Transcript DRIC Update - Marc Brazeau

Detroit River International Crossing (DRIC)
New International Trade Crossing (NITC)
Briefing for the Transportation Border Working Group
November 8, 2012
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Windsor-Detroit Trade Corridor:
Critical for Canada’s Economic Security
• Canada’s Busiest Crossing
– $126 billion of two-way surface trade – 28% of total Canada-U.S. trade
– Over 220,000 jobs in the region depend on this border crossing
– Consists of four crossings: Windsor-Detroit tunnel, Ambassador Bridge,
truck ferry and Canadian Pacific Railway tunnel
Ambassador Bridge
carries a third of
Canada-U.S. truck
traffic
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Rationale for the Project
• Corridor is facing capacity challenges
• Inadequate direct highway access (through central Windsor) and
customs facilities
• New bridge a key priority for shippers and manufacturers
• Only major Ontario-U.S. crossing without significant
redundant capacity for truck traffic
Commercial Traffic
Bridge Crossing
Windsor - Ambassador
Sarnia - Blue Water
Fort Erie - Peace
Queenston / Lewiston
Trucks per day
US Entry
(2011)
Detroit
7164
Port Huron
3970
Buffalo
3433
Lewiston
1916
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Project Location—Windsor-Detroit
I-75
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Canada pursuing a three-pronged strategy
to advance the project
policy
legal
financial
• Negotiated a Crossing Agreement with Michigan for Canada to
implement project
• Continuing outreach and advocacy efforts in Michigan and
Washington
• Vigorously defending legal actions against DRIC
• Developed a legal strategy to shield DRIC from existing and future
legal challenges in Canada
• Working with U.S. government to fund U.S. plaza
• Committed $550 million to fund Michigan project components
• Developing Business Case for P3 arrangement and project
funding
• Purchasing land and undertaking utility relocation
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Policy: Canada-Michigan Crossing Agreement, June 2012
• Framework for each party’s roles and responsibilities
• Project funded and delivered by Canada—no cost to Michigan
– US responsible for its customs plaza
• Buy America waiver to use only Canadian & American iron and steel
• Requires U.S. Presidential permit to become effective in U.S.
“an investment in the
future of the North
American economy”
—Prime Minister Harper
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Policy: Governance Structure
State of Michigan
(Governor)
Michigan
Strategic Fund
Michigan DOT
Government of
Canada
International
Authority
Windsor-Detroit
Bridge Authority
Concessionaire
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Policy: Crossing Agreement
• Windsor Detroit Bridge Authority responsible for management and
procurement
– Responsible for delivery of project on behalf of Canada and Michigan
– Conducts procurement process and enters into contractual agreement
with concessionaire
– Oversees construction and manages operation of the crossing
– Vehicle to flow Canada’s investment to project
• Windsor-Detroit Bridge Authority created October 2012
– Approved by the Prime Minister – Canadian Crown corporation with 1
interim director
– Complete Authority to be established in 2013 – 5 directors
• International Authority reflects shared governance
– 50/50 participation – 3 Canadian and 3 Michigan members (after
Authority fully established)
– Approves procurement process and final agreement
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SECRET
Legal: Bridge to Strengthen Trade Act
• Introduced in October 2012 as part of the Budget Implementation
Act II
– Exempts DRIC construction from requiring certain permits, approvals or
authorizations under a number of federal laws
– Clarifies corporate governance issues and provides minor amendments to
the International Bridges and Tunnels Act
• Provides certainty to private sector bidders that the project will not
be delayed or stopped by frivolous lawsuits on the Canadian side
• DRIC must meet all obligations under relevant federal legislation
pertaining to fisheries, species at risk and navigation
• DRIC must comply with the commitments made in the federal
environmental assessment report
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Financial: Procurement Structure
International Authority
Michigan
Canada
Provides assistance
as requested by the
Crossing Authority
Funding/Payments
Canada
Michigan
Approvals/oversight
as per the Crossing
Agreement
Windsor-Detroit
Bridge Authority
Canadian Port
of Entry
Bridge
MI
POE
U.S.
POE
I-75
Interchange
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Financial – Timelines
• Budget 2007 confirmed Canada’s intention to pursue a P3
– To design, build, finance and operate new crossing system under long-term concession
• DRIC received environmental approvals in both Canada & U.S. in 2009
• Windsor Essex Parkway construction underway, completion expected 2015
–
Budget 2007 committed Canada to contribute up to 50% of eligible capital costs
• Property acquisition and utility relocation
–
–
Several industrial properties still to be acquired in Canada, utility relocation design
beginning
No properties have been acquired in the U.S., utilities also have to be relocated
• Project business case being completed
– Based on an investment grade traffic and revenue forecast; robust project cost
estimates; and market soundings
• Timelines once approvals obtained and pre-procurement work completed
– 18 months for actual project procurement process (Request for Qualifications - Request
for Proposals - financial close)
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– Construction expected to take up to 5 years
Financial: Procurement of U.S. port of entry
Procured as part of the P3 package?
Yes
will be included in P3
GSA works with Transport Canada/Crossing
Authority to determine specifications and
funding
Economies of scale
No
Independently procured by GSA
Canada will require cross default
provisions to ensure the delivery of the
U.S. POE on a consistent timeline to
avoid payment of penalties to
concessionaire
Integrated construction completion
Canada requires a firm assurance from U.S. Government on
construction and operating commitments, including staffing, and
timeframes before proceeding with the project
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Next Steps
• Confirm U.S. commitment for funding and required approvals
• Develop project business case
– Complete U.S. due diligence
– Seek approvals in Canada
• Complete establishment Windsor-Detroit Bridge Authority
• Establish International Authority
• Continue with property acquisition and utility relocation design in
Canada
• Continue to manage legal risks
– Vigorously defend legal and trade challenges
– Passage of Bridge to Strengthen Trade Act
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