When Matty wins, we all lose. 

How political clout beat the public interest

When supporters of the proposed Detroit River International Crossing gathered for a press conference in downtown Detroit this past April, a startling array of often discordant voices were singing in sweet-sounding harmony.

There were Democrats and Republicans. There were a number of trade unionists as well as business interests ranging from the local Chamber of Commerce to Ford Motor Co. There was the African-American mayor of Detroit and white political power brokers from the other side of the Eight Mile divide. There were Canadians and Americans. All standing shoulder to shoulder as they joined in unison to praise the proposed bridge they said needs to be built between the Motor City and Windsor.

The current governor, Democrat Jennifer Granholm, and a few conservative members of the Legislature were there. Jim Doer, the Canadian Ambassador to the United States, was there as part as a far-ranging coalition that also includes the Michigan Association of Counties, the Canadian Auto Workers and the Ohio Senate. It was indeed, as one business publication covering the event reported, an "all-star lineup."

But the fact that they had come together spoke volumes, not just about the importance of the issue but also about the power and influence emanating from one octogenarian billionaire — Manuel "Matty" Moroun, whose privately controlled Detroit International Bridge Company owns the Ambassador Bridge.

That bridge provides a crucial link in the chain of international commerce, a key point in the corridor that accounts for 25 percent of all the trade that flows between Canada and the United States. As a conduit for semis carrying freight, it is a near-monopoly that, according to a recent article in the Wall Street Journal, generates $60 million a year in toll revenue.

The bridge, however, is only one piece of Moroun's empire, which includes trucking and insurance businesses, as well as real estate and duty-free shops. So, even without the Ambassador, the Moroun clan wouldn't be reduced to collecting aluminum cans in order to make ends meet.

But it is the bridge that he is most associated with, and competition from the DRIC — which would be publicly owned and privately operated — is portrayed as a cataclysmic threat to all things Moroun. The scope of DRIC's perceived menace to Moroun and his family was made clear at the April press conference when Matty's wife Nora made what the trade publication Toll Roads News described as a surprise appearance at the event.

"You have somebody who operates a crossing that has retained a No. 1 ranking since we owned and operated it. Now the state of Michigan and Canada want to take 70 percent of our business," Nora Moroun is reported to have said. Making the most important border crossing in North America sound like a vulnerable mom-and-pop grocery, she added, "They want to destroy our family business."

Given that perspective — even if exaggerated — it's not surprising that Moroun and his minions would pull out all the stops in an attempt to keep the DRIC project from moving forward.

Those efforts culminated earlier this month, when legislation needed to take the next step in making the DRIC a reality failed to make it out of committee after Republican leadership reneged on a promise to allow an up-or-down vote on the Senate floor.

Which means that Matty Moroun wins. At least temporarily.

He wins because it puts him in a position to convince a new group of legislators and an equally new governor that the DRIC is dead and that, if they want to fend off competition from border crossings located elsewhere, then his new bridge is the only game in down.

And though he is locked in what has been a lengthy battle to build a second bridge, facing significant opposition on the Canadian side and permitting problems on the American side, he still wins, even if that second bridge of his never gets built. Because every day he delays progress on the DRIC, he profits. The longer the hoped-for bridge remains just a hope, the more millions he continues to rake in by maintaining his grip on cross-border traffic and the tolls it generates.

"Delay works in the bridge company's favor," says Sarah Hubbard, senior vice president of government relations at the Detroit Regional Chamber of Commerce. "Delay does not work in the region's favor. Or the state's favor."

The view is much the same from the other side of the river. As Brian Masse, a member of the Canadian Parliament from Windsor and a vocal DRIC supporter, points out: "He wins, and everyone else loses."

But his victory in the long run, no matter how much he wants to convince people otherwise, is anything but inevitable. His camp may claim that the DRIC is dead, but it is not. And its importance — to the city of Detroit, the entire region, and the nation as a whole — is an issue that is far too important to allow him to hold sway and dictate the terms of the debate.

 

River of trade

There is one thing everyone agrees on: Any sustained disruption to the flow of goods across the Detroit River would be an economic catastrophe. Automobile manufacturing — which relies on just-in-time deliveries to keep assembly lines moving smoothly — would screech to a halt. As the Build DRIC Now Coalition points out, with $43.8 billion in trade moving through the Detroit-Windsor corridor annually, more than "450 major Michigan businesses from Holland to Hazel Park" count "on the free flow of trade with Canada to keep their businesses competitive."

Which is a main reason why, after the 9/11 terrorist attacks, a bi-national effort to create "redundancy" in the corridor began.

This history was outlined in a November letter Canadian MP Masse sent to the Republican leader of Michigan's Senate, Mike Bishop.

