Short and Pithy as I have so much to do for the rest of the month but I didn’t want to leave everyone hanging.

 

I recently returned from a short journey to Toronto (OK Brampton) and other parts of SouthWest Ontario where I got my annual reaffirmation that, among other things, the people who think fossil fuel use is on the downswing are daft morons who have never spent a nano-second in traffic in Canada’s busiest and most crowded area.

 

Unlike last year, where I was able to sneak in a field trip to Petrolia and the birthplace of the North American commercial oil and gas industry, this year my time was spent largely in traffic, commuting from one visit to another, enjoying time with relatives and then a brief sojourn into the country where we visited some delightful locations and enjoyed some tremendous food (highly recommend Elora, if you can stomach the eye-watering hotel costs).

 

Part of me wanted to take advantage of the recent opening of the Gordie Howe Bridge to make a pilgrimage to Windsor and maybe tempt fate on a border crossing into Detroit and then closing the loop over the Ambassador Bridge but a quick check of Google Maps showed a six hour round trip, even using all the side roads and goat tracks available. Side note – Ontario is really big. I don’t know why I always think of that part of the province as being cozy and compact like Europe.

 

So no, I was unable to visit the Elbows Up Bridge – the latest and greatest thorn in the side of the US Administration and Canadian vanity project.

 

Which is disappointing because visiting there would have allowed me to continue my search for the debt owed to Canada for its funding of the bridge.

 

Provocative statement, right? Maybe. But first, let’s see how we got to where everyone thinks we are.

 

History Lesson

 

The Windsor-Detroit border is one of the busiest commercial border crossings in the world, handling about $1 billion a day of two-way trade. That’s a lot. And up until a week and a bit ago, the Ambassador Bridge handled about 40% of the commercial truck traffic or 10,000 trucks per day. Which is an astounding number.

 

There were of course a number of problems with that including the private ownership of what was in effect a monopoly crossing, the difficulty in maintaining an aging crossing without causing a recession, the bottlenecks that developed particularly on the Canadian side where the bridge dumped traffic into what is in essence a residential neighbourhood and all the costs associated with the preceding.

 

The alternative developed over time was to build a new crossing that would leave a US Interstate Interchange and cross the Detroit River a few miles north feeding directly into the infamous Ontario 401 highway, shaving massive time off the regular commute. This safety valve would be more efficient as well as keep the privately owned Ambassador Bridge from extorting too much rent from trapped shippers.

 

The problem? Who the heck was going to pay for it. No one really wanted to front the costs.

 

Finally, the Canadian government, under the stewardship of Stephen Harper stepped up and said we will pay for the bridge, the interchanges and all that if you (Michigan and the US) will pay for the Interstate access and your toll plaza.

 

After some fake hemming and hawing and endless lawsuits by the owners of the Ambassador Bridge, Michigan and the USA agreed to this ridiculously generous offer and in 2012 the agreements were struck.

 

Canada would pay for the bridge. Toll revenue would pay Canada back and the whole shitteroo would ultimately be owned 50/50 by Canada and the State of Michigan.

 

There was much rejoicing (hurrah) and with final approval coming from Donald Trump during his first term, construction of this defining project of inter-country friendship and cooperation got underway.

 

The construction of the bridge was officially completed in the first half of 2026, awaiting only the US approval of its international border crossing complex. Bob’s your uncle.

 

Nowhere did anyone think the bridge wouldn’t open.

 

Except of course that is what happened. The theory being that a well-timed donation to a Trump PAC by Snidely Whiplash (Ambassador Bridge owner Matthew Maroun) managed to derail the process sufficiently to allow the Americans to realize that a quick shake-down opportunity was in front of them to get a “better deal” on the bridge and stick it to us nasty Canadians.

 

This of course is what we saw play out over the past few months with the Trump administration sending out its talking heads to decry us horrible Canadians for having the temerity to build a bridge for the benefit of both countries with our own money and expecting to be repaid for that according to the legally binding series of contracts executed by all parties.

 

The Noyve as they say.

 

Ultimately, we know what happened. The Americans rolled over Canada and extracted mucho concessions, made sure to ger their cut ahead of the repayment of any debt principal and exposed Mark Carney along the way as a liar for suggesting not too much had changed and left Canadians feeling abused, confused, ripped off and generally full of hurt feelings.

 

Waahhhhh, the sobbing went. Outrage! Said any and all punditry and partisan personages.

 

Wait a sec, I said. Remembering this quote from Howard Lutnick…

 

“The USA struck a great deal with respect to the Gordie Howe Bridge. Before this deal we got NOTHING. Now, the U.S. gets 50% of net revenues until 2041 and a say in setting the tolls. Our share is before interest and principal. This is the Art of the Deal in action.”

