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Transportation
Drive Now, Pay Later
Builder financing, private operators, more tolls: Is "borrow and spend" right for taxpayers?
‘No free road’
A lot of money’s about to be made here. The question is whether it’s a good thing for taxpayers and drivers.
House Democratic Leader Dan Gelber of Miami, a skeptic, calls it “borrow and spend.” “Somebody’s making a profit, and they’re raising capital more expensively than government does.” Tolls, he adds, “have become another way to tax people.”
Doug Callaway, president of Floridians for Better Transportation, has a different concern. “Remember the Florida Lottery,” he says. All the talk about “innovative financing” could take the heat off the governor and legislators to keep spending tax money on roads, just as lottery profits that were to enhance education “quickly became a replacement for existing sources.”
“There’s no free road,” Kopelousos says.
Enter “innovative financing.” It gets the roads built when the state otherwise wouldn’t have the money.
“Traditional” financing uses gas tax money, occasionally supplemented by other tax revenue, to pay for about $8 billion in road construction each year. It has been at that level for about five years, says DOT’s Clary, despite the rapid rise in the cost of right of way, road materials, equipment and even labor. Toll roads are financed by 30-year bonds, repaid from tolls.
Now the road builders have seen the opportunity for more road building business if they’ll provide financing themselves, like department stores boosting sales with their own credit cards. Investors like MacQuarie and Goldman see the opportunity for profits if they’ll take some of the risk of driver usage by purchasing a “concession” — the right to the toll revenue over an extended number of years while maintaining the road.
The deal with that 30-mile corridor on I-75 in southwest Florida is one example. Clary says DOT was going to spread the work over nine separate projects in an eight-year span because that’s what the state could afford. But the group led by Anderson Columbia committed to build the road in three years for the same amount of money.
Drivers benefit, Clary says, because they’re not subjected to construction on that stretch of road for eight years. The state benefits by avoiding increases in road building costs over those last five years. And the contractors, while taking more of the risk, get more business faster and have opportunities for bigger profits.
