(Corrects to remove erroneous traffic data contained in fifth paragraph of story published Sept. 14.)
Sept. 14 (Bloomberg) -- Billionaire Manuel Moroun, who beat out Warren Buffett to buy the Ambassador Bridge more than three decades ago, is fighting a plan championed by Michigan Governor Rick Snyder to build a public competitor to the busiest U.S.- Canada border crossing.
Moroun, 84, a Detroit trucking-company owner known as Matty, controls his city’s 81-year-old, traffic-choked main link to Windsor, Ontario. He wants to build his own adjoining six-lane span and has lobbied lawmakers and spent more than $1 million on television ads labeling the Republican governor’s idea a boondoggle.
At stake in the fight, which has drawn in diplomats, the Tea-Party-backing Koch brothers and residents of one of Detroit’s poorest neighborhoods, is control of a crossing that carries one-quarter of the truck commerce between the U.S. and Canada and more than 7 million vehicles a year, according to the Public Border Operators Association.
“This is Canada’s No. 1 national infrastructure priority,” Roy Norton, the nation’s consul general in Detroit, said in a phone interview.
Ford Motor Co. estimates that trucking delays at the toll bridge cost the company $13.7 million in 2010, according to the Center for Automotive Research in Ann Arbor, Michigan.
Under Snyder’s plan, Michigan and Canada would hire a contractor to build and run a Detroit River bridge two miles south of the Ambassador. The contractor would determine financing for the estimated $950 million cost of the so-called New International Trade Crossing.
Canada has offered to foot as much as $550 million of Michigan’s bill for connecting roads, money that might leverage $2 billion in U.S. highway funds for projects around the state. Norton said tolls would repay the sum.
The U.S. and Canadian governments also would build customs plazas, costing about $400 million on each side, according to a Michigan Department of Transportation report.
Today, the Senate Economic Development Committee will resume hearings on the plan, which has tested Snyder’s sway in the state capital dominated by his fellow Republicans.
“As of now, the votes are not there,” said Republican Senator Mike Kowall, who chairs the committee.
Snyder’s bill would authorize a joint Michigan-Canada authority to hire a builder and issue revenue bonds on its behalf to finance the bridge. Any bonds wouldn’t have the state’s credit backing, nor would Michigan spend any money on the span itself beyond paying the contractor.
“It’s very rare for these arrangements to go forward without state assistance,” said Bryan Grote, co-founder of Mercator Advisors LLC, a Philadelphia-based financial adviser on public infrastructure projects.
The four-lane Ambassador was completed in 1929 by banker Joseph Bower. At 7,490 feet, it was the world’s longest suspension bridge at the time, according to the bridge’s website. In 1979, Moroun bought the controlling interest in the bridge company, outbidding Buffett, chairman of Berkshire Hathaway Inc.
Matthew Moroun, 38, is Manuel’s son, family spokesman and vice chairman of the Detroit International Bridge Co. He said a public project would likely put it out of business. Traffic over the bridge has dropped 40 percent since 2000, he said.
Its revenue was estimated at $81 million in 2004, according to a state report. Matthew Moroun said that’s too high, though he wouldn’t disclose numbers.
A public bridge would cost the Ambassador close to half its commercial traffic, according to a state Transportation Department analysis.
“We would have a hard time, if not an impossible time, paying our bills,” Moroun said in an interview.
The family also stands to lose money from its duty-free gas station on the Detroit side, which is exempt from 60 cents per gallon in taxes but charges prices similar to those of taxed retailers.
Moroun’s company plans to build a six-lane bridge next to the Ambassador Bridge, which would be overhauled and kept open. Canada opposes the idea because it would feed truck traffic on Windsor’s congested streets.
Moroun’s arguments, however, resonate in the Legislature.
“Republicans and Democrats have a philosophical problem with putting a private business out of business by building a publicly owned bridge,” said Representative Paul Opsommer, 58, a DeWitt Republican who is chairman of the House Transportation Committee.
Enter the Kochs
A new public bridge is the key to increased commerce, said Lieutenant Governor Brian Calley, who drafted the legislation and is Snyder’s lead lobbyist for the project.
“Everyone wants a private bridge,” Calley said in a telephone interview. “The question is, do they want a private bridge for one politically active family with exclusive access to a monopoly?”
The battle has spread as far as Toronto, where Moroun paid for television ads. Fox TV commentator Dick Morris said in an interview with WJR-AM radio in March that Moroun had hired him to advise the campaign. Americans for Prosperity, the free-market advocacy group founded by billionaire industrialists Charles and David Koch, conducted a public relations campaign, including mass mailings to voters.
“He has co-opted some of the Tea Party movement, which sends shivers up Republicans’ backbones,” said Tom Shields, spokesman for a coalition of business, labor and political leaders supporting Snyder’s plan. “He’s done a pretty good job of taking a stand that this is free enterprise versus big government.”
Attuned to Dollars
Forbes in March estimated Manuel Moroun’s worth at $1.7 billion, making him the 275th richest individual in the U.S. His family contributed $565,000 to state candidates for the 2010 election, according to campaign finance reports. That includes 15 senators and 30 House members.
“Those people respond to money,” said Rich Robinson, director of Michigan Campaign Finance Network, which tracks political spending. “It’s got to be the money-in-politics issue in Michigan this year.”
Snyder’s new bridge is not just an issue in Lansing, it would affect one of Detroit’s poorest neighborhoods, Delray, in the city’s southwest corner. The bridge’s 160-acre plaza would swallow up blocks, some nearly vacant from years of flight by residents.
Help the People
Delray Mechanical Corp., which services industrial equipment, has been in the area for 22 years, said Julie Ebsch, the owner’s wife.
“People hear that you live or work in Delray and it’s like, ‘Nobody goes there,’” said Ebsch, who was mowing the business’ lawn. “It’s blighted because we have problems that need addressing.”
Some lawmakers have demanded that the project pay for improvements, hire residents for construction and limit pollution from trucks.
“There should be some giveback to the community,” said Representative Fred Durhal, a Detroit Democrat.
Snyder is pressing lawmakers to vote before year-end. Even if Moroun blocks the bridge for a year or two it would be a victory for him, said Wayne County Executive Robert Ficano, a Democrat who supports Snyder.
“That’s two years of tolls,” Ficano said. “It might be that simple of a business plan.”
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