about moving out West as the automobile industry is dying here.

We would have started our transition to our new economy with the sign that Windsor is open for business if the Mayor had not stalled for so many years. With someone who actually knew what he/she was doing and how to negotiate properly, this road to the border could have been negotiated years ago and probably be almost completed by now.

Instead, we have become the laughingstock of this country. We are the City in Canada who told the Senior Levels and a private investor to get lost even though they wanted to inject billions of dollars into our devastated economy.

In my opinion, this will be Eddie’s legacy as Mayor no matter what he does or does not do until his term ends. He has made our City a joke.

For Eddie to claim that what he achieved would be a victory for Windsor would be a disgrace. However, watch the cheerleaders and sycophants claim otherwise!

So, what is our Mayor going to now? Threaten a lawsuit again or actually start one using our weapon of mass destruction, David Estrin? I doubt it. If Sandra is right, the start of a lawsuit means the end of 15,000 jobs.

I do not believe that our Mayor has the guts to even try that. Certainly from what I am hearing, our Councillors would be against it. The March, 2003 revolution would become public. Our Mayor cannot afford that.

I even heard that some polling was undertaken to see what the attitude of people in Windsor is. I have no idea if this is true or not. However, given the Mayor’s change in his aggressive position, it would seem pretty clear that residents of this City are worried more about the economy and jobs than about Greenlink or the DRIC road. So much for failed advertising blitzes.

I hardly believe, as I have Blogged before, that the Minister of the Environment will reverse what DRIC is doing given the fact that the Minister of Finance and the MITI Minister seemed to be so in favour of what is going on with this “outstanding project.” After all, the Finance Minister has said that “it's time to start." Infrastructure Ontario is here starting already.

If Eddie wants us to believe that his submissions to the Environment Minister will protect our position then he is deluding himself, not us any longer. He is no longer believable on the border file.

The homes on Indian Road, the Interim Control and Demolition By-laws, Councillor Postma's revelation re the Sandwich CIP and Greg Heil's recent "Heritage" resignation just compound his difficulties in that part of the City too.

The Province is calling Eddie’s bluff in the most public fashion possible. They are rubbing his face in the DRIC road. They are daring him to take the step after “threatening.”

It is put up or shut up time for our Mayor. It is payback time for Dwight and Sandra.

How long will Eddie’s real war last? It will be over on Wednesday when the DRIC Draft EA Report is published.

When Fate is against you, then one has no chance of success any longer. Imagine, the Estrin legal fees report coming out at tonight's Council meeting at the same time as the DRIC ad is published. What a remarkable co-incidence!

Border Legal and Consulting Fees

Darn. Buried in the Communications Package again, Item #9 out of 11.

If only there had been a few more days in the last quarter, the fees could have totalled $5 million or more.

Don't worry though. At over $300K in the last quarter, they will top that amount in the next quarter easily. I am sure of it.

Rumour has it that Eddie is well aware now that we are getting the DRIC Road and that Greenlink is dead. One could ask therefore what have we achieved for all of the spending of that money other than the waste of time due to the stalling.

Oh there may be a tweak here and there so that our Mayor can claim a huge victory but in reality the Schwunnels have all been shot down.

What I do expect is that the Senior Levels will pay us some money for being the host community for this project and Eddie will claim victory for that. I expect that the way we will get the money is by overpayment by the Senior Levels on the value of the Brighton Beach lands.

After all, isn't that really the reason why Eddie wants the jail to locate there. If he can convince the Province to pay an excess amount for that land, then that amount would be the precedent for the land that would be used for the DRIC bridge and the Plaza.

Here is what would be fun for the Senior Levels to use as a counter to our Mayor if he gets too greedy. Someone would have to justify why the hundred acres or so at Brighton Beach are worth more than the hundred acres or so that Mr. Fahri bought at the Lear plant where the East End Arena is now being built. That land was purchased for about $8 million. Does anyone believe that Eddie would be satisfied with that amount? I think not.

If you want to ask how I can make the statement about the Greenlink Road, then take a look at Henderson's Saturday column. Most of it is spent justifying the need for having a world-class firm running the DRIC road project. It was only at the end, by the time most people stopped reading the Column, when Gord brings in Greenlink again and in the usual pro forma fashion:

• "Let's not take our eye off the ball. The real issue isn't which company snares those juicy contracts. The real issue is whether the province will come to its senses, put pride and personality aside, and roll out a final design this month that comes close to matching the city's global-calibre, landscape-altering GreenLink plan."

