The federal government released the text of what it’s calling an agreement in principle with the United States for the Gordie Howe International Bridge, which outlines how revenues could be collected — and shared — for the bridge that was entirely financed by Canadian taxpayers.
Portions of it appear to contradict what Prime Minister Mark Carney has said about how money will be split and how much the U.S. will get before Canadians are repaid for the debt of the bridge.
Carney said last week that Canada will not share any tolls collected from the bridge until Canada’s $6.4-billion debt from building it is repaid, but he also said that “net revenues” will be split over 15 years.
“Splitting of tolls, any sharing of the toll, won’t happen until all of the debt is repaid,” Carney told reporters on July 16.
“We will split net revenues over the course of the first 15 years and those net revenues are after operational costs — it’s manning the toll booth, it’s maintenance, it’s snow removal, a series of other operational costs.”
That came after Carney had told CTV on July 12 that, “We get the revenues. Then the servicing of the costs of the bridge and paying the debt of the bridge, and then what’s left over, there’s a split of that for 15 years.”
However, the text of the agreement in principle states that Canada will make payments to the U.S. totalling 50 per cent of “net bridge and crossing related revenues” for 15 years, and doesn’t clearly define what counts as operating costs or make mention of Canada’s debt.
The bridge is set to open on July 27 after several months of delays, and it will generate revenue mainly from drivers paying a toll to cross it.
But Canada sharing any portion of the bridge’s revenues, including from tolls, means it make take longer for Canada to make back the money paid to build the bridge in the first place.
Canada originally paid the entire $6.4 billion cost to build the bridge, and under the terms of the original 2012 agreement with Michigan, Canada would have been entitled to receive all toll revenues until its total debt was recuperated.
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But under the terms of the new agreement in principle, some of those revenues would be sent to the U.S. for the first 15 years.
“Canada will provide annual economic participation payments, outside the 2012 Canada–Michigan Crossing Agreement equal to fifty (50) per cent of net bridge and crossing related revenues for the first fifteen (15) fiscal years of bridge operations,” the new agreement in principle says.
“Net bridge and crossing related revenues is all revenues collected with respect to the bridge, less all incurred operating costs of the bridge. Such payments shall be made to a United States-Canada Economic Development Fund, established and solely controlled by the Government of the United States.”
Those “operating costs” are not defined in the text. Typically, the phrase would refer to things like expenses to run the bridge on a regular basis, but the text does not factor in the initial capital expense Canada spent to build the bridge.
The new agreement in principle makes no direct mention of Canada’s initial cost to build the bridge, but does distinguish the 2012 agreement as being a separate binding agreement.
“Nothing in this Agreement in Principle shall be interpreted as amending, modifying or superseding the 2012 Canada–Michigan Crossing Agreement or the ownership, governance and financial framework established thereunder,” it says.
The U.S. controlled Economic Development Fund is also detailed in the new agreement as being something both Canada and the U.S. “will reasonably agree on,” and that “will be for the benefit of the United States,” as well as trade between the U.S. and Canada.
The amount that drivers pay in tolls to cross the bridge will be set by the Canada-run Windsor-Detroit Bridge Authority, as originally stated in the 2012 agreement.
But the new agreement in principle states that certain proposed adjustments to those tolls during the first 15 years of the bridge’s operations will require a 30-day waiting period to allow the U.S. to either provide written consent of those changes or reject them.
The specific adjustments that may be subject to a 30-day waiting period include the following:
- “a. a proposed toll-rate increase (i) exceeds ten percent (10%) within any fiscal year and (ii) would result in toll rates that are above the average of comparable regional crossings; or
- b. a proposed toll-rate reduction would result in toll rates falling below the average of comparable regional crossings,” the new agreement in principle says.
The new agreement in principle also states that its terms must be confirmed by both parties (Canada and the U.S.) by the bridge’s pegged opening date of July 27, 2026, and a ceremonial opening event must be held by Aug. 3, 2026.
Carney’s statements, Concordia University economics professor Moshe Lander says, may have been a point of confusion because of the financial semantics: for example, distinguishing between “splitting of tolls” and splitting “net revenue.”
“He almost seemed to be suggesting that there’s another source of revenue that could be generated here, and I’m struggling to figure out — a toll bridge —how else are you making revenue?”
Lander said it will likely “take a little longer to recoup the cost because some of that money is going to front loaded and shared with the U.S.”
Although the bridge is still scheduled to open next week, Canada and the U.S. will not be celebrating the opening together after U.S. President Donald Trump on Monday threatened Canada with new tariffs of up to 50 per cent.
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