Capitalists Responsible for Detroit's Destruction Benefit From Bankruptcy Deal: Syncora Already Holds Substantial Interests in the U.S.-Windsor Tunnel
9:24 PM, September 10, 2014
By Alisa Priddle
Detroit Free Press Business Writer
Extension of the lease to operate the Detroit-Windsor Tunnel is part of a tentative agreement between the City of Detroit and creditor Syncora in the historic restructuring of the bankrupt city.
There are still hurdles to the deal — the two sides have until Monday morning to finalize details including settlements with banks that feel Syncora owes them money. But the agreement confirms the lightly held secret that Syncora wants to keep running the U.S. side of the international tunnel that generates revenue through tolls.
The tunnel was among key assets in the deal reached late Tuesday that also includes bonds, a long-term lease on a parking garage beneath Grand Circus Park and $6.2 million in credits toward purchasing city property and buildings that might go up for sale in the coming years, including Joe Louis Arena.
Syncora owns American Roads, a private company with a lease to operate the U.S. side of the tunnel, which the City of Detroit owns, until 2020. The new deal would extend that lease by another 20 years to 2040. Proceeds from the tunnel lease are around $4 million to $5 million a year after the city is given its cut of about 20%.
The City of Windsor owns and operates the Canadian half of the tunnel. For that reason, Windsor Mayor Eddie Francis was pulled into negotiations that really heated up in the past 10 days leading up to the deal.
Francis said he was called in by teams from both the City of Detroit and Syncora and was there to protect his half of the tunnel.
“Our interest continues to be for Windsor,” Francis said, noting that 5,000 nurses, more than 1,000 engineers and another 1,000 students use it to travel to Detroit on a daily basis.
Windsor has repeatedly expressed interest in purchasing Detroit’s half of the tunnel. It is an open offer that has been in play a few times over the years.
In 2008, then-Detroit Mayor Kwame Kilpatrick and Detroit City Council pursued sale of the U.S. half of the mile-long tunnel to Windsor for $65 million but the deal never came to fruition.
Last year, when Detroit filed for bankruptcy, Windsor once again said it wanted first dibs if the asset was for sale.
Nothing came of that, Francis said. But, “if ever a day comes where the City of Detroit is thinking of disposing of the asset, we would be very much interested. When we thought it was for sale, at the start of the bankruptcy, we said we were interested but there has been nothing to say there is an imminent sale since.”
Further muddying the waters, American Roads, which operates the U.S. portion of the tunnel, filed for bankruptcy itself in July 2013. American Roads employs about 100 people and is responsible for tolling, maintenance, safety and security, customer and government relations, capital planning and information technology.
American Roads emerged from bankruptcy a year ago and under the restructuring plan, main creditor Syncora took full ownership and control of the company. Syncora has been a major creditor and opponent in Detroit’s municipal bankruptcy.
The tunnel dates back nine decades. Detroit Canada Tunnel Corp. had the building rights and created the first underwater international crossing, which became operational Nov. 3, 1930.
The Detroit-Windsor Tunnel LLC, a private firm, was created in 1928 to operate the tunnel on behalf of its owners. And in exchange for the building rights, parent Detroit Canada Tunnel Corp. promised that ownership of each side of the tunnel would revert to its respective city, at no cost, after 60 years of operation.
Windsor started preparing to legally take over ownership of the Canadian side of the tunnel in 1990. The Tunnel Corp. tried to block it, saying the original deal was invalid and the tunnel was better run by one organization than two owners each with a half. Windsor took it to court and it went all the way to the Supreme Court of Canada, which ruled in the city’s favor. Windsor took its half and is responsible for employees, costs and revenue, Francis said.
Detroit continued to lease its half and receive a percentage of the tolls. That would continue under Syncora’s extended lease. Syncora sees it as further long-term investment and commitment to the City of Detroit.
The operations company, Detroit-Windsor Tunnel LLC, was owned for many years by Alinda Capital Partners. In 2007, they offered to extend the lease with the City of Detroit for 60 years after the current lease expires in 2020. The offer was for $60 million but the city would lose the 20% of toll revenue it had been collecting. That deal never happened.
A year later, the city pursued sale of its half to Windsor for $65 million — another failed deal.
Francis said his role is to ensure Windsor residents are not impacted by any deals.
“Public oversight is a key issue for us,” Francis said of the important crossing and connection between the downtowns of Detroit and Windsor.
