(The following story by Bill Shea appeared on the Crain’s Detroit Business website on June 17, 2010.)
DETROIT, Michigan — The Windsor Port Authority has been added to the consortium seeking to build a $400 million rail tunnel between Detroit and Windsor, making the effort a public-private partnership.
The port authority, which is overseen by the Canadian federal and Ontario provincial governments and the city of Windsor, joins Calgary-based Canadian Pacific Railway Ltd. and Toronto-based Borealis Infrastructure Management Inc. in what is now called the Continental Rail Gateway to build a new tunnel near the current 100-year-old rail tube below the Detroit River.
The effort was previously called the Detroit River Tunnel Partnership.
Borealis is investment arm of the Ontario Municipal Employees Retirement System, which has more than $47 billion in assets and is expected to finance most of the work.
There also are plans to add a Michigan-based partner to the consortium, but Marge Byington, the project’s Grand Rapids-based director of government relations, declined to say who it might be.
The Continental Rail Gateway has been set up as a partnership under an international agreement to oversee the effort, and has a four-member board of directors representing the three partners, Byington said. The board will be expanded as the project develops.
The coalition has begun the environmental assessment process required to allow it to construct a larger rail tunnel that could accommodate double-stacked, 9-foot-6 containers and some new generations of multilevel rail cars used by shippers and auto manufacturers, according to a statement released today by the project.
Environmental and other required paperwork has been submitted to Transport Canada. The Michigan Department of Environmental Quality and the U.S. Army Corps of Engineers also are involved in the regulatory process.
The project’s organizers told Crain’s in October that they expect a year to 18 months of U.S. and Canadian environmental study and approvals and construction to take two to three years. They hope the tunnel is open no later than 2015.
It’s believed that the tunnel effort has spent between $75 million and $100 million in engineering and environmental studies since it was launched in 2001.
The current 8,500-foot rail tunnel near Detroit’s 12th and Howard streets opened in 1909 and was enlarged in 1994. It handles about 350,000 rail cars annually. However, it cannot handle the largest containers when doubled stacked.
The current tunnel, along with the land needed for a new tube, is also owned by Borealis and Canadian Pacific. Borealis increased its stake in the tunnel and the project from 50 percent to 83.5 percent in an $87.7 million deal in 2009.
Borealis’ investments generated net investment income of $731 million in 2009, compared with $596 million a year earlier, according to its website.
A message was left for Borealis.
The tunnel consortium’s original plan, announced in 2001, was to convert the old tunnel to a cargo truck route while the new tube was built for the largest double-stacked freight cars, but that idea was scrapped when the U.S., Michigan and Canada decided to build a new Detroit River bridge.
Once a new tunnel is in service, the old tube would be used for maintenance operations and be available for redundancy, said Byington, who held economic development posts in the former Commerce Department under Gov. John Engler and in the city of Detroit under Mayor Dennis Archer.
The high-clearance replacement rail tunnel project is predicted to create 2,200 direct and indirect jobs, backers said.
Organizers hope to bolster rail trade moving along the route linking the Port of Montreal through Detroit and on to Chicago. Currently, only the $200 million freight and passenger train tunnel built in 1994 underneath the St. Clair River between Port Huron and Sarnia, Ontario, by Canadian National Railway Corp., can handle the largest rail freight trains.
“This is important to the region because the Port of Montreal plans to double its container-handling capacity over the next ten years,” the consortium said in its statement.
Backers said that $21.5 billion of the $137 billion in U.S.-Canadian trade that moved through the Detroit-Windsor corridor in 2008 was via rail.
The 9-foot-6 corrugated steel shipping containers are known as “high-cube” and are newer and less common than 8-foot-6 freight boxes. The units of both heights are typically 20 to 40 feet long and are used to ship products and raw materials over long distances via ship and rail.
The old rail tunnel can’t handle two 9-foot-6 containers stacked atop each other.
The tunnel project is moving forward as Michigan considers its continued participation in the $5.3 billion joint U.S.-Canadian effect to build a new bridge for cars and trucks over the Detroit River.
The tunnel consortium says it has the backing of organized labor, the Detroit Regional Chamber, Business Leaders for Michigan, U.S. Sen. Stabenow, D-Mich., Wayne County Executive Robert Ficano and MDOT.
The port authority oversees the Great Lakes cargo shipping that is processed in Windsor, which is primarily salt and construction aggregates such as sand and stone. Petroleum, grain, steel, cement and project cargo also are shipped.
The port authority will take an equity stake in the tunnel, but Byington declined to say how much.
Talks to add the port authority to the project began after a May 2009 multi-model conference in Windsor, Byington said. It’s participation in the effort is expected to ease the regulatory and financing process, she said.
“Government and business leaders have committed to the vision of realistic, cross-border cooperation outlined at (the multi-modal) conference in Windsor last year,” said David Cree, president and CEO of the port authority in a statement. “This new cooperative agreement fortifies the goals we discussed. A larger replacement rail tunnel is critical to creating jobs and turning Windsor-Detroit into one of the most significant logistics hubs in the Midwest.”
Detroit has a passenger ship terminal under construction, but sees almost no freighter traffic.