"Following the heinous event of September 11, 2001, border procedures, infrastructure vulnerability and security created further complications to efficiently run our aging border infrastructure."

Initially, Moroun's Detroit International Bridge Co. opposed these efforts, claiming traffic volume didn't warrant a second bridge. But, as the effort progressed, the bridge company attempted to get in on the action, proposing a second span be built adjacent to its existing Ambassador Bridge.

But that proposal was eventually rejected the bi-national DRIC study group. It was rejected in large part because having two bridges side by side failed to provide the kind of protection necessary to the flow of trade should disaster — either natural or man-made — strike.

Security expert Stephen Flynn says the decision to seek another crossing some distance from the Ambassador was a wise one.

As president of the Center for National Policy, a Washington, D.C.-based think tank that specializes in infrastructure and homeland security issues, Flynn says that, viewed from the perspective of a terrorist looking to inflict the most economic damage possible, "You would be hard put to find an asset more important than the Ambassador Bridge. No one has turned over a rock in Afghanistan and found a note saying they are going after the Ambassador Bridge, but I would say it is at the top of the list of attractive targets."

And having two bridges right next to each other would make it even more attractive, he says.

It's not just the bridge itself, he explains. An attack that would cause shutdown of roads leading to the bridge, for example, or customs or immigration facilities, would also lead to a significant disruption in the flow of goods.

On the other hand, having separate bridges makes it less likely either would be targeted; taking out just one wouldn't completely shut down international traffic.

And an attempt to attack both bridges would involve much more planning, coordination and surveillance by more people. As the logistics of an attack becomes more complicated, says Flynn, the "footprint becomes larger" and is more likely to be uncovered.

"Building extra capacity further away makes more sense."

Speaking from a national security perspective, Flynn says, "They should have built extra capacity 10 years ago." And the delay in moving ahead "is not a very responsible position to take. The overarching goal should be to advance the security of the country. The stakes here are quite high, not just for the local area, but for the broader national good."

What's especially disturbing, he says, is that as the debate drags on al-Qaeda and its affiliates are becoming increasingly focused on creating economic destruction.

Flynn's observations highlight a devastating hypocrisy on the part of the bridge company.

After the DRIC study group decided against "twinning" the Ambassador Bridge, the company set out on a dual course. On the one hand, it began pursuing construction of a twin span on its own. It also launched an all-out effort to derail construction of a competing publicly owned bridge nearly two miles downriver near Zug Island in the Delray neighborhood.

The result is that, if Matty Moroun were to have his way, there would be two bridges next to each other — creating an extremely high-value "big bang" target instead of the more complicated target of two separate bridges that would serve as a deterrent to terrorism.

The hypocrisy comes from the fact that the fence the bridge company put up in Riverside Park — taking a 150-foot stretch of publicly owned land the company needs in order to build its second bridge — is being justified by the claim that the fence is needed to deter terrorists.

As Metro Times has previously reported, although the signs placed on that fence by the bridge company indicate that trespassing in the area is prohibited by order of the Department of Homeland Security, government officials within the department previously have consistently said they never authorized the company to put up either the fence or the signs.

Although one judge has already ruled that the bridge company is illegally occupying the parkland, the company has appealed that decision and continues to use the national security argument in court as a rationale for fencing off public property it doesn't own.

(In addition to the Riverside Park lawsuit, a Wayne County Circuit Court judge ruled recently that the bridge company illegally utilized a portion of city property — a section of 23rd Street — when constructing a truck plaza adjacent to the bridge. Another judge is considering finding the company in contempt for allegedly failing to abide by an agreement with the state to build an elevated truck ramp that would keep truck traffic off of surface streets in southwest Detroit.)

Another irony in all this is that the patriots on the Republican side of the aisle in the Michigan Legislature — with outgoing Senate Majority Leader Mike Bishop in the lead — were able to derail, at least for the time being, progress on construction of the DRIC bridge downriver.

To accomplish that obstruction, they had to justify refusing an offer of financial help that proponents say would have allowed Detroit and the rest of the state to reap the financial benefits of a new bridge while avoiding any risk to the state's taxpayers.

 

Canada steps in

In May, despite all the political firepower on display at the press conference the previous month, it became clear that the depth of Michigan's budgetary woes was going to make the DRIC project a tough sell in the Legislature.

The cost of the entire project is pegged at $5.2 billion, but little of that would have fallen on the state's taxpayers, even in a worse-case scenario. The Canadian and U.S. governments would finance much of the project's costs — things such as tollbooths and customs facilities. The state's portion would be primarily limited to its half of the actual bridge construction, projected to be as much as $1.2 billion for the entire span.