Do you think that Eddie will have the nerve to ask the Senior Levels to re-imburse the City for these costs? Let me see. Eddie can abuse the Senior Levels by playing Perry Mason with their experts, spending money by coming up with ridiculous schemes designed to stall, achieving little, snubbing them and calling them all kinds of names and then expect to be paid back for doing so? Surely the Senior Levels have some principles!

I wonder when Council will ask what the total is for Mr. Sutts' fees and those of consultants to date on the Tunnel deal. It certainly has to be much more than the $1.2 million quoted sometime ago with all the work that has been undertaken.

So far actually this deal has been a success. We don't have the Tunnel!

Working Up The Contractors Now

Whew, I returned from my secret mission just in time. It’s a good thing that a number of contractors read my BLOG. I will explain to them today that they need not get too excited about the Star headline:

• “Job too big for local firms?
  
  City companies fear border work will go to global consortium.”

Everything is being done to work up people on the border file, as has been the history for the last six years, so that the Senior Levels can get exactly what they want and who they want involved. Not only that, we will bless them for it!

When it turns out to be Canadian companies who get the work including local subcontractors, we will all breathe a huge sigh of relief and be so grateful that our Senior Level Governments are using infrastructure to help us get over the hump during this time of economic devastation. It will be characterized as Canada/Ontario’s “New Deal” for Windsor to borrow from FDR.

Why do you think that Infrastructure Ontario came down here so that this story would be published a few days before the Minister of Finance was going to hold his pre-Budget meeting? We need to get the local yokels all worked up so that a couple of Editorials and a Henderson Column can be published before Dwight comes to town.

That would give our Mayor his chance to rant and rave in front of the Minister about the need for local jobs so that he could be our Saviour. That allows Eddie to back off from Greenlink gracefully as the focus shifts from his Greenlink road to jobs. After all, who will remember Greenlink after of these local jobs are created due to Eddie’s advocacy on behalf of the Windsor Contractors.

That ought to be worth a few campaign donations for Eddie’s run for a third term as Mayor and cut out Bill Marra as well. It also ends Eddie's Greenlink fantasy thank goodness. He can still pull out canals for dreaming to replace the Greenlink Schwunnels vision.

Of course, the project cannot guarantee local jobs because it would be illegal in Ontario to do so. Remember the big fiasco over Huron Lodge. Don’t expect Gord Henderson to be our champion either although he may think that you have forgotten what he said before during that controversy:

• “this is about compromising the bidding process to help $30-an-hour plus tradesmen find work at home and assisting local subcontractors in grabbing a piece of one of the juiciest projects to come along in some time.
  
  The question is, where do we draw the line if we start undercutting competitions to keep Windsor folks working? Would it apply to bids to supply police cruisers from Tilbury auto firms? Or asphalt from a company based just outside the city limits? If the process becomes incestuous, with only Windsor firms competing for Windsor contracts, city taxpayers will be the big losers because prices will soar...
  
  By the way, when did out-of-town construction workers become pariahs? These well-paid folks fill our motels and patronize our bars, restaurants and malls. They're a godsend for the hospitality industry.
  
  If council rejects the low bidder Monday, after falling on its face over the Buskers handout, its fiscal credibility will lie in tatters on the eve of budget deliberations.”

We are told already in the Star article that

• “A spokesman for Infrastructure Ontario said he expects the lion's share of jobs will go to local workers regardless of which consortium wins control of the highway project. He pointed to 22 other Ontario infrastructure projects underway where that has been the experience.
  
  "Obviously with this project there will be domestic and international interest," said Steve Dyck. "But at the end of the day, the consortium we believe will be dependent on local resources to get it done, similar to all our other projects."
  
  He suggested that wording could be built in the RFQ to favour use of Windsor-area workers.”

When you see Eddie making his big pitch and Dwight agreeing to consider this matter seriously, because after all he is a local MPP as well, then you will understand that this is all being orchestrated. That is the answer isn’t it so enjoy your weekend.

Of course if the winning Consortium partner has local connections, it makes it even better. No one here would object when the partner hangs out the "Help Wanted" sign. More praise to our local political heroes.

Just to let you know, Infrastructure Ontario views this as its role and why its role is essential to all of this:

• “For some of the Province’s biggest projects, Infrastructure Ontario uses private financing to strategically rebuild vital infrastructure while maintaining public control…
  
  For projects in the range of $50 million to $300 million, or more, the crown corporation is mandated to set project criteria, bring together public and private sector organizations, conduct a procurement process to select a private-sector consortia and ensure the public interest is upheld throughout the life of the project.
  
