BRADENTON, Fla. — The Florida Department of Transportation is proposing a network of regional transportation toll authorities that it says would take some financing pressure off the state and move projects forward.
FDOT is proposing a bill during the upcoming legislative session that would create the Florida Regional Tollway Authority. The session begins March 5.
The act would enable contiguous counties across the state to plan and issue bonds to finance what the state calls “regionally significant” transportation corridor improvements.
Some of those improvements typically would have been done by FDOT but its financing capacity has been constrained by state borrowing policies and depressed revenues in recent years, according to a transportation revenue study by the Center for Urban Transportation Research on behalf of the Florida Metropolitan Planning Organization Advisory Council.
Bonds issued by a regional tollway authority would not count toward the state’s debt limits.
Other factors limiting FDOT’s ability to finance projects include sweeps of the transportation trust fund by lawmakers in recent years to bolster the general fund, and dwindling gas tax revenues.
The Legislature also redirected an increase in some vehicle-related fees to the general fund.
FDOT Secretary Ananth Prasad unveiled the proposed Tollway Authority Act last week at a symposium in the state’s panhandle, which was held to discuss financing that region’s transportation network.
The act would also create three new tollway authorities: the Northwest Florida Regional Tollway Authority serving Escambia and Santa Rosa counties; the Okaloosa-Bay Regional Tollway Authority serving Okaloosa, Walton and Bay counties; and the Suncoast Regional Tollway Authority serving Citrus, Levy, Marion and Alachua counties.
“The legislation creates the three tollway authorities and establishes the framework for others,” said FDOT spokesman Dick Kane.
Tollway authorities would have the ability to pledge net toll revenues as security for the payment of bonds issued by the authority to fund construction of a facility, according to an department proposal prepared for lawmakers.
The actual bill is in the process of being drafted.
Transportation projects would be developed and planned by an authority, but constructed by FDOT or a local government certified by the state to administer federal aid projects.
Facilities would be operated and maintained by the state, with those costs required to be repaid annually from current year toll revenues.
“The tollway authority model requires current reimbursement to the department for all costs of operation and maintenance before debt service is paid on bonds issued to finance a facility,” the legislative paper said.
The proposal “discourages duplication of government resources by requiring tollway authorities to use existing government resources to construct, operate and maintain facilities.”
The proposed bill would also transfer the governance and control of the Mid-Bay Bridge Authority to the Okaloosa-Bay Regional Tollway Authority, which came as a surprise to the agency when it was mentioned at last week’s symposium, according to authority board chairman Gordon Fornell.
FDOT did not collaborate with the Bridge Authority about the proposal, he said, adding, “We’ll be strongly opposed to it.”
The Mid-Bay Bridge Authority, also located in the state’s panhandle region, had about $259 million of outstanding revenue bonds, according to its fiscal 2011 audit, the most recent available. The bonds are rated in the triple-B category by Fitch Ratings.
“We use all our tolls to pay off our capital debt,” Fornell said. He added that it is his understanding that the proposed act would allow Bridge Authority toll revenue to be spent outside its Okaloosa County base of operations.
Fornell said it might be possible that the new structure proposed by FDOT could affect the Bridge Authority’s bond payments.
Though the Santa Rosa Bay Bridge Authority is also in the panhandle, the Transportation Department’s legislative paper makes no reference to it. Santa Rosa has about $116 million of defaulted toll revenue bonds, which were accelerated shortly after the new year began by the trustee, Bank of New York Mellon.
“Due to the financial condition of the bridge, we didn’t want to burden a new authority with that debt,” Kane said when asked why the toll bridge was not included in the tollway authority act.
The idea of creating tollway authorities appears to be based, in part, on recommendations made by the Florida Metropolitan Planning Organization’s advisory council last year.
The MPO is a statewide transportation planning and policy organization created by the state Legislature.
The revenue study prepared by the MPO proposed that Florida create regional transportation financing authorities “with provisions to incur debt outside of the state’s debt-service cap and limitations.”
A regional financing authority could assist in “buying down” the capital cost of revenue-generating projects and the future revenue streams pledged towards paying off bonds, as well as provide other types of loans and credit enhancements to encourage a higher level of transportation funding, the MPO study said.
“These entities would not compete with existing agencies to operate transportation facilities; rather, they would act as financiers for regional transportation investments in projects that are user-fee-based or that have a dedicated revenue source for repayment,” the study said.
The purpose of establishing regional transportation financing entities would be to provide increased capacity and greater flexibility to state and local agencies to finance necessary transportation infrastructure projects “while also preserving the integrity of the existing state bond policies and practices.”
The study went on to say that debt financing is frequently the most appropriate mechanism to pay for new highways, bridges and transit facilities.
It is also consistent with “user pay-user benefit” principles for projects that provide additional capacity for the benefit of future users or that extend the useful life of existing facilities.
The MPO study also said that the Legislature in 2012 placed a comprehensive cap on the total amount of debt that FDOT could undertake, limiting the future use of debt financing to pay for transportation improvements.
The cap covers bonds issued for FDOT projects, participation in public-private partnerships, other debt-like arrangements, and risk-sharing participation agreements with regional transportation authorities.
“The recently enacted legislation limiting FDOT’s participation in debt financing and debt-like programs should serve as a catalyst for establishing a transportation financing mechanism which does not impact the state’s debt management policies and practices,” the study said. “It is contemplated that [regional authorities] would operate independent of the state and would not rely on state tax revenues in any capacity that would limit the state’s tax-supported bonding capacity.”
The proposal outlined by FDOT’s Prasad last week said that the financing of new transportation facilities systems developed by tollway authorities would not rely on a legal obligation of the department to pay the cost of operation and maintenance of facilities.
Some expressway and bridge authorities have lease-purchase agreements with the department, including the Mid-Bay Bridge Authority.
The proposed tollway authorities bill should begin going through pre-legislative session committee meetings soon.
Lawmakers will be in regular session from March 5 until May 2.