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Leasing Alligator Alley to a Private Company?<!--[endif]--> tfernandes@fox4now.com

Complaints they're going too fast on interstate 75, but it has nothing to do with speeding. It's the proposed lease of Alligator Alley. Supporters say it's privatization. Critics say it's a sell-off. (June 22, 2008)

 

Charlie Crist follows the money, loses interest in ethics
Palm Beach Post Editorial                          
September 5, 2002

With each revelation, it becomes clearer that Charlie Crist is unfit to be
Florida's next attorney general. Previously, Mr. Crist had seen no ethical
problem with the fact that he has accepted $500, the maximum individual
contribution, from three lobbyists who sit on the Florida Elections Commission
that cleared him of two complaints.

Last week, The Post reported that Mr. Crist had accepted not just
contributions but cut-rate travel from a company that the attorney general's
office is investigating. We would like to report Mr. Crist's response, but he
refused even to acknowledge questions from the paper's reporter.

The company in question is Advance America, which deals in so-called "payday
loans." Customers who need cash before they get paid write a personal check to
the company and postdate it. They get the cash, and the company charges
interest.

Attorney General Bob Butterworth began investigating Advance America in May
2000 to determine whether the company was rolling over the interest to raise
it beyond the state limit of 18 percent. Advance America has refused to comply
with subpoenas.

At a June 2001 fund-raiser in Fort Lauderdale, Mr. Crist received $1,500 from
Advance America and two other companies at its address in Spartanburg, S.C.
Advance America's lobbyist, who hosted the event, also contributed $500.

In addition, Mr. Crist reimbursed Advance America $57.60 for "travel." The
company would not disclose what sort of "travel," though one presumes it
wasn't for a rental car or a bus ticket.

Mr. Crist has accepted at least two dozen private plane trips over the past 20
months, each time repaying just a fraction of the true cost. It's a way for
someone interested in good government to get around contribution limits.

Someone who takes the office of attorney general seriously would refuse any
contribution that might be a conflict. The other Republicans in the Tuesday
primary have refused money from industries such as tobacco that the attorney
general's office is investigating.

Mr. Crist, who has used his position as lame-duck education commissioner to
campaign, takes seriously only his ambition for yet another office that he is
unqualified to hold.

Rather than hinder Mr. Crist's candidacy, the Republican Party of Florida has
aided it. GOP Chairman Al Cardenas criticized Solicitor General Tom Warner for
running billboards that note Mr. Crist's two-time failure to pass the Bar exam
and his disdain for ethics.

One must presume that since Mr. Crist leads in fund-raising and in polls, the
Republican Party would rather have a winner than an attorney general the
people can trust.

Fortunately, Mr. Warner, a former state representative from Stuart, and state
Sen. Locke Burt, R-Ormond Beach, are well-qualified and respect the office.
For Republican voters, the choice Tuesday is as easy as ABC -- Anybody But
Crist.

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Brent Batten: CFO, economist sink Alley lease idea

By Brent Batten     Naples Daily News     June 7, 2008

As Florida’s Chief Financial Officer, Alex Sink knows about the different ways the state raises money.

She doesn’t like them all, but she knows about them.

Take the Florida Lottery, for instance. Scratch-off games and drawings yield $1.26 billion a year for the state. And Sink wants no part of it.

“I don’t play the lottery. It’s a horrible investment,” Sink said recently in a visit with the Naples Daily News editorial board.

Sink is no doubt familiar with the astronomical odds associated with winning even modest lottery jackpots. For instance, the chances of winning $1,200 in the Mega Money game are 1 in 142,000.

Sink casts that same skeptical eye toward the proposed lease of Alligator Alley to a private entity in return for a large up-front cash payment.

Sink isn’t flatly opposing the deal, yet, but convincing her it’s a good idea is going to take some doing.

Ultimately, a private entity is going to want to show a profit on the deal. That’s money that could go to the state if Alligator Alley stays under government control.

“This is being driven by investment bankers who stand to put potentially tens of millions of dollars in their own pockets” Sink said.

Sink says one of the state’s own investment accounts, a retirement fund for example, could pay the highway department up front with tolls from the Alley used to repay the loan. That would amount to one branch of government leasing Alligator Alley from another. If there’s a profit to be made by leasing a state asset, the state may as well be the one making it, she reasons.

“I’m going to go back to my own economists and ask them,” Sink said.

One such economist is Hank Fishkind, who already has offered Sink his opinion of the proposed Alligator Alley deal.

“I don’t think it’s a good idea to lease Alligator Alley,” said Fishkind, an economist who has done financial analysis of Florida projects including military base closures and Everglades restoration.