 

And also, this quote from Mark Carney

 

“It’s not splitting the tolls of the bridge, It is an agreement for 15 years to split net revenues. Any sharing of the toll revenue won’t happen until all the debt, all of the debt, is repaid.”

 

That’s interesting. Why is all the language on this so evasive? Are they even saying the same thing.

 

And what is net revenue? What is the debt amount? Never mind that, what is debt?

 

So I decided to do what I do. Dig, read and digest. Formulate theories. Ask questions. And the more I did the more curious I got.

 

What follows is my own personal theory and is untested. But.

 

But…

 

It kinda makes sense when you look at it, so I’m sticking to it.

 

First, I went through the various agreements and some audited financials because I have nothing but time on my hands apparently. I primarily looked at the last audited financial statements of the Windsor-Detroit Bridge Authority (WDBA) and the original Crossing Agreement between Canada, Michigan and the Crossing Authority – the predecessor firm to the WDBA (this agreement is the one referenced in point 4 of the new side-agreement that says it remains in full force).

 

One of the first things I noted…

 

There is no actual “debt”. That’s right. On the balance sheet of the WDBA, the entity that received money from Canada, there is no line item saying “long term debt” owed to Canada. There is no schedule of principal payments like you would see in financial statement notes. Zip. Nada nothing.

 

WTF, right? What gives? Well here goes.

 

As I understand it, the money/funding was issued as a grant from the federal government and was/is recorded on the financial statements of the company building the bridge (WDBA) as “other income” received in each of the years it was being drawn.

 

What this appears to mean – from an accounting perspective, there isn’t any debt created per se, it’s more like a deferred revenue number or a pre-paid.

 

What Canada has on its end is what’s called an “imputed value of unrecouped Canadian contributions”. This is an off-balance sheet item that gets calculated every year as the total amount of that “other income” to WDBA (and grant expense to Canada) grown at a rate of Government of Canada bonds (like a 5 year) plus 100 bp (so the amount “due” to Canada goes up every year). This amount is tracked separately, disclosed in the notes and represents what Canada is due. But it ain’t on the balance sheet as debt. And there is no scheduled repayment.

 

What there is, is a bridge that once open generates tolls and as per the original agreement, those tolls are collected by the WDBA and recorded as revenue.

 

So once the bridge starts generating toll revenue, it gets netted (for want of a better term) against the deferred account. This is covered in the “crossing agreement” which the release clearly says remains in force. What the new arrangement does I guess is put a cap on that so that the Government of Canada can’t sweep excess cash to accelerate the reduction of the imputed value. Payout still happens, it’s slower, but our imputed value of unrecouped contributions still grows every year minus any payments made.

 

So it seems that everyone is right and everyone is wrong.

 

All these things are calculated and disclosed in the audited statements for the various different entities and there is wacky Public/private partnership/government GAAP-like accounting standards. The Canadian stuff is tracked separately but it is an off-balance sheet liability that only hits the P&L.

 

In simple terms and to my non-accountant interpretation that I will likely get hung out to dry over:

 

Canada fronted/granted (pre-paid!) the WDBA their toll revenue so they could build the bridge, and recovers those costs once the tolls start being collected, but… WDBA may have other sources of income aside from tolls, may manage their expenses better or there may be timing considerations for the annual imputed value that keep it smaller than a 100% offset, so the result is a “net” profit – and that is where the 50/50 split happens. We will of course have no way of verifying this until the next set of audited statements from WDBA that include actual bridge operation and positive, collected toll revenue as opposed to weird “other income” line items from the Canadian government.

 

It is worth noting that in the original Crossing Agreement, the 50/50 split was always contemplated but only after Canada recovered its Unrecouped Canadian Contributions.

 

And bombast aside, I do have some real sympathy with the US position – there were significant cost overruns that were incurred and they really had no say in them. But under the agreement Canada gets full recovery no matter what. It’s fair to say that the US didn’t sign up for Canada over-paying and thus their 50/50 participation gets kicked down the road further. So it isn’t surprising that they would want some of that to come sooner – by way of this profit or “net revenue” share.

 

I think I’m right.

 

At least that is how I believe it works in “layman’s terms”. The toll revenue was prepaid by Canada to pay for (fine, finance) the bridge. There are no interest payments. There are no principal payments.

 

As actual tolls get collected Canada gets refunded (operating expenses). What’s left every year gets split. The amount Canada is “owed” grows every year regardless. Everyone makes some coin and no one is getting screwed. And the bridge is finally open, which is the big prize in all of this.

 

Boom chakalaka

 

I think this is why it has been impossible to explain. Also, I don’t think that anyone wants to call out the other as being “wrong”. And the comms have been a disaster, especially on the Canadian side. But part of me thinks it was intentional.

 

In all honesty, I’m happy to the US win the semantics battle and get the f-ing bridge open.

 

Of course I could be all wrong. But I don’t think so.