Monday, July 27th should finally see an official opening of the Gordie Howe International Bridge, with that date confirmed by Washington and Ottawa. The postponement of the June opening was due to a reworking of the original agreement signed back in 2012 by Michigan and Canada.
All the details have yet to be made public, but the new agreement is based on an initial 15-year term. And the new terms have changed from a simple, equal toll revenue split after Ottawa recouped its four-and-a-half billion dollars for building the bridge. This new arrangement is based on a net revenue, or profit split between Michigan and Canada, with those net revenues to be divided after the bridge’s annual operating costs are covered – which includes debt repayment amounts to Ottawa.
Prime Minister Mark Carney clarified that Canada will administer the revenues to ensure that Canada’s infrastructure investment is repaid. Carney was clear that the word “net” carries a lot of weight.
“It is an agreement for 15 years to split net revenues. Any sharing of the toll revenue won’t happen until all the debt is repaid. And those net revenues are after operational costs: it’s manning the toll booths, maintenance. The underlying agreement that we have with Michigan remains the same. No sharing of tolls until all the debt is repaid.”
Under the new terms, President Trump confirmed that Michigan’s 50 percent share of those net revenues, or profits, will be invested in a regional development fund on the Michigan side.
While the mayor of Windsor, Drew Dilkens, applauds the concept of regional investment, he does not think Michigan businesses or residents should start making plans for any profits from the bridge any time soon.
“My assessment is that, for the first 15 years, there’s going to be very little profit, as the vast majority of toll revenue goes to offset the cost of construction, which was the original deal with Michigan to begin with. I don’t think there’s going to be much to put in Donald Trump’s economic development pot, but we won’t know until traffic starts crossing the bridge, and they start generating some revenue.”
Another term under the reworked deal is that Washington, together with Michigan, must approve any toll increases of more than 10 percent imposed by Canada on the Gordie Howe Bridge. Drew Dilkens believes that was an easy term for Canada to go along with. As the current chairman of the Windsor-Detroit Tunnel committee, Dilkens says that to increase toll amounts at any international crossing by ten percent is very unlikely.
“I think that’s a free give. I say that as the chair of the Windsor-Detroit Tunnel. The city of Windsor is a half-owner in the tunnel that connects Windsor and Detroit, and so I understand toll increases. It’s very unusual to say you’re going to increase costs more than ten percent, anyway. Operationally, I think it means almost nothing.”
So, the consensus, at this point, is that a badly needed new bridge will finally open. While the new terms are not quite as straightforward as the original deal with Michigan, an improved international crossing that will carry about one-quarter of all of Canada-U.S. goods traded is a net gain for both countries.