BRADENTON, Fla. - Looking for ways to bring in new revenue, the Florida Department of Transportation is exploring monetization of a 78-mile-long toll road across south Florida known as Alligator Alley.
A variety of ways to monetize the toll road are under consideration, including leasing it to a private operator through a concession in a public-private partnership, or having FDOT securitize future toll revenues, said Bill Thorp, the department's interim assistant secretary for finance and administration.
"We're looking at ways to convert some of the value into a monetization so we can build additional transportation projects in the state," Thorp said.
Although there are several FDOT-owned toll facilities in the state, the agency is looking first at Alligator Alley as a pilot project because it is in the best shape to attract companies interested in leasing it. For its length, it also has one of the lowest tolls in the country. Drivers of two-axle vehicles with transponders are charged $2 and drivers paying cash are charged $2.50.
"We have not decided to do anything with tolls, but we know that is below market and you could raise the tolls and still be under market," Thorp said. "We could monetize [the toll] ourselves through the form of bonds."
But in determining the route to take, FDOT next month is holding a forum to see if there is interest from prospective concessionaires. The date and place of the forum have not yet been determined.
Studies by the state and investment banks have suggested that leasing the toll road could bring between $350 million to over $1 billion. Under state law, FDOT can consider leasing its toll roads for up to 75 years.
Alligator Alley, which traverses the Florida Everglades from Fort Lauderdale to Naples, has about $41 million of outstanding debt rated A-plus by Fitch Ratings and Standard & Poor's, and A1 by Moody's Investors Service. Approximately $2 million of tolls a year through 2016 are owed to the South Florida Water Management District for Everglades improvements.
Thorp said despite those debts, FDOT believes the facility has value that can be leveraged.
"One of the reasons we're looking into leasing is because the whole economic situation has changed in recent months with monoline insurers running into difficulty," Thorp said. "We'd like to talk to concessionaires to see what kind of interest can still be brought to the table under the provisions of House Bill 985."
HB 985 was signed into law last June by Gov. Charlie Crist instituting new standards governing public-private partnerships and leasing of existing toll roads in Florida by FDOT as well as other agencies, such as expressway, transportation, bridge, or toll authorities.
The law requires that each agency must do an independent analysis of the proposed contract that demonstrates its cost-effectiveness and overall public benefit. The private partner must provide an investment-grade traffic and revenue study that is acceptable to national bond rating agencies.
The law also set standards for maintaining, operating, and renewing P3 toll facilities, and regulates tolls to be charged.
When Crist signed the bill, he said it would help address Florida's growing backlog of transportation needs.
"Expansion and improvement of existing roadways must and should take priority," Crist said then. "The additional financial tools provided by this bill, especially the public-private partnership authority, should therefore be used to maximize expansion and improvement of appropriate facilities."
FDOT already has a pool of financial advisers to consult with on P3s. So far, the state's P3s have involved new projects or expansions of existing roads. Alligator Alley would be the state's first privatization of an existing toll facility.