Detroit Mayor wants to lease the tunnel

The new mayor of Detroit wants to follow the footsteps of his predecessor and lease the Detroit-Windsor tunnel. Mayor Cockrel hopes to raise $250 million by leasing the Detroit-Windsor Tunnel, Municipal Parking, and Public Lighting.

Detroit is facing a deficit of $300 million. The mayor also wants to introduce 10% pay cut to workers.

Leasing Detroit-Windsor tunnel to raise upfront cash simply wont work. Ask Mayor Bloomberg who tried congestion pricing and Gov. Corzine who tried leasing the turnpike. They had to withdraw the plan because of lack of public support.

In good economic times, the plan would have worked and Detroit would have probably got a good deal from the private institutions. But now considering frozen capital in our banking system, private investors are reluctant to lend money. Its a buyers market.

"This practice, which has succeeded in other cities, sells the right to the income generated by city operations over a contracted period of time in exchange for a lump sum payment. This is no different than a citizen winning the mega millions jackpot and taking a single lump sum payment immediately instead of a series of payments over many years. This transaction allows a person to get money when it is needed most."

Personally I think it is unfair to compare the money generated from leasing state assets to proceeds from a mega million jackpot.

Photo Courtesy of Debbie Schlussel