  Infrastructure Ontario’s aim is to take better control over limited resources through accountability, transparency and investing wisely to bring projects online on time and on budget. Our mandate is about utilizing private-sector expertise, not about privatization, to ensure the expansion and revitalization of public assets.
  
  The old ways of financing and managing infrastructure projects were inefficient. A lot of things were done well, like setting priorities and allocating resources, but too often projects ended up over budget and over schedule. And taxpayers paid for these inefficiencies.
  
  There is true commitment to adhering to expected and planned life-cycle costs throughout all phases, from design and construction to maintenance. For example, payments to the private sector contractor will be linked to a level of service based on specified performance standards.”

Since the DRIC road is a huge project, or is going to be defined that way, then Infrastructure Ontario is going to be involved. And didn't Len Kozachuk of URS, the Engineering firm who acted as consultat for DRIC Canada just become Vice President of Project Assessment for Infrastructure Ontario. You have no idea how hard that information was to get out that organization!

The DRIC road project will morph into a P3 too as I shall discuss in another BLOG soon. Of course, it could have been handled differently, just like the Manning Road work as set out in the same edition of the Star:

• “Subject to funding approval, construction would be done in five phases over 7.5 years, generally moving from north to south.”

However, if it was done that way, then the Province might not have control over who would actually do the building. Too many companies could be involved at that time. As we know as well from that story, the $1.6 billion for the DRIC road should probably be doubled by the time it is done given the way the Manning Road has escalated from $125M-$200M over a one-year period.

As well, I would expect that the road project and the Federal bridge and plaza project would ultimately become one. It would be one giant P3 project because otherwise it does not make sense to have two of them.

The project will be an enormous one because all the numbers that we have heard so far are mere estimates. If the road, plaza and bridge cost around $3 or $4 billion then expect the amounts to double by the time this is finished.

This is after all our Megaproject run amok. It is our Big Dig. The Province and the Federal Government need to be in control of all of this money that will be used by the time it is done. They know as well as you and I do that there will be huge cost overruns from the estimates. They have to control that.

Now this is where the fun begins and local contractors should relax. It is obvious that no local contractor has the skill to plan, build, finance, operate and manage a bridge/plaza border operation and to do the engineering required for tunnels and Schwunnels and whatever. However, they do have some of the skills required and the workforce to do the actual construction job. Really, what is the difference between this and Huron Lodge where local subtrades were involved even though the General Contractor was out of London. There is a need however to ensure that a foreign consortium doesn’t get the work.

That this is an issue can be seen by the fact that Brian Masse is there already pontificating “There ought to be a law.” He has the knack at least to be front and centre as the issue becomes public so he too can claim the glory. I give him political credit for doing the obvious just before it becomes obvious.

What is needed therefore is a major Canadian engineering firm that has the expertise and the background to do all this, a financing source given the huge amounts of money that would be involved, a firm that can do a lot of the work according to the plans that are prepared by the major firm and a workforce that can do all of this.

This is not one small job either and that is why Infrastructure Ontario needs to be involved. The Feds will have an interest as well given their part of the work and they would need a firm that has a reputation of being able to handle such a project.

When this goes out for a Request for Quotation, there will be relatively few groups that will be able to bid on it. I could tell you who I thought was going to get the deal and who all of the partners were but I’m not going to do it as that would take away all of the surprise.

Rest assured that the firm whom I think will be the major player in all this recognized this opportunity. Recently, they positioned the firm quite well to make this all happen.

So, dear contractors, keep on reading the headlines and the news stories because they are there for a purpose. Just recognize exactly what is going on. Make sure that you have a positive and strong voice through your Organizations to make this happen. This is political after all and you know what politics is like. Keep the pressure on the politicians because after all they do not care about how much money is wasted. All they care about is that they are re-elected.

You may as well get in on the action too if there is federal and proovincial money to spread around for the good of the Community. It's not hard to accomplish as our local sucesses with STOPDRTP and WeACT demonstrate.

AND MAKE SURE THAT YOU AND YOUR FRIENDS AND COLLEAGUES KEEP ON READING THIS BLOG FOR ALL THE INSIDE SPECULATION! SEND ME THEIR NAMES AND I WILL ADD THEM TO MY MAILING LIST

Who Is Ontario’s Only Border Friend Now

Let us cut to the chase right away. The only border friend that the Province has is the Owner of the Ambassador Bridge. PERIOD!

