Michigan’s House Republican Caucus wants to continue exploring a sale of the Blue Water Bridge, despite a new analysis showing there would be little upside for the state.
The House GOP passed a transportation budget last month that explores selling a variety of state assets, including the bridge. The fire sale is at least part of the Republican answer to Gov. Gretchen Whitmer’s plan to up the gas tax by 45 cents and use the revenue to fix the state’s crumbling roads.
The new feasibility analysis by the Michigan Department of Transportation (MDOT), performed at the request of state Rep. Julie Brixie (D-Meridian Twp.), estimates that it would take 62.5 years for a private company to pay off a hypothetical $500 million purchase of the international border crossing that connects Port Huron to Sarnia, Ontario.
Still, there’s a catch: In order for a company to turn a profit within that timeframe, the firm would have to cease any large maintenance projects and capital investment into the bridge. MDOT, which is presently responsible for all maintenance on the U.S. side of the crossing, has at least two such projects planned over the next decade, according to the analysis, which Brixie’s office provided to the Advance.
The MDOT analysis notes that the U.S. span of the Blue Water Bridge is in need of a new deck, a project scheduled to start in 2030 at an estimated cost of $70 million. Additionally, MDOT has been working on a toll plaza expansion at an estimated cost of $285 million.
Currently, the bridge operates on an annual budget of about $24 million with about one-third of that going toward large capital and maintenance projects.
Further, the analysis notes that with the state’s current debt service of $7 million annually and at the hypothetical sale price of $500 million, the state would only net about $20 million off a potential sale.
The bridge still has $90 million in total debt from the construction of a second span in the 1990s.
The state could attempt to negotiate with a private buyer to take on more of the debt load as part of a sale. However, doing so would only make the asset less desirable, as it would extend the time to recoup the upfront investment.
A former Meridian Township treasurer, Brixie noted in a phone interview the “insane assumption” of not doing any maintenance work on the bridge for more than half-century as evidence that a sale is unfeasible and the Legislature needs to move on to other options for its road-funding revenue.
“We need to actually make sound fiscal decisions as caretakers of the state’s precious resources … and selling off state assets is not part of the fiscal solution,” Brixie said, adding that she fully supports the proposed 45-cent gas tax increase included in Whitmer’s budget proposal.
MDOT spokesman Jeff Cranson confirmed the details of the analysis to the Advance, but declined further comment at this time.
House Republican leaders have said that including language to explore a sale of the bridge is merely about fact-finding at this point.
“The wording that you see in the budget are simply ways for us to understand, ‘Is there value in our assets, is there interest in them?’” state House Appropriations Chair Shane Hernandez (R-Port Huron) told reporters last month after the body passed its budget. “I don’t believe there’s any decisions that will be made at this point. It’s a way for us to do some fact-finding and see what the market is at this point.”
As the Advance has previously reported, the proposed House GOP transportation budget strays far from Whitmer’s in that it does not offer a gas tax increase for road funding and instructs MDOT to explore toll roads and conduct feasibility studies for selling assets like the Blue Water Bridge, state-owned airports and highway rest stops.
The proposed $5.4 billion Fiscal Year 2020 transportation budget does increase road funding compared to the previous year by 7.8%, however.
Speaking with reporters late last month, Whitmer panned the idea of selling bridges or other state-owned assets.
“It begs the question of, ‘What else might we sell as a state? The Capitol building or the Mackinac Bridge I love so much? — which I don’t think would be a good idea to sell’,” Whitmer said. “It’s akin to having a garage sale to pay your mortgage. It’s not a real solution.”
Lance Binoniemi, vice president of government affairs for the Michigan Infrastructure and Transportation Association (MITA), a trade group for construction companies that work on infrastructure, said he had not yet read the MDOT report and declined to weigh in on the wisdom of selling a public bridge.
He did, however, caution that such a sale would be unlikely to move the needle much in terms of solving Michigan’s infrastructure woes.
“It certainly doesn’t fix our road-funding problem,” Binoniemi said, adding that it’s ultimately a decision for policymakers and asset sales could potentially offer some benefits.
Still, key House Republicans say they will “absolutely” continue with exploring a sale of the bridge. In a phone interview on Wednesday, state Rep. Matt Maddock (R-Milford), who chairs the House Appropriations Transportation subcommittee, called the figures from MDOT’s analysis “preposterous.”
He also questioned why MDOT was doing this due diligence at all, saying such work should be up to a private sector buyer to perform.
MDOT, however, is responsible for operations and maintenance of the bridge on the American side of the border crossing.
Maddock last month pushed for an unsuccessful budget proposal that would have blocked MDOT from spending any money upfront on the construction of the Gordie Howe International Bridge crossing that’s being built between Detroit and Windsor, Ontario.
Canada is footing the bill for the construction of the new crossing in exchange for toll revenues and reimbursing the state for any expenses. However, speaking with the Advance on Wednesday, Maddock still questioned how much the Gordie Howe Bridge might cost Michigan taxpayers.
While Maddock questioned MDOT’s general involvement in the bridge crossings, he also noted that he’s pleased to have the analysis on the Blue Water Bridge, which he said he’d been trying to get since taking office in January.
Still, Maddock acknowledged that any sale of the bridge or other assets will require considerable amounts of due diligence on both the public and private sector sides. He also acknowledged Whitmer might shoot down the idea altogether.
“This is boilerplate language. … This could easily be killed by the governor,” Maddock said. “This could easily be part of the negotiation between the Democrats and the Republicans when it comes to the ultimate Transportation budget. This is just an idea right now, technically. It’s a suggestion.”