Would bridge leases pay off for Florida?

Officials keep running the numbers, but haven't made a decision.

By MIKE BRASSFIELD, Times Staff Writer
Published November 25, 2007

The badly peeling paint on the Sunshine Skyway is evident.
	[Lara Cerri | Times]

TAMPA - Picture the Sunshine Skyway under the control of profit-driven investment bankers instead of state bureaucrats. That could lead to soaring tolls on Tampa Bay's iconic bridge, which has charged the same price for a quarter-century.

But faced with a $2.5-billion budget shortfall over the next two years, Gov. Charlie Crist and state transportation officials are considering selling 50-year leases on Florida toll roads such as the Skyway, the Pinellas Bayway and Alligator Alley in exchange for large sums of cash up front.

Other local toll roads such as the Veterans Expressway, Suncoast Parkway and Lee Roy Selmon Crosstown Expressway are off the table.

"We won't do it unless it is good for the state," Crist has said repeatedly.

There is no doubt that road privatization can be lucrative in the short term, with the cash-strapped state potentially raking in billions. Indiana, Chicago and several foreign countries already have done the same thing. Supporters argue that Florida will only end up with more gridlock if it doesn't come up with creative ways to raise money for road construction.

But over the long run, would drivers be getting a raw deal?

It would mean handing over the operation and maintenance of a toll road or bridge to a private company, which could raise prices at the toll booth and keep most of the revenue. Critics say the state would be letting investors make fat profits from aggressive toll hikes.

Judging from public records obtained from the governor's office and the Florida Department of Transportation, it's clear officials are running the numbers, trying to figure out what would be a fair deal.

They're also looking at leasing Alligator Alley first, because the Skyway and Bayway have maintenance issues.

No free ride

How much would drivers pay?

Today it costs $1 in cash or 75 cents with a SunPass to cross the Skyway in a car. The state says that's low compared to similar bridges. The Golden Gate Bridge costs $5. The Skyway's price has stayed the same since 1982, although lawmakers have come close to raising it a couple of times.

Under new management, prices would certainly go up.

In a preliminary study, the Transportation Department estimated a 50-year lease on the Skyway could be worth $1.3-billion if investors were allowed to set tolls at "market rates." The study used the example of the SunPass toll, which would double in the first, fourth and 10th years of the deal, climbing from 75 cents to $5 within a decade.

A more politically palatable deal would raise tolls by 50 percent starting in the first, fourth and 10th years. In a decade, Skyway drivers would be paying $3.50 in cash or $2.50 via SunPass. More price hikes would follow in the 40 years after that. A lease with those conditions could net the state $477-million.

And leasing Alligator Alley, which runs between Naples and Fort Lauderdale, could bring in $500-million to $1.3-billion depending on how high the toll could rise - either to $6.75 or a whopping $10 in the first decade.

Any deal would come after negotiations over how expensive the tolls could get over a full 50-year span. It also would require public hearings and legislative approval.

Proponents of this idea make the point that companies don't raise their prices high enough to scare off customers. There's no reason for a private firm to hike tolls to the point where no one is using the road, said Rep. Gary Aubuchon, a Cape Coral Republican. He co-sponsored a bill earlier this year that paved the way for the leasing of toll roads.

Also, tolls will start creeping upward incrementally no matter what, thanks to a new law that indexes them to inflation. (See box.)

But critics say private investors would still hike tolls more aggressively than the government, disproportionately hurting low-income drivers.

"Take Alligator Alley. For many people, that's the only way to go from east to west Florida and vice versa," said Sen. Mike Fasano, R-New Port Richey, chairman of the Senate Transportation Committee. "It would be controlled by a private entity that could raise tolls ad nauseam. It could make it unaffordable for people to travel."

Worth the squeeze?

Alligator Alley has quietly emerged as the state's prime candidate for privatization. It got picked through a process of elimination.

A law passed this year allows Florida to lease toll roads that are operated by the Transportation Department, but not by Florida Turnpike Enterprise.

The turnpike's system's roads, including the Veterans Expressway and Suncoast Parkway, can't easily be leased because they're all part of a system that's tied together financially.

"It's an all-or-nothing proposition," said Kevin Thibault, assistant transportation secretary.

That leaves four roads: the Alley, the Skyway, the Pinellas Bayway and a state-owned stretch of the BeachLine Expressway (formerly the Bee Line) in Central Florida.

But the upkeep costs of the Tampa Bay area's toll bridges would lower the price that investors would be willing to pay for them. Florida officials fear they wouldn't get enough cash to make the deal worth it.

Said Thibault: "You have to ask, is the juice worth the squeeze here?"

Sunshine Skyway: The 20-year-old landmark has undergone major repairs for corroded columns, worn-out 20-ton expansion joints, and peeling paint on its distinctive yellow suspension cables.

The $18-million collected each year at its toll booths pays for its upkeep, with the extra revenue funneled to road construction in neighboring Pinellas and Manatee counties.

"It's a big structure. There's lots of maintenance that needs to go on. It's always continuing," Thibault said. A company that leased the Skyway would be taking on those costs.

Pinellas Bayway: It's in worse shape. Its two 45-year-old bridges were supposed to have been replaced by now. In fact, the Transportation Department will hold a public meeting Wednesday night in St. Pete Beach to discuss raising tolls to pay for that.

Alligator Alley: The long, flat road through the Everglades has lots of bridges to let water and wildlife pass underneath. Those require upkeep. But as the only east-west highway in South Florida, it's a virtual monopoly.

"It's pretty straightforward, straight as a needle, and has stable traffic flow," Thibault said.

'A gold mine'

Why consider doing this in the first place?

Because Florida's traditional way of building roads is starting to break down. Its $8-billion-a-year road construction budget is getting squeezed by a double whammy of declining gas-tax revenue and huge spikes in the cost of materials.

Companies are interested. An industry official told lawmakers that Florida is "sitting on a gold mine." Crist's office has been briefed by investment firms. And public records obtained from the Governor's Office included a stack of studies from the Reason Foundation, a libertarian think tank that supports privatizing roads.

One obvious question: If there's money to be made by raising tolls, why can't the state do it without getting private firms involved?

Transportation officials are asking. They commissioned a study that concluded Florida could get $600-million to $1.6-billion up front by raising tolls on Alligator Alley and