Originally posted in by Dan Tevlock in Investigative Post and re-posted in Art Voice.
The long-debated expansion of the Peace Bridge plaza may ease congestion, but it will also greatly enhance PBA revenue
Public Bridge Authority officials say they’re focused on expanding the Peace Bridge Plaza on the American side because it will improve traffic flow. But a look at the authority’s books reveals another possible motive: money.
While passenger vehicles account for almost 80 percent of bridge traffic, car tolls account for only 21 percent of authority revenue.
Truck tolls, on the other hand, generate 48 percent of the authority’s revenues, almost $16 million a year.
Duty Free stores at the base of the bridge in Buffalo and Fort Erie account for another 22 percent, or $7.2 million projected for this fiscal year.
Steps being taken by the authority assure the Peace Bridge will maintain the lion’s share of truck traffic in the region—two-thirds of trucks crossing the border do so at Buffalo-Fort Erie rather than the Queenston-Lewiston Bridge.
Expanding the plaza may also necessitate the relocation of the Duty Free Store in Buffalo, which, if history holds true, will generate a financial windfall for the authority. Duty Free stores in Buffalo and Fort Erie have relocated three times over the past 20 years and each move has netted the authority additional money.
North Common Councilman Joseph Golombek Jr., citing health problems in the neighborhood adjoining the bridge that many attribute to car and truck fumes, expressed concerns about the authority’s plans.
“It’s not about health, it’s not about what’s best for Buffalo,” he said. “It’s all about expanding the plaza, having a bigger Duty Free store so that they PBA can make more money.”
Sam Hoyt, the authority’s chairman, disagreed, saying the changes are intended to improve traffic flow.
“It isn’t driven by Duty Free or anything else. We want to make this the most efficient border crossing possible,” he said.
Expansion plans kept secret
The Public Bridge Authority has been secretive about some of its expansion plans for the US plaza outside of the 17 acres it currently owns.
The authority has disclosed three projects involving $34.5 million of work. Plans call for a new US Customs Commercial building with more inspections bays for trucks, a new underpass and ramp with one point of exit at the plaza to remove “criss-crossing” traffic patterns and widening the bridge entry into the US to improve traffic flow.
But authority officials have been mum when it comes to explaining expansion plans for Busti Avenue.
Officials want to raze eight vacant homes in the 700 block of Busti Avenue and the Common Council is considering selling the authority about two blocks of street right of way. In August, Governor Andrew Cuomo announced an agreement with the owners of the Episcopal Church Home to purchase the seven-acre West Side campus on Rhode Island Street for the authority’s plaza expansion, encroaching farther into the Lower West Side neighborhood. If all of this goes as planned, the authority will have almost nine more acres in its footprint. The Campaign for Greater Buffalo, a nonprofit preservation organization, is suing the Public Bridge Authority in federal court to halt the razing of the Busti homes. Oral arguments were heard December 17.
What exactly the authority wants to do with all of this additional land has been kept secret. The only document the authority has released is a conceptual landscaping plan that shows the razing of the vacant homes it owns on Busti Avenue and their replacement with green space.
During an interview in October, Public Bridge Authority General Manager Ron Rienas said a new Duty Free store could be moved to the land at the Episcopal Church Home. Official plans will be released when all the property is acquired, he said.
Hoyt said there are “multiple plans” for what the authority may want to do with the additional space on Busti Avenue, but “nothing specific.” He conceded a few politicians and other power players have seen them, but the authority refuses to release these documents to Investigative Post or the public, including neighborhood residents who will have to live with whatever the authority ends up doing with the property.
He added: “I’ve seen various [plans], sometimes on the back of a napkin, sometimes more professionally created.”
Hoyt said he’s not aware of any traffic studies that shows the plaza needs to be expanded, but he points to the backup of cars and trucks on the bridge as evidence that something needs to be done.
“It is arguably the most inefficient plaza for all the border crossings,” he said.
Another potential improvement involves a preliminary agreement between the US and Canada to allow American customs officers to review the clearance paperwork for incoming commercial vehicles at the Canadian plaza.
The 18-month pilot program is expected to begin soon.
Hoyt estimated that 90 percent of the trucks will pass through the American side without having to stop and the rest would need secondary inspections.
“That we hope will have a dramatic improvement and impact on the flow of traffic,” Hoyt said.
Golombek said expanding the US plaza onto Busti Avenue will have health consequences for the Lower West Side neighborhood, where asthma rates are almost four times the national average. One health study made a link to air pollution coming from the Peace Bridge and the large number of residents who suffer from respiratory illnesses. He said he will not be voting to sell the two blocks of Busti Avenue.
“I just think it is a bad deal for that neighborhood environmentally,” Golombek said. “The more that I hear about it, the more environmentally unsound it is. I just think it is unconscionable.”
The Public Bridge Authority’s 2013 operating revenue is projected at $33.4 million.
About $10.8 million is spent annually on salaries, overtime, benefits, and pensions for an equivalent of 95 full-time employees and the legacy costs of retirees.
Another $1.6 million is allocated for bridge repairs and maintenance.
Another expense of $5.6 million is marked as “depreciation” for the bridge, buildings, booths, and other technology on the property.
Net operating revenues projected for this fiscal year are $11.1 million, which authority officials said will go to the capital fund for bridge re-decking, renovations, and other projects. The capital fund through 2015 totals $63.227 million.
The bridge authority estimates it will rake in $15.7 million in truck tolls for its next budget—more than double the estimated $6.9 million in automobile toll revenue, even though automobiles account for a lion’s share of the bridge traffic—4.77 million cars in 2011.