To pave the way, Canada offered to cover Michigan's share of the tab — up to $550 million. The money, generated through tolls, would be repaid over time.

Senate Majority Leader Mike Bishop (R-Rochester) initially promised to allow the issue to come to the floor for a vote after authorizing legislation was narrowly approved by the Michigan House on a largely party-line vote.

Bishop then reneged on his promise. His spokesman told Metro Times that the about-face occurred because the Michigan Department of Transportation (MDOT) failed to provide the Legislature with all the pertinent traffic study information.

According to published reports, concerns were expressed by some in the Legislature that MDOT was concealing information that tolls would not be enough to cover construction and operating costs, and that Michigan taxpayers would end up subsidizing the project.

MDOT spokesman Bill Shreck tells Metro Times there was no withholding of information.

State Rep. Rashida Tlaib is a Democrat who represents the southwest Detroit neighborhood where the Ambassador Bridge is located, She says she supports the DRIC, but only if the final plan includes measures designed to help her constituents. She says it wasn't worries about the proposed span's financial viability, but rather Moroun's largesse that persuaded legislators to vote against the DRIC bill.

It is important to note, she says, that approval of the legislation would not have automatically meant that the DRIC would be built. Rather, the measure would only have allowed MDOT to enter into negations to create a public-private partnership.

That partnership, she said during a recent press conference, was itself a compromise. Asked by Metro Times during that event why the project couldn't have been entirely public, both she and Canada's Masse noted that the public-private partnership was proposed in an attempt to help gain support from conservatives.

"The public-private partnership — that's not a Democratic concept," she says. "That's a Republican idea."

Even so, with Republicans in control of the state Senate, the bill sat in committee throughout the summer and fall. Then came Election Day, and a stunning victory for the GOP. Along with gaining a supermajority in the Senate, Republicans took control of both the House and the governor's office from the Democrats.

"Look at what happened here," she says. "You have Mike Bishop promising an up-or-down vote, and then, all of a sudden after the election, you have the leadership saying, 'No, no, we're not going to do it.'"

In December, Democrats in the Senate made one last attempt to get the measure to the floor for a vote, but fell far short.

The consequences for Michigan, Tlaib says, are potentially devastating.

With Michigan bearing the burden of one of the nation's highest unemployment rates, failure to construct the DRIC means there won't be 10,000 new construction jobs on this side of the river pouring concrete piers, erecting girders and stringing suspension cable. Neither will there be the 25,000 new, permanent jobs supporters of the project say it will generate over the next 20 years.

There's another consequence of not building the DRIC, says Canada's Masse:

"It sends a chilling effect to those who might have been willing to invest in our north-south corridor. There's no doubt that when investors look at retooling old plants or building new ones, one of the things they look at are infrastructure capabilities."

Hubbard, of the Detroit Regional Chamber agrees, saying, "It is a real issue. Buffalo already has four bridges" crossing the Niagara River into Canada. "They are pursuing the same kinds of industry we in Michigan are — the auto industry and other logistic-type carriers. And those industries are going to take the options that have the lowest costs and the least amount of waiting time at the border.

"These companies think long-term when deciding to open or close a plant. And it's the future we are concerned about, as far as potential growth. As the economy is going into a recovery, we want to be able to catch that uptick."

Given all that, how could a majority of the Legislature not have jumped at that deal being offered by Canada?

It is possible that concerns about traffic numbers and hidden subsidies laying in wait for the state's taxpayers are heartfelt — although even the Detroit Chamber's Hubbard contends that MDOT provided legislators with credible info. And Tlaib says she wants to give her fellow lawmakers the "benefit of the doubt."

But asked what the overarching lesson of this has been, she replies: "We have steel workers who haven't gotten a paycheck in two years, and to have legislators turn their backs on a project that would have put 10,000 people to work is very disappointing. The lesson I learned as a freshman legislator is to never underestimate the power of special interests."

And when it comes to Matty Moroun and the Detroit International Bridge Company, that power is considerable.

According to a recent analysis of federal and state campaign finance records by the Free Press, Moroun "showered candidates and political action committees with campaign cash — $526,825 to state candidates and PACs and another $489,200 to federal candidates and PACs" in 2009-2010 as the Legislature wrestled with the DRIC issue this year.

"From my perspective, having observed this from some distance, I would say that [Moroun and the bridge company] spent a lot of money with one policy objective — to kill the DRIC — and they got what they wanted," says Rich Robinson, head of the Michigan Campaign Finance Network, a nonprofit watchdog group.

The bridge company wasted little time trying to capitalize on its victory.

