BottomLine => AMER ROADS Detroit tunnel side worth some moolah.... even if hard to find in Syncora financials
Motorists enter the Windsor-Detroit tunnel on Monday, July 27, 2015, from Windsor, Ont. (DAN JANISSE/The Windsor Star)
Comments EmailTweet
Dave Battagello
Jul 27, 2015 - 6:04 PM EDT
Last Updated: Jul 27, 2015 - 7:11 PM EDT
Traffic has continued to move largely unfettered through the Detroit-Windsor tunnel for the past decade.
But behind the scenes, control and operation of the important local border crossing have been far from secure since a joint operating agreement expired in 2007.
Tunnel operations since that time have been renewed by Canadian and U.S. controlling interests on a month-by-month basis. But Windsor’s city council on Monday endorsed an action plan that includes getting a new joint operating agreement in place to better protect public interests on both sides of the border.
The City of Windsor owns the tunnel’s Canadian side.
“There have been many things going on with the tunnel for the last seven to 10 years,” said Helga Reidel, the city’s CAO. “It’s been real difficult for us to have (tunnel operations) settled for the long term.
“Every time we tried to sit down and talk, something else would happen and there was inability to reach a new agreement. Lately, things have settled down.”
Getting a new JOA would keep both sides on the same page in terms of tolls, oversight, infrastructure priorities and staffing.
Motorists enter the Windsor-Detroit tunnel on Monday, July 27, 2015, from Windsor, Ont. (DAN JANISSE/The Windsor Star)
The tunnel’s U.S. side is owned by the City of Detroit, but control for the past 30 years has been given to the private sector in exchange for annual lease payments.
In 2007, the tunnel’s fate was first thrown for a loop when Ambassador Bridge owner Matty Moroun moved to get control of the tunnel’s U.S. side. That was quickly followed by the City of Windsor’s ill-fated and controversial attempt in 2008 to buy control of the U.S. side for $75 million.
Soon after that deal crashed, the tunnel was in limbo as Detroit’s finances faltered and the city headed into bankruptcy.
American Roads LLC — which then held the lease with Detroit to control the tunnel’s U.S. side — also went into receivership.
The tunnel’s control in Detroit now belongs to leaseholder Syncora Guarantee Inc., a Bermuda-based insurance entity. Its lease to operate the tunnel’s U.S. side was recently renewed with Detroit until 2040.
“For the average person in Windsor who uses the tunnel, nothing will change with these negotiations (to get a new JOA),” Reidel said.
“We are trying to align ourselves with Detroit and get a deal done. It would help ensure our revenue stream and keep toll rates under control. This is due diligence to make sure paperwork is in place for the long term.”
Both Syncora and Windsor have retained a private entity known as the Windsor-Detroit Tunnel Corporation to oversee operations, staffing and upkeep.
The city pays $650,000 annually to the corporation as its share of tunnel administration. The city has also contributed approximately $1 million per year over the last 15 years to WDTC for capital expenses, aside from a handful of one-time major expenditures, such as for new lighting or ventilation improvements.
Traffic numbers increased five per cent in the first six months of this year, after remaining stable for several years. Close to four million vehicles use the tunnel annually.
The city has received a dividend from the tunnel corporation of $1 million annually for the past three years, said Onorio Colucci, the city’s treasurer.
Between 2008 and 2012, the city did not receive any funds from tunnel operations due to a steep decline in traffic — affected by tighter border regulations and far fewer U.S. customers heading to Caesars Windsor.
Tunnel profit-sharing peaked between 2001 and 2005, when the city received annual cheques of $6.6 million.
“The $1-million dividend is appreciated, but is not a big part of the city budget,” Reidel said. “Of greater importance to us is maintaining the downtown-to-downtown connection for our commuters. We have 5,000 people per day going to work (in the Detroit area).”
