Low loonie could add $3.5B to price tag of new Windsor-Detroit bridge
The Windsor-Detroit crossing is the busiest commercial trade crossing between the U.S. and Canada
Exporting & Importing
OTTAWA—The federal Liberal government will need to find $3.5 billion more to pay for a new bridge at the bustling border crossing between Canada and the United States.
Documents show Prime Minister Justin Trudeau has been warned that the cost of building the new Windsor-Detroit bridge has likely gone up by at least $2 billion, thanks to the declining value of the Canadian dollar.
Government officials told Trudeau the project would also need an extra $1.5 billion in a contingency fund to bear the shock of any interest rate increases should the loonie decline further against its American counterpart. The Canadian dollar closed Jan. 4 at 71.73 cents U.S., down 0.52 of a cent from Dec. 31 and its lowest point in the last 10 years.
The government’s long-term fiscal framework has the price of the bridge, to be named after hockey legend Gordie Howe, pegged at $4.8 billion.
The details are laid out in a secret briefing note to Trudeau obtained by The Canadian Press under the Access to Information Act.
The Windsor-Detroit crossing is the busiest commercial trade crossing between the U.S. and Canada. Almost one quarter of all goods moving between the two countries pass over the existing bridge and through the tunnel connecting Detroit and Windsor.
The long-sought new bridge, to be built over the Detroit River, spawned a hard-fought political battle among national, state, provincial and local politicians and the private owner of the existing Ambassador Bridge.
To make the project a reality, the Canadian government agreed last year to pay for all construction costs, including $250 million for the inspection plaza on the American side of the river, with a plan to recoup the costs through tolls.
The government expects to collect about $4 billion in tolls over 30 years _ more than enough, Trudeau was told, to cover the $2-billion cost increase that consultants from Deloitte calculated in October.
Otherwise, the documents said, the costs could only be recovered “before the end of the useful life of the bridge,” adding in brackets, “100 years.”
Three select companies will be given the opportunity in “early 2016” to bid on the construction work, said Mark Butler, a spokesman for the Windsor-Detroit Bridge Authority, the Crown corporation that is overseeing the project.
Butler didn’t define “early 2016,” but said the authority should still have the procurement process wrapped up within the 18-month timeline started in July. That would see the procurement process end one year from now.
The briefing note to Trudeau said the request for proposals needed to be out “at the latest” by the middle of last month in order for the bridge to open by December 2020.
The bridge authority needed to “demonstrate it had sufficient funds to support the project” before it could launch the RFP process, the document said.
Butler wouldn’t comment on the authority’s finances.
“To protect the best interests of taxpayers, it is not appropriate to discuss cost estimates for the entire scope of the contract during the procurement phase,” he wrote in an email.
“Doing so could jeopardize the competitive process.”