In Southwest Florida, Fishkind, who maintains an office in Naples, has weighed in on the housing slump, suggesting prices won’t fall any further, but it may be another year before they start to rebound.

Fishkind echoes Sink’s belief that the state could use toll revenues to back bonds that would provide a sudden infusion of cash, if that’s what’s needed.

The state has the capacity to borrow almost any amount it wants, he said. “The private sector is going to want a profit. That’s usually higher than the interest (that would be paid on bonds),” Fishkind said.

Privatization doesn’t create more money, only redistributes the money currently being spent by motorists, Fishkind noted.

“If you need more money, then raise the toll. At the end of the day, the only money is coming from those who use the facility.”

He said privatization of roads, as has occurred in places like Chicago and Indiana, gives bureaucrats and politicians cover. “They don’t want to take the heat for raising the toll.

“That doesn’t make it a good financial deal for the people who use it.”

Sort of like the lottery.

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Crist lobbies for leasing Alligator Alley

by Linda Kleindienst   March 26, 2008.  Sun-Sentinel  Broward Politics

While delivering a speech on the importance of open government to a group of reporters, editors and legislators today, Gov. Charlie Crist launched into a little public lobbying when his gaze fell on Broward Rep. Jack Seiler.

Crist had been trying to talk to Seiler since last week about the governor’s plan to lease Alligator Alley to a private company.

“I owe you a phone call, Jack. I apologize. You called me back over the weekend. Forgive me,” Crist said. “I was asking you why you might not want us to lease Alligator Alley when we need more money for education. But you can answer that question later.”

Crist’s plan is to raise money for the strapped state budget by leasing the 75-mile road that crosses South Florida.

After the lunch, Seiler, the ranking Democrat on the House Policy and Budget Council, said he isn’t a fan of the idea.

“You have a public road, paid for by public dollars and it needs to stay public,” Seiler said.
“If you’re doing a new road and want to put a toll road in, that’s different. But this road is bought and paid for with public dollars. A private entity would (lease it and charge tolls)to raise money. Why don’t we make the money?”

And, he added, the state wouldn’t raise tolls as high as a private contractor might. The toll is currently $2.50.

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Guest Commentary: Leasing toll roads is wrong fix for state money woes

By Bill Graves, President and CEO, American Trucking Association

Naples Daily News  May 3, 2008

I have a black-and-white photo, taken in 1956, of a truck making its way through the toll plaza on the Kansas Turnpike. The truck, emblazoned with the Graves Trucking logo, belonged to my father’s trucking company.

In those days, a toll road was one of very few options available for states wishing to build a freeway system. Interestingly enough, some 50 years later, toll roads are again surging in popularity. Now, however, because of the rise in popularity of asset monetization schemes that provide up-front cash payments, governments have begun to view the leasing of existing toll roads as a quick fix for financial woes.

Just three years ago, the privatization or leasing of existing highway infrastructure was a little-understood concept that few were even talking about. Today, the momentum behind these get-rich-quick schemes is considerable. What began as a niche financing scheme for the construction of new highway capacity is fast becoming the financing mechanism of choice, and the public interest is unfortunately being sacrificed in favor of the almighty dollar.

For example, in January 2005 the city of Chicago leased the Chicago Skyway (Interstate 90) to a joint venture of the Australian Macquarie Infrastructure Group and Spanish Cintra for $1.83 billion to pay off city debt and fund nontransportation projects. In June 2006, Indiana leased the Indiana Toll Road (Interstate 80/90) to Macquarie-Cintra for a one-time payment of $3.85 billion.

Accordingly, there has been a lot of talk recently among state lawmakers in Tallahassee about how best to fund the expansion of Florida’s infrastructure to keep pace with the state’s rising population. With budget shortfalls and a general unwillingness to levy tax increases, it’s not surprising that Florida’s politicians are considering asset monetization for the highway equivalent of a payday loan.

However, before rushing into the privatization and/or leasing of Florida’s existing roadways, a thorough review must be done to ensure there is a clear understanding of the long-term implications. Does it really make sense to surrender control of an existing roadway for two, three or even four generations in exchange for an up-front cash payment that is likely to be gone in 10 years? That hardly sounds like a fair exchange to me.

Before proceeding, lawmakers must give serious consideration to the impact on toll rates when an existing roadway is leased and be sure their actions today are motivated solely by the long-term public good. In a privatization deal, the investor is usually allowed annual increases of a minimum 2 percent to a maximum of the average rate of change in gross domestic product per capita (the accepted standard). Based on historical figures, annual increases could hit 6.2 percent and privatized highways can become “Lexus highways,” unaffordable for those on limited incomes.