"Today's actions in the Senate only reinforce that the DRIC project is dead," Matty's son Matthew Moroun, vice chairman of the bridge company, told the Wall Street Journal after the measure failed to make it the Senate floor for a vote. "It's time ... to stop delaying the Ambassador Bridge's construction of its privately funded second span and work cooperatively to improve the existing international crossing, while creating much-needed jobs and economic growth in our region."

But, like a lot of information that comes out of the bridge company, what Moroun the younger had to say wasn't exactly true.

To be certain, with Michigan legislators having gone home for the year, there will be no more votes on the issue in 2010. But that doesn't mean there won't be a renewed attempt to gain passage when the new Legislature is seated next year.

And, already, attempts are being made to convince Republican Gov.-elect Rick Snyder to throw his support behind the project.

This week Canadian Transport Minister Chuck Stahl met with Snyder in Lansing to "reaffirm the government of Canada's commitment to build the new Windsor-Detroit border crossing," according to a press release from Stahl's office.

"The meeting was very productive. The governor-elect understands the complexity of this project and was very interested in learning more about Canada's offer to increase its financial participation so that there would be no cost or financial risk to Michigan taxpayers."

No doubt bridge company representatives will be doing their best to convince Snyder and legislators otherwise. In fact, the effort is already under way. The Gongwer News Service reported shortly after Election Day that Snyder had met with incoming freshmen legislators at an event held at Karoub Associates, the bridge company's highly effective lobbying firm. Sponsored by the Detroit International Bridge Company, Matty's wife, Nora, was also present.

But as they listen to the company's pitch that traffic projections don't justify constriction of the DRIC, Snyder and the Legislature should keep this in mind: The company was singing a much different tune a few years ago in Buffalo.

 

The Buffalo shuffle

In the Buffalo-Niagara corridor there are four international crossings between New York and Ontario, two of them operated by public authorities. In 2008, the general manager of one authority, Ron Rienas, who oversees operations at the international Peace Bridge, testified before a U.S. House transportation appropriations subcommittee and followed up a month later with a letter to the committee's chairman.

Among other things, he noted that the four Buffalo-Niagara bridges contain a total of 14 lanes over the Niagara River, with a total of nine lanes open to trucks. That compares to the Ambassador Bridge's four lanes, which are heavily used by trucks, and the Detroit-Windsor Tunnel, which is used primarily by cars.

Despite the Buffalo-Niagara Corridor's greater capacity, Moroun's Detroit International Bridge Co. created a subsidiary that attempted to win approval to construct a new four-lane bridge over the Niagara River.

In a June 2008 letter to the committee, Rienas described an evaluation process he said was similar to that undertaken by the DRIC study group. He also said he felt compelled to "correct" comments to the committee previously made by officials from Moroun's bridge company.

"Since 1999, the Ambassador Bridge [DIBC] has been aggressively seeking to construct an additional crossing over the Niagara River one and a half miles north of the existing Peace Bridge. In spite of the traffic declines [at the Peace Bridge] less than four months ago the Ambassador Bridge submitted an application for a Presidential Permit to U.S. Department of State and filed an Environmental Assessment alone with their application."

Rienas also reiterated the bridge company's rationale for wanting to build the bridge:

"The proposed bridge and plaza system is compatible with the national interest. The project will provide a higher level of service to the business and commerce interests engaging in international trade by eliminating border delays and opening the door to opportunities for intermodal transportation linkages. The Proposed Project will not only provide a safe and efficient corridor for traffic flowing into and out of the U.S., bit will serve as a catalyst for local business development, bringing jobs and prosperity to the city of Buffalo."

And Rienas added that in the bridge company's application for a Presidential Permit and in its environmental assessment for a new crossing in Buffalo, the company said:

"The need for an additional international crossing within the Niagara River Region has been intensely studied for more than a decade by various independent agencies and organizations. All these studies have reached the same conclusion — that additional cross border capacity is needed between Canada and the U.S." (Our emphasis.)

In other words, Rienas tells Metro Times, the same studies the company relied on in an attempt to win approval to construct a bridge in the Buffalo-Niagara Corridor, the company ridicules in Detroit, saying the numbers don't justify constructing the DRIC.

What's the difference? The DRIC would provide competition to the bridge company's Detroit franchise, while the Buffalo span would allow it to expand its operations.

"In summary," Rienas told the committee, the Ambassador Bridge cannot credibly say one thing in Detroit and then say the opposite in Buffalo."

Credibly would appear to be the key word in that sentence.

But incredible as it seems, Moroun and the bridge company have managed to say just that, and held off the rest of the organized business community and much of the political establishment.

What remains to be seen is whether his personal financial interests — and the political clout his vast wealth garners — will continue to win out over the public's best interests.

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