BRADENTON, Fla. - In what is perhaps a sign of the economic downturn and a slowdown in public-private partnerships in other states, numerous domestic and international firms have shown interest in leasing a 78-mile-long toll road in South Florida called Alligator Alley.
Nearly 170 people attended a forum last week on the monetization proposal by the Florida Department of Transportation, many representing companies expected to bid on the public-private partnership concession. Alligator Alley would be the first existing toll road in Florida to be leased, although the state has other P3s in the pipeline.
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.
While there is outstanding debt, the FDOT believes the toll road has value that can be leveraged.
Leasing the road to the private sector, however, has stalled for now.
A competing proposal under consideration by the Legislature forced FDOT yesterday to delay seeking qualifications from firms interested in leasing the road.
The proposal, contained in SB 1978, an omnibus bill covering a myriad of transportation issues, would require the State Board of Administration lease Alligator Alley to the Lawton Chiles Endowment Fund. The fund was created in 1999 to invest the money the state won from its settlement with tobacco companies. It is named after the late governor who helped secure the settlement.
Calling the idea "Investing Florida Money in Florida," sponsor Sen. Dan Webster, R-Winter Garden, wants to take $500 million from the $2.3 billion endowment fund to provide funds to FDOT for new and backlogged transportation projects across the state. Tolls collected on Alligator Alley would then provide payments on a lease held by the endowment fund.
Going ahead with the P3 could be more financially advantageous for Florida than leasing to the endowment fund, according to Jack Finn, a senior vice president and national director of toll services for HNTB Corp., which has participated in various P3 projects. Finn has spoken about transportation infrastructure issues before numerous governmental organizations and also attended last week's forum on the Alligator Alley concession.
"If Florida moved forward [with the Alligator Alley concession], I think the state would see more interest, possibly more competition, and possibly a higher bid," he said. "Successfully moving forward with P3 projects in Florida would probably increase interest by the international P3 community in the state of Florida and could increase competition on future projects."
Finn said many companies specializing in P3s, particularly international firms, have established offices or subsidiaries in the United States in anticipation of growth in the industry.
But he said the sector has been disappointed by a slowdown of public-private activity, especially in Texas, where there has been a partial two-year moratorium on the construction of new toll roads by private firms. The moratorium, enacted last year, resulted from protests about turning over highways to private owners for 50 years or more.
"Texas seemed to be leading the way and slowed down," Finn said. "The private sector is looking carefully around the country to see who is serious about moving forward with a P3 program."
Although the Florida Legislature last year authorized FDOT to lease a number of toll roads, including Alligator Alley, Webster said his legislative proposal would keep the toll road in state hands. It has also been suggested that leasing to the endowment fund would guarantee a steady rate of return. Currently, the principal is invested and the interest is spent on health care programs.
Webster's proposal is not in the companion House transportation bill, which passed Tuesday. That means lawmakers must negotiate the final details before the session ends at 6 p.m. tomorrow.
In a tight budget year, FDOT is looking for ways to bring in new revenue, particularly since the proposed state budget for fiscal 2009 does not authorize any new debt for road projects despite a backlog of transportation needs.
While the state was forced to delay seeking qualifications from firms interested in leasing Alligator Alley, FDOT's assistant secretary for engineering and operations, Kevin Thibault, said the agency is now in a "wait-and-see mode."
If the endowment fund proposal is passed in the transportation bill, it still must be signed by Gov. Charlie Crist, who hasn't said if he supports the idea.
FDOT hasn't taken a position on the bill's requirement to use the endowment fund, Thibault said, but if it prevails as written then the department could not proceed with the P3 concession.
If the bill gives transportation officials a choice between using the endowment fund or going through with a public-private partnership, Thibault said the department would evaluate them both.
The commonality of both ideas is getting "much needed" revenue up front for transportation needs, Thibault said.
"It brings revenue forward to tackle our transportation needs," he said. "The result is stimulating the economy."
FDOT has launched a Web site regarding the Alligator Alley privatization project at www.alligator-alley.com.