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Toll Roads
For Whom the Tolls Swell
Florida's growing reliance on toll roads to keep pace with growth attracts new investor interest.
Drooling
Stutler also expects to see Florida landowners and developers proposing their own private roads. DOT would work with those to plan connections to the state system. Stutler says at least three such projects are under discussion. Walt Disney Co. has already been a major funder of road projects in central Florida. The company contributed nearly $75 million toward the $152-million cost of building the so-called Southern Connector near Kissimmee a decade ago and was able to build its Celebration community as a result.
Private interest in roadways doesn't stop there. Florida's once-troubled, now-thriving toll enterprises expect to collect more than $1 billion in tolls during 2006, equivalent to 10 or 11 cents of gas tax. And all that cash flow has some outsiders drooling.
In other states, private companies are beginning to purchase long-term leases (known as "concessions") on existing roads in expectation of making money by operating roads more efficiently and raising the tolls. The pioneers and most prominent players are foreign firms. The best known is Macquarie Bank of Australia, operating as the Macquarie Infrastructure Trust, which has acquired rights to the Dulles toll roads in northern Virginia. Two other important players are Cintra Concesiones and Abertis Infraestructuras, both based in Spain.
A Macquarie-Cintra partnership successfully bid $1.8 billion for a 99-year lease of the Chicago Skyway, a 7.8-mile elevated stretch of Interstate 90 across the south side of Chicago. The city says it will use the money to pay down old debts and create a "reserve" fund; it won't necessarily use the money for transportation. Indiana, Ohio and Texas are among other states actively working with private entities.
Would Florida ever consider cashing out of attractive chunks of highway like the Sunshine Skyway Bridge over Tampa Bay? "A lot of people are talking to Florida," says Stutler. "Most of them have come to us about wanting to take an existing proven roadway and make it a concession. ... But Florida would be slower to move in that particular model because I think we have demonstrated a history of some success on toll roads. We know a lot."
"We should be using the private sector to help us build something, not to buy something that we've spent a lot of blood, sweat and tears on," adds James L. Ely, executive director of the Turnpike Enterprise. Unlike other states desperate for cash and greater efficiency, "We are the envy of many places around the world."
But the state still might turn to the private sector for some joint-venture road projects. "We might not sell it to them," says OOCEA's Keen, "but what we could do, if we need $200 million or $500 million for our (expanded) work plan, we could work out a business model that makes them money," probably through toll increases over time. "We're just beginning to explore that."
Seizing the initiative
Half a century ago, when both the national interstate system and Florida's Turnpike began, superhighways were thought of as a way to move people across great distances. The turnpike ran 309 miles through sparsely populated central Florida to deliver tourists to bustling, cosmopolitan Miami. Today, however, even interstate "bypasses" are clogged with commuters. And on the turnpike, says Executive Director Ely, 90% of the tolls are by commuters, not tourists.
One thing nobody has figured out is how to plan ahead on roads without encouraging sprawl. "Does growth bring roads, or do roads bring growth?" asks OOCEA's Keen. "The answer is yes."
Ely says there's a story that Walt Disney himself, flying over Florida looking for a place to put Disney World, spotted the intersection of I-4 and Florida's Turnpike and picked that as his site. At about the same time, the Apollo moon program was in full swing at Cape Canaveral. The state didn't have the money to pay for the roads those two huge ventures would need, but the toll authorities could get it done.
As the state grows and coastal areas are built out, the population is going to grow inland. State and local governments have a chance to plan where big developments and even new cities will go. One way to influence those decisions is via choices about where roads will go. That's why possibilities like a coast-to-coast road well south of Orlando but north of Lake Okeechobee are important decisions for growth, environmental
and economic reasons.
DOT says every dollar invested in transportation produces $5.50 in "user benefits." The state isn't raising taxes, though. Bush has not-too-subtly noted the unused taxing authority in local option sales and gas taxes and suggested local governments ought to be the ones building more road capacity. But the Legislature has pressed for more state money, like last year's addition of $1.5 billion more for infrastructure expansion, ranging from roads to water and sewer systems. It's a lot of money, but it is a single-digit percentage against what some say is a $25-billion backlog just in the state road system, before counting congestion on local streets.
For both private industry and the toll authorities, with their large, predictable free cash flows, Florida's congestion problem looks like a huge opportunity.