Detroit has the busiest Canada-US truck border crossing in the nation with 7,300 trucks a day traveling the Ambassador Bridge in 2010. The Peace Bridge is the third busiest Canada-US truck crossing, with 3,400 daily trips, almost double that of the Lewiston-Queenston Bridge.
The toll for a five-axle truck is $28 to cross into Canada on the Peace Bridge, versus $18.50 on the Lewiston-Queenston Bridge.
But the savings aren’t enough to sway truck drivers.
Why do truckers pick the Peace Bridge?
George P. Ledson, owner of Cavalier Transportation Services and past chairman of the Ontario Trucking Association, said routing usually determines which bridge to take.
“It is more favorable for us to use Lewiston,” he said. “We are headed for Rochester and it is a little more direct than to use the Peace Bridge.
“The other fellas, I would assume, if they are going to Ohio or places like that, the Peace Bridge is a better bridge.”
He said traffic backups are a secondary factor.
“All bridges are still a pain,” he said. “It’s a big delay for the drivers and we’re on a timeline because drivers can only drive so many hours a day.
“If they are sitting at that bridge for an hour and a half or two hours, it comes right out of the driving hours, which is only 11 hours in the US and 13 here in Canada. “
Jeff Bryan, owner of Jeff Bryan Transport and chairman of the Ontario Trucking Association, said truckers prefer the Peace Bridge because it has better access to interstate highways.
Niagara Falls Bridge Commission spokesman Brent Gallagher said the Peace Bridge also has more lanes for trucks than the Lewiston-Queenston crossing. He said the commission finished a $100 million rebuild of the Queenston plaza on the Canadian side, which increased capacity from three lanes to five. A similar expansion of the Lewiston plaza could start in two years if the commission gets approval.
“Are we at capacity? Probably not. But it’s an issue of customs staffing those booths,” Gallagher said.
“It’s the same with the Peace Bridge. If they only have one or two booths open, you can get backups. That’s part of the issue when you talk about capacity.”
Duty Free revenue
Each time a Duty Free store moved, authority revenue rises.
The two Duty Free stores at the Peace Bridge are also big moneymakers for the authority. The stores sell liquor, cosmetics, cologne, gift-shop items, and tobacco.
There are two ways the authority profits from the Duty Free stores: a base lease payment and a cut of sales. The authority refused to release the lease agreements or discuss details.
Budget documents show the authority’s rental revenue and sales cut from both Duty Free stores has more than doubled since 1992, growing from $3.5 million to $7.2 million projected for 2013. Part of the reason: bigger and better stores.
The Duty Free store in Buffalo was located on Porter Avenue until 1995, a setup that required customers to order from a catalogue and then make a second stop to pick up their purchase. The store was relocated to the middle of the bridge plaza and sales at the stores on both sides of the border jumped by 25 percent, or $720,000, over three years. Most, if not all of the increase is attributed to the relocation of the Buffalo store.
The store was relocated again in 2005 to its present location at the edge of the plaza along Busti Avenue to open up que space for cars and trucks. Duty Free revenues again jumped for the authority over the following three years, this time by 36 percent, or $1.6 million.
The opening in 1998 of a new Duty Free in Fort Erie—the largest such store in North America—also resulted in an increase in authority revenues. Payments to the authority grew by 19 percent, or about $700,000, from the year before the expanded stores opened to the year after.
“The store was down by the base of the bridge itself and it was really in a tough spot,” said Jim Pearce, the general manager for the Peace Bridge Duty Free.
“Now we are kind of back away from it a bit and it is easier for people to get in and get out. So, yeah, it was a big increase in sales.”
Moving the Duty Free store to Busti Avenue would not be motivated by money, Rienas said.
“The Duty Free never asked us for a new Duty Free,” Rienas said in an interview in October. “They are quite happy staying where they are. The whole reason of moving the Duty Free is it allows us to add greater capacity by adding more booths.”
The Ambassador Bridge in Detroit, which is privately owned by the Moroun family, started selling tax-free gasoline in 2007. How much the Morouns make from the gas station setup has not been disclosed, but the Detroit Free Press reported in 2011 that it was more than a million dollars, and probably a lot more.
Some politicians and community members have said that a gas station could be part of the Duty Free expansion, but Hoyt said “absolutely not.”
“I’ve made inquiries, because I’ve heard that rumor as well, with the PBA staff and they say absolutely not. And so, I can say this: that as long as I’m involved with this authority [a gas station] won’t be a part of the plan.”
Critics of the expansion say the authority has a vested interest in accommodating trucks and having larger Duty Free stores in more prominent locations.
“The PBA’s desire to build a larger Duty Free store as a part of their expansion plans does little to help the local economy,” said Andrew Delmonte, a program director for the small-business advocate Buffalo First who researched the Duty Free revenue stream.
“In fact, it is likely to harm the local economy of the neighborhood and the city by taking away revenues from locally owned and independent establishments, which cannot compete with the duty free’s tax-free merchandise.”
Golombek said Duty Free lease revenue and toll revenue from trucks show that the Public Bridge Authority has a vested interest in expanding the Duty Free.
“It is higher than I thought but I am not surprised by any stretch because I knew there had to be something for their rationale behind this,” he said. “You don’t want to stand in the way of progress, but it’s different when progress is harming people, and that is what I see this doing.”
Hoyt said maintaining the current revenue numbers “is just fine for us” and expanding the plaza is not being driven by revenue.
“It’s a not-for-profit corporation. There aren’t shareholders. There isn’t some sort of profit-driven mentality so we can reward the shareholders,” he said.