Unlike our Mayor who was

• “OK with cabinet shuffle
  
  Windsor Mayor Eddie Francis is cautiously optimistic the Ontario roots of Canada's new transportation minister will bode well for the city on the border file”

I would bet that the Province is extremely pessimistic about its future, especially given the fact that our manufacturing industries are in a tailspin and the domestic automobile industry may completely collapse taking down with them a considerable number of parts suppliers.

Again, this demonstrates to me the Mayor’s failure to see the big picture to this City’s detriment.

Let me give you three good reasons why this City and this Province are in trouble, big trouble. Consider these three new Cabinet appointments by the Prime Minister:

1. Minister of International Trade and Minister for the Asia-Pacific Gateway: Stockwell Day.
   
   
2. Minister of Defence and Minister for the Atlantic Gateway: Peter MacKay
   
   
3. Minister of Nothing and Minister for the Continental Gateway and Trade Corridor: NOBODY.

Two strong senior Ministers for the coastal gateways and NOBODY to help Ontario.

Oh, you have never heard of the Continental Gateway and Trade Corridor before. I must admit that I knew about it but not very much. I read about the term recently in an Ontario Government publication that said that:

• “The Continental Gateway is the multi-modal transportation system in Ontario and Quebec whose roads, rail lines, ports, and airports support Canada's two largest economies that conduct over 71% of Canada-U.S. trade. The Continental Gateway is critical to Canada’s economic competitiveness.”

Frankly, it seems very much like the Windsor Crossing when I saw that this Memorandum of Agreement had been signed about a year ago:

• “The Honourable Lawrence Cannon, Minister of Transport, Infrastructure and Communities, the Honourable Donna Cansfield, Ontario Minister of Transportation, and Ms. Julie Boulet, Quebec Minister of Transportation, today announced the signing of a Memorandum of Understanding (MOU) on the development of the Ontario-Quebec Continental Gateway and Trade Corridor.”

Everybody talks a good game don’t they. We have been hearing for eons down here how important our border crossing is to be economies of the United States and Canada but look at how little has been done by our Governments.

Did you really expect anything any different for the Central Canada crossings after the federal election? Quebec disappointed the Conservatives given their high expectations of so many seats there, especially respecting Michael Fortier who gave up his Senate seat but was not elected. Fortier had become the key border operative for PM Harper and he met with many of the big players on both sides of the river. No one has replaced him so far.

In addition, the Liberal Ontario government was a thorn in the side of the Conservatives as well for seats in Ontario and since they will be in power for another couple of years will continue to be a problem. Who knows, Premier McGuinty and/or Finance Minister Duncan might want to take a shot at the Federal Liberal leadership too. Rumours suggest that Finance Minister Flaherty might want to return to his Ontario roots politically given his strong attacks as Finance Minister against Ontario taxing policy.

To put it into a stark perspective, take a look at this about the Atlantic Gateway and weep:

• “It's hardly a top-of-mind topic, except in MacKay's native province of Nova Scotia, where Conservative Premier Rodney MacDonald has been doggedly pushing Ottawa to support the multimillion-dollar trade initiative for more than two years.
  
  In essence, the four Atlantic provinces are keen to boost trade with Europe and Asia by improving the region's ports, railways and roads.
  
  Last October, Ottawa released a study that said the concept could create 60,000 jobs.
  
  MacDonald has a $300-million wish list that includes plans for new roads, a refrigerated terminal, a twinned highway, a rail line through Halifax, a new industrial park and even the dredging of Sydney harbour in Cape Breton.
  
  MacKay signed a tentative agreement with the provinces a year ago, but the money from a $2.1-billion fund in the federal budget has yet to start flowing. MacDonald is keen to see that happen before his minority government faces a general election - probably in the spring.
  
  On Thursday, MacDonald said he had specifically asked the prime minister to create the quasi cabinet portfolio earlier this month, and he was thrilled MacKay got the job.
  
  "Peter MacKay has been a champion for us in that regard, and I have no doubt that this is going to move the gateway more quickly," said the premier, who supported Harper in his successful 2004 bid to become federal Conservative leader.
  
  "This is one of those opportunities where the federal government has money booked, that they can start spending it in Nova Scotia and start partnering with us to do so."
  
  Two years ago, the federal government committed $591 million over eight years on the so-called Pacific Gateway, but the Atlantic region has had to wait.”

They may not have to wait if the Feds pull out of Windsor and take their money with them.