Contact Alisa Priddle: 313-222-5394 or apriddle@freepress.com. Follow her on Twitter @AlisaPriddle
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| Moratorium NOW! Coalition contingent in the June 2013 fiftieth anniversary commemoration of the Detroit Walk to Freedom led by Dr. Martin Luther King, Jr. and Rev. C.L. Franklin. (Photo: Abayomi Azikiwe) |
By Alisa Priddle
Detroit Free Press Business Writer
Extension of the lease to operate the Detroit-Windsor Tunnel is part of a tentative agreement between the City of Detroit and creditor Syncora in the historic restructuring of the bankrupt city.
There are still hurdles to the deal — the two sides have until Monday morning to finalize details including settlements with banks that feel Syncora owes them money. But the agreement confirms the lightly held secret that Syncora wants to keep running the U.S. side of the international tunnel that generates revenue through tolls.
The tunnel was among key assets in the deal reached late Tuesday that also includes bonds, a long-term lease on a parking garage beneath Grand Circus Park and $6.2 million in credits toward purchasing city property and buildings that might go up for sale in the coming years, including Joe Louis Arena.
Syncora owns American Roads, a private company with a lease to operate the U.S. side of the tunnel, which the City of Detroit owns, until 2020. The new deal would extend that lease by another 20 years to 2040. Proceeds from the tunnel lease are around $4 million to $5 million a year after the city is given its cut of about 20%.
The City of Windsor owns and operates the Canadian half of the tunnel. For that reason, Windsor Mayor Eddie Francis was pulled into negotiations that really heated up in the past 10 days leading up to the deal.
Francis said he was called in by teams from both the City of Detroit and Syncora and was there to protect his half of the tunnel.
“Our interest continues to be for Windsor,” Francis said, noting that 5,000 nurses, more than 1,000 engineers and another 1,000 students use it to travel to Detroit on a daily basis.
Windsor has repeatedly expressed interest in purchasing Detroit’s half of the tunnel. It is an open offer that has been in play a few times over the years.
In 2008, then-Detroit Mayor Kwame Kilpatrick and Detroit City Council pursued sale of the U.S. half of the mile-long tunnel to Windsor for $65 million but the deal never came to fruition.
Last year, when Detroit filed for bankruptcy, Windsor once again said it wanted first dibs if the asset was for sale.
Nothing came of that, Francis said. But, “if ever a day comes where the City of Detroit is thinking of disposing of the asset, we would be very much interested. When we thought it was for sale, at the start of the bankruptcy, we said we were interested but there has been nothing to say there is an imminent sale since.”
Further muddying the waters, American Roads, which operates the U.S. portion of the tunnel, filed for bankruptcy itself in July 2013. American Roads employs about 100 people and is responsible for tolling, maintenance, safety and security, customer and government relations, capital planning and information technology.
American Roads emerged from bankruptcy a year ago and under the restructuring plan, main creditor Syncora took full ownership and control of the company. Syncora has been a major creditor and opponent in Detroit’s municipal bankruptcy.
The tunnel dates back nine decades. Detroit Canada Tunnel Corp. had the building rights and created the first underwater international crossing, which became operational Nov. 3, 1930.
The Detroit-Windsor Tunnel LLC, a private firm, was created in 1928 to operate the tunnel on behalf of its owners. And in exchange for the building rights, parent Detroit Canada Tunnel Corp. promised that ownership of each side of the tunnel would revert to its respective city, at no cost, after 60 years of operation.
Windsor started preparing to legally take over ownership of the Canadian side of the tunnel in 1990. The Tunnel Corp. tried to block it, saying the original deal was invalid and the tunnel was better run by one organization than two owners each with a half. Windsor took it to court and it went all the way to the Supreme Court of Canada, which ruled in the city’s favor. Windsor took its half and is responsible for employees, costs and revenue, Francis said.
Detroit continued to lease its half and receive a percentage of the tolls. That would continue under Syncora’s extended lease. Syncora sees it as further long-term investment and commitment to the City of Detroit.
The operations company, Detroit-Windsor Tunnel LLC, was owned for many years by Alinda Capital Partners. In 2007, they offered to extend the lease with the City of Detroit for 60 years after the current lease expires in 2020. The offer was for $60 million but the city would lose the 20% of toll revenue it had been collecting. That deal never happened.
A year later, the city pursued sale of its half to Windsor for $65 million — another failed deal.
Francis said his role is to ensure Windsor residents are not impacted by any deals.
“Public oversight is a key issue for us,” Francis said of the important crossing and connection between the downtowns of Detroit and Windsor.
Contact Alisa Priddle: 313-222-5394 or apriddle@freepress.com. Follow her on Twitter @AlisaPriddle
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