The Problems with a Public-Private Partnership Controlling I-595

Is the re-design of the freeway introducing a radical form of road financing, control and maintenance?

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Will a private corporation control the planned elevated reversible toll road on I-595? There are ideas under discussion, and laws just passed by the Florida Legislature, that would authorize turning over construction and management of the super highway to business interests. Now that Governor Charlie Crist has not vetoed H.B. 985, Floridians have a lot to worry about.

Dubbed "Highway Privatization," the South Florida Sun-Sentinel reported on April 4, 2007, that "Florida is among more than 20 states that have passed bills authorizing some form of highway privatization." The paper reported there were plans for State officials "to meet with investors and contractors all over the world to consider financing options for the mammoth I-595 project."

Just what the Florida Department of Transportation (FDOT) intends and what this concept means for your "freeway" is ambiguous at this point. It's time to put the brakes what has, to date, been a discussion-free idea of highways controlled by the boardroom.

Toward the end of the 2007 Regular Legislative Session, Tallahassee revised Section 334.30 and established additional criteria allowing FDOT to enter into "P3's" (Public-Private Partnerships). According to a bill summary published on-line by the Florida Senate, "FDOT may develop new toll facilities...through P3's." Now that the law is in place, and plans speed ahead to create an elevated (and reversible) toll road through the heart of Broward, we need to step back and take a good hard look at the ramifications of such a partnership.
 

There are many questions which need to be answered. The legislation is short on details, and how the law will be interpreted and applied will be based upon the regulations which will be produced by FDOT.

 

Editorial endorsing FDOT's plan to eliminate elevated toll lanes over 595. Click here.

FDOT considers plan to scrap elevated highway above I-595. Decision expected by end of September. Click here.

 Click picture to play video of 9.5.07 Davie Town Council meeting. More information on 595Alert.org News page.

The Danger of "Included Traffic" and the need to get the data right. Click here.

Preserving Florida's transportation infrastructure and the danger of "Shadow Tolls." Click here.

 

Who will select the business entities who will control the road? What criteria will be utilized in the selection process? Is the planned governmental oversight tight enough to insure tolls are reasonable, and not raised at the whim of a corporate board? Since when did government feel it should delegate what has been a primary function of a public transportation policy? If the state is meeting with investors and contractors, why not report on those meetings in a public forum, in the sunshine and in detail, so the public has a chance to follow the discussions?

Private toll roads are controversial. CBS4.com (May 4, 2007) quoted State Representative Jack Seiler (D-Wilton Manors) as saying "The day we privatize our public roads and we turn them over to private companies is the day we start selling this great state off." "It's going to be a big mistake."

Initial analysis of the bill approved by the Legislature indicates the companies could build and run the toll way for years under a contract. At the end of the contract, the high bridge envisioned by FDOT would be controlled by the State. That leaves more unanswered questions. Could the contract be renewed? For how many years? Could the agreement be assigned by the original company to yet another? What say would the public have in the future?

The cost of building the I-595 corridor project is estimated to be at least $1.5 billion. Anyone who thinks the price will stop there is ignoring history. Cost overruns are a part of American road construction culture. If private business controls the tolls, and under-estimates the cost of building and maintaining the new infrastructure, those costs will be passed on to the drivers who will pay for the right to use the road. Tolls will most certainly increase. Corporate boardrooms strive for profit, or they would not be involved. If profit shrinks, owners or shareholders sitting in some distant boardroom may increase the charges to use the road.

"A toll road constructed, operated and maintained with private capital creates a slippery slope."

Nothing we have seen, by the way, eliminates the possibility of a taxpayer bail-out if the elevated road proves too costly. For that matter, nothing prevents the operating concern from asking for changes in the restrictions imposed by Florida law and regulations about fare increases. And what controls will be in place to insured maintenance of the road is not cut back in order to maximize profit? A toll road constructed, operated and maintained with private capital creates a slippery slope.

In reality, how much public control will there be? What is the length of any P3 contract? Will the P3 have eminent domain powers? Will the P3 hold public meetings for toll payer input? Will records and plans be made public? How transparent will this operation actually be? Will some sort of sovereign immunity attach to the public-private partnership? How accountable will the private interest be to the people of Broward County? Will non-compete clauses be used to shore up the corporate road monopoly?

There must be careful citizen analysis of this method of funding highways and bridges. The public interest is to scrutinize the details. If the facts are not known, there should be no rush to employ a P3 on Interstate 595.

The wisdom of private toll roads is in dispute across the nation. In 2006, Indiana Governor Mitch Daniels approved a bill allowing for a $3.8 billion agreement to lease 157 miles of the Indiana Toll Road for 75 years. The lease was reportedly entered into by an investment company. The Indiana experience has become a topic of heated conversation. According to Stateline.org, a public policy website run by the Pew Research Center, "As states increasingly look to toll roads and public-private partnerships for quick road-financing fixes, the public, consumer advocates and motorist and trucking associations are putting up barriers to pay-as-you drive proposals." See the article, "Toll Roads Hit Speed Bumps," published by Stateline.org, here.

The Stateline.org article reports debates about private toll roads are raging in Texas, Pennsylvania, Colorado, and New Jersey. Reuters.com reported on April 27, 2007 "the Texas Legislature approved a two-year moratorium on privatizing toll roads after a public outcry over whether private companies are reaping overly generous profits from some recent deals."

In Chicago, Reuters.com reports, a lease agreement made in 2005 enriched the City by $1.83 billion for the Skyway bridge. However, Joan Gralla, of the news service, states, "But fiscal monitors have criticized Chicago's deal..." She reports, "The 99-year-pact failed to give taxpayers the extra toll revenue the companies can get."

TampaBay.com reported on February 16, 2007, that the Tampa-Hillsboro Expressway Authority is trying to enter into a partnership with private industry to build and operate a toll road. According to the article, "One firm it will still need millions in public subsidies every year to break even on the road - a potential deal breaker. The other firm is asking for no public money but would charge higher-than-average tolls."

Looking between the lines, one can ask, "The higher the tolls, isn't there less justification for a partnership with private interests?" Will FDOT promise subsidies will not be entertained? The Tampa article points out that one foreign company has said without subsidies, a $3 toll might have to be charged. Now that tolls are being considered for Interstate 95 between Miami and Fort Lauderdale, just how much will it cost to go to work? To make deliveries? To see friends and family?

These debates demonstrate the need for a thorough analysis of a local P3 that threatens to dominate the 595 corridor for decades to come. Florida, and Broward County, need to proceed with extreme caution on such partnerships.

The Sun-Sentinel report of April 4, 2007, states tolls would increase during rush hour, to keep the traffic from clogging. That is known as "congestion pricing." The decision to use the road will not just depend on where you want to drive (high above the main roadway or on the ground) but also upon the time of day you need to use it. In a county already too expensive for many to live quality lives, are we further pricing our residents out of Broward County? Are we creating second class citizens who cannot afford high daily fees to go to and from work?

The case is compelling....Governor Crist needed to veto H.B. 985. 

The debate is only beginning in Broward County. See Sun-Sentinel.com editorial of June 9, 2007 entitled, "A very flawed highway bill lands on the governor's desk." Join in the dialogue. Let us know your thoughts about a 595 elevated toll road run by a private company. E-mail us here.

-Mitch Chester (Posted 5/31/07; Revised 6/20/07)

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Mitchell A. Chester, Website Editor
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