All that Ontario can see with its gateways into the United States is misery. I won’t talk about Windsor because you ought to know all about that by now. In the Sarnia/Port Huron area, over$400M is required for a new Plaza in the United States that is facing all kinds of difficulties. In Buffalo/Fort Erie, the proposed new bridge there had problems because of bird migration while

• “The Federal Highway Administration, New York State Department of Transportation, the federal Advisory Council on Historic Peservation and the New York State Historic Preservation Office have all declared the [Peace Bridge Plaza expansion] project would have a negative effect on the surrounding area if the it goes through as currently proposed.”

I should remind you as well, dear reader, that the Province completely understands that the Federal Government position is paramount with respect to international border crossings. The Province at one time thought that it might have an interest in the new crossing in Windsor or at least have some kind of a say but they know that it is the Feds who will make all of the decisions.

That is the problem. What incentive is there for the Federal Conservatives to do anything to help out this Province? If Minister Flaherty wants to be the PC’s leader in Ontario, you would not expect him to be too helpful to the Provincial Liberals.

Accordingly, if you are the Premier there really is only one person who can help you: Matty Moroun, the Owner of the Ambassador Bridge and the proponent as well for the Ambassador Niagara Signature Bridge Group in Fort Erie/Buffalo.

Both the Premier and the Owner have the same interest: to continue to allow border traffic to flow efficiently and smoothly in the Windsor/Detroit area and in Fort Erie/Buffalo to benefit the economy of Ontario. The Premier should probably understand now that the Prime Minister is not going to be of any what assistance whatsoever. His focus is clearly on the coastal Gateways and not on the Central Canada gateways that ought to interest Ontario and Québec.

With Mr. Fortier not in the Government, it may well be that the focus on a P3 bridge in Windsor may not be important anymore. Given the election of the Democratic candidate for President, a fight over the Ambassador Bridge is not one which Canada would want to have with the new US Administration. I would expect that Ambassador Wilson will be resigning shortly because I would assume that he is persona non grata because of NAFTA-gate.

As I have stated before, and as the Province would know, with the Bridge Company being a competitor to any new crossing, with traffic volumes decreasing and with the weakness in the banking system, the amount of money available for a P3 bridge may be shrinking if anyone even has an interest. There are other infrastructure projects where money can be put without having a fierce competitor.

The Bridge Company Owner has the advantage that he would be able to raise money for his project here and also in Fort Erie/Buffalo and could not care less about infrastructure in other parts of Canada. Just in passing, the Peace Bridge has already asked for substantial sums of money from Governments on both sides of the river for their project.

His business interests and that of the Premier are identical.

As far as money goes, the Premier should know, since he has been trying to get more money out of Ottawa for infrastructure, that it is a hopeless cause as well. The Province will not be allowed to have any involvement whatsoever in the building of a new bridge nor to have a say in it. He is going to have enough problems trying to find the money for the DRIC road.

I expect that the Province had hoped that they would have an indirect influence on the border crossing if OMERS was involved given the relationship between the Pension Fund and the Province. That was important for Ontario’s position for its economy in the future. However, the Province should know now that some Australians are involved with MDOT, probably Macquarie Bank. That could mean that Borealis may be cut out entirely. Moreover, the opening by Mr. Nobrega of an office in London signals that his interest is investing outside of Ontario and of Canada and not here.

What does this all mean? Unfortunately, some of the economic nationalists are going to be disappointed but they had their chance years ago and did not act. The Province in my opinion has no choice but to start talking with the Bridge Company to protect the economy of this Province.

The easy solution is for Ontario to demand that the DRIC study be tabled because their traffic projections are meaningless and the study itself is flawed. They ought not to have too much trouble with MDOT going along with them after Senator Cropsey got through with them. The Province can however take some comfort from some of the information that came out of DRIC with respect to the DRIC Road. That road is similar to what the City’s WALTS study recommended and which the Bridge Company proved could be engineered. Ontario should immediately build a much lower cost “interim” road to the “interim” Enhancement Project as was always contemplated under the Border Infrastructure Fund.

The two people that should have the lead on this assignment are Sandra and Dwight. They should be told to do the deal NOW. Once Ontario and the Bridge Company have made their deal, then the Federal Government would have no choice but to go along with it. In spite of everything, the Federal Government is smart enough to know when to retreat. Ontario and Michigan are obliged to work together to insist that the two Federal Governments go along with what they want.

The Feds understand better than anyone else that Dan Stamper was not joking around when he said that the Bridge Company had the legal right to build a bridge here and given what is going on at the other major border crossing, they are a formidable competitor there as well.

With Ontario and the Bridge Company working together, the Premier can get exactly what he wants. After all, that is what his new friend should be for.