Moreover, the Florida Legislature introduced a proposal to lease Alligator Alley to the state-administered Lawton Chiles Endowment Fund. While this would keep the road out of the hands of private entities, it is nonetheless troubling when you consider the Chiles Fund historically generates annual returns between 7 percent and 12 percent, while the toll road generates almost no excess revenue after accounting for expenses, debt service and the wetlands remediation fund obligation.

Therefore, in order to generate acceptable returns that meet the annual returns of the Chiles Fund, toll rates on Alligator Alley would have to be increased substantially.

Should Alligator Alley (or any existing toll road in Florida) be leased to a private entity or state endowment fund, the much higher tolls are likely to force travelers to venture greater distances to avoid paying the toll. In the case of Alligator Alley, which has no nearby parallel roadway, drivers will be forced to pay the much higher toll rate or drive a long distance to use an alternative route. Considering the current price of fuel, a driver would essentially be stuck facing a lose-lose situation.

There is also the issue of fairness in taxation or the so-called “user-fee principle.” Toll advocates argue that tolls are a user fee necessary to finance the maintenance or expansion of a specific road. However, requiring drivers to pay a toll to fund projects in a completely different section of the state, and from which the toll payer derives little or no benefit, is unfair. Yet that is exactly what happens in a lease or privatization scheme, as the up-front cash payment for control of the road is diverted to projects elsewhere, while the increased toll revenues go to line the pockets of investors.

This is not to say that public-private partnerships have no place in helping to solve the problem of how to fund Florida’s or our nation’s infrastructure needs. Private financing can play a role. But it should be a limited role.

We are a society spoiled by instant gratification and access. Having served two terms as governor of Kansas, I understand, all too well, the pressures our leaders face to find immediate solutions to complex problems. But I also know constituencies expect their leaders to have the political will to do what’s right rather than what’s easy.

I challenge Florida’s leaders to find that will on this issue. We must take the time to consider the long-term effects leasing Florida’s existing roads will have on the state’s transportation system, citizens and businesses. As seriously as consideration is given to the financial gains of a lease, the same consideration must also be given to the potential for losing the benefits of an asset that has served Florida well — and will continue to do so, providing the state’s lawmakers resist the temptations of a quick fix.

Bill Graves is a former governor of Kansas.

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Phil Lewis: Numbers tell the tale of Alley lease proposal

By Phil Lewis   Naples Daily News June 14, 2008

Stephanie C. Kopelousos, Florida’s secretary of transportation, was in Southwest Florida this past week and paid our editorial board a visit.

As you might expect, the controversial leasing of Alligator Alley to private investors was about all we had time to talk about.

Kopelousos’ boss — Gov. Charlie Crist — had just signed a bill that allows the state to enter into "private-public" partnerships to lease existing toll roads as a way to generate and free up money to build new roads and repair existing ones.

It looks like Alligator Alley, which links us to Fort Lauderdale and Miami, will be the test case.

So far, eight private investment groups are interested. But, why?

Crunch the numbers and it becomes clear. At $2.50 a pop, Alligator Alley tolls produce $23 million a year.

Right now the state spends about $6 million a year in road upkeep and operation — collecting tolls, keeping rest areas clean, etc. The state also pays $2 million a year to the South Florida Water Management District to help cover the cost of Everglades restoration — a multibillion-dollar, state-federal project. (The Alley cuts right through the wide, wetland flow way that feeds the Everglades ecosystem.) Subtract $8 million from $23 million and you get $15 million a year left for retiring $41 million in state-issued bonds that are backed by Alley tolls.

If a deal is reached, private investors wouldn’t have to worry about retiring the $41 million debt, nor the $2 million a year commitment to the Everglades. Those obligations would remain with the state.

And, since some of the investment groups expressing interest in leasing and operating the highway include road-construction companies, you would think there could be some savings in the $6 million the state pays each year for highway maintenance and operations. Let’s say $1 million a year, if a consortium of investors includes a road-paving firm.

That means a successful investment group could gain control of a cash cow capable of spinning off $18 million a year after expenses. How much would you be willing to invest for a "guaranteed" return of $18 million a year?

That — admittedly in simple terms — is what the investment groups are trying to figure out. The eight groups that have expressed interest will be pared to a few finalists by the end of this month. In early fall, the state will decide whether to lease a public highway to private interests, something that’s never been done before in Florida.

The state is looking for an up-front, lump-sum payment and a schedule for receiving a yearly take of any excess tolls collected. When we tried to pin Secretary Kopelousos down on whether a decision has already been made to lease Alligator Alley, she stuck to her guns.

"No," she said, it all depends on the offers and if the best offer is in the best interest of the public.

She repeated what the state’s been saying from the start: No one really knows what you’ll get when you invite private enterprise in and conduct an auction. Good point. We taxpayers might like the results.

A big, up-front payment could allow the state to retire the $41 million in debt, payoff the Everglades restoration commitment (it runs through 2016) and provide a modest income stream to do other projects.

Or, a big, up-front payment would allow the state millions to use immediately for road construction in Collier and Broward counties at a time when both road-building costs and state road-building funds are low.

Or, the best offer might be good enough to do it all with a minimum increase in the tolls over the next few decades. (The state continues to insist that the power to raise tolls will remain solely with public officials.) The secretary also fielded a few other questions that have been concerning us:

Why was the Florida Turnpike, which links Orlando to West Palm Beach, Fort Lauderdale and Miami, exempt from the state law allowing the leasing of toll roads?

Because the state wants to test the public-private concept on a scale smaller than the long, more heavily traveled turnpike, the secretary said. The Alligator Alley portion of Interstate 75 is "only" 78 miles long and accommodates between 8 million and 9 million vehicles a year.

Would a lease holder be allowed to open concessions — food, gasoline, tourist-information services — at the rest and recreation areas along Alligator Alley? Absolutely not, the secretary said.

If up-front money is used to fund immediate highway improvements in Collier County and Broward County, what will the split be? That hasn’t been determined, but — we were assured — it will be determined and made public before any decision is made on leasing the Alley.

Phil Lewis is editor of the Daily News. His e-mail address is plewis@naplesnews.com

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Naples group protests proposal to lease
Alligator Alley to private company

Naples Daily News staff  June 6, 2008

About 35 demonstrators gathered Friday morning at the U.S. 41 entrance to the Pelican Marsh development in Naples to protest the proposed leasing of Alligator Alley to a private company.

The group, from the Citizens Transportation Coalition, chose that location because Lt. Gov. Jeff Kottcamp was guest speaker at the breakfast meeting of the Republican Men's Club of Collier County at the Pelican Marsh Golf Club.

Eight bidders competing for the right to control Alligator Alley for the next 50 to 75 years submitted Statements of Qualification by Tuesday’s deadline.

A Florida Department of Transportation schedule calls for the list to be pared down by June 30. At that time, the firms will be asked to submit proposals for a lease of the 78-mile alley, which runs from Naples to Weston. A leasing firm could be announced by September, making the alley the first state-owned toll road leased to a private firm.

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Anger overflows at meeting to discuss privatization of Alligator Alley

By Leslie Williams Naples Daily News May 27, 2008

Rarely do local politicians and the voting public have a chance to agree — passionately and universally — on an issue.

But on Tuesday night, Collier County residents and legislators had a chance to gather as one very angry chorus to tell the Florida Department of Transportation “No.”

“We are united on this issue,” said County Commission Chairman Tom Henning. “We are opposed to leasing Alligator Alley.”

He was speaking on behalf of his fellow commission members, who did not attend the workshop because of concerns about violating sunshine laws, but he might as well have been speaking for the 100 or so people gathered in the Golden Gate Community Center.

The throng turned out well before the 6 p.m. start time with signs proclaiming, “I-75; Charlie’s Cash Cow,” asking, “Who gave you permission to sell my roads” and declaring, “Privatization: Corporations win, we lose.”

The public meeting in Collier County was conducted by FDOT more than a month after the first announced meeting discussing the proposed lease of the 78-mile toll road took place in Orlando. That April 24 meeting was conducted with just a week of notice in Collier and Broward county newspapers, and took place amid a gathering of some 300 investors, engineers and subcontractors.

Since then, the state has issued a request for qualifications, the first step in gathering the credentials of interested firms for a possible public-private partnership to last 50 to 75 years.

“I’m sure there are pros and cons to the issue, but the fact of the matter is that it has not been done as it should have been,” said Peter Gaddy, vice president of the Golden Gate Estates Area Civic Association.

He was vetting concerns expressed by many lease opponents who say the state has acted in a way that, at the very least, presents the impression of secrecy.

“I like to try and maintain a good relationship with every department in state government,” said Rep. Matt Hudson, whose district 101 includes the entirety of the alley. “That’s why I found it particularly troubling that they... didn’t bounce it off the guy who represents this area.”

Once the applause had died down, Hudson said he sent a letter to FDOT Secretary Stephanie Kopelousos April 20 chiding the department for the location of the meeting and requesting a response to his concerns. It is a response Hudson said he is still waiting on.

Following comments from elected officials, the meeting was scheduled to move on to smaller discussions among three groups in the room. Audience members revolted against this idea, as Collier Citizens Transportation Coalition President Gary Eidson grabbed the microphone at the front of the room stating, “I find it a little offensive that public speakers are going to be diluted and put into little corners.”

FDOT District 1 Secretary Stan Cann, who knew he was working a tough crowd, relented, and allowed public speakers to come to the podium one by one to state their concerns. A major point of concern for speakers was Cann’s explanation that part of the reason for the bidding process is to determine the road’s worth.

“It seems that if you don’t know the value of it, you won’t know what you’re entitled to,” said Bob Murray.

And though Cann assured the people present that, by state statute, money raised from renting the alley would stay in Collier and Broward counties, the audience was not so easily convinced.

Gail Nance, a Collier County teacher, said the same promise was made when the Florida Lottery was created in the 1980s, but the money brought in via the lottery simply displaced previously dedicated money.

“What the government gave away with the one hand they took away with the other,” she said. “It’s just that the money we would have gotten will get sent somewhere else.”

Though the meeting took a different shape than the one intended by its organizers, FDOT Assistant Secretary of Engineering and Operations Kevin Thibault said it was still productive.

“This is what we wanted,” Thibault said. “We wanted to hear from the public and see what their issues are.”

Thibault said he expected more public meetings on the Alley in the coming months, and hoped the Web site, Alligator-Alley.com, would be another forum for people to get involved and make their feelings known.

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More detail on three Florida lease-concession prospects

Oct. 3, 2007  from TollRoad News.com

Florida DOT have provided us with some more detail on their assessment of the value of three possible toll facilities to be put out for bid by investors. We've got "Possible leases of existing toll facilities" a five page screed dated 2007-09-05. It says the Sunshine Skyway Toll Bridge in Tampa, Alligator Alley Naples to Ft Lauderdale, and Beachline East expressway are "most likely candidates for consideration."

The analysis is the first response to this summer's HB985 which gave the Florida DOT the authority to do longterm lease concessions with the private sector.

The FDOT paper says the $numbers are based on a "very preliminary analysis."

It calculates high and low concession values based on movement to a market toll rate - that which maximizes net toll revenue - for the high estimate and 50% of the market rate for the lower.

Sunshine Skyway Bridge

On the Sunshine Skyway bridge the toll for cars using a transponder is currently 75c whereas the market based toll is estimated to be twice that - $1.50 in 2008, rising to $3.00 in 2012 and $5.00 in 2017. Comparable toll bridges are given as the Golden Gate $2.50, Henry Hudson Bridge NYC $1.75 and Bronx Whitestone NYC $4.00.

Adopting full market pricing the Sunshine Skyway concession would generate $1,315m, but with caps limiting tolls to 50% of market rates $477m for a 50 year lease.

The Sunshine Skyway is described as a 28km (17.4mi) 4 lane expressway. It is designated I-275 and spans the mouth of Tampa Bay and is the most direct route for west Tampa area people to get to St Petersburg, Sarasota and points south.

Alligator Alley

125km (78 miles) long Alligator Alley the straight shot expressway designated I-75 between the Fort Lauderdale area and Naples on the Gulf Coast is a concession valued at $1,332m for full market tolls calculated at $4.00 for cars now vs the present toll of $2.00. The market rate could rise to $8 in year 5 and $10 in year 10.

At half market toll rates the road would bring an estimated $504m

Beachline East

This is the FDOT portion of a longer tollroad called the Beachline (formerly Bee Line) designated FL528 which has segments owned by the Orlando toll authority and Florida Turnpike Enterprise.

Tolls on the Beachline East currently 25c would rise to $1.00 by 2012 and $1.50 by 2017 under a market toll setting regime generating a concession fee of $321m. A half-market tolls concession would bring $140m the paper says.

Schedule

The paper lays out a possible schedule, major items of which are:

- 45 days of preparatory evaluation
- 30 days RFQ/proposal development (Done day 45)
- 15 days for shortlisting (Done day 45)
- 45 days development of RFP (Done day 90)
- 90 days for proposals to be developed (Done day 181)
- 45 days for final analysis (Done day 217)
- 30 days award of concession (Done day 247)
- 60 days for financial close (Done day 307)

Download text of "Possible leases of existing toll facilities" FDOT, 2007-09-05, 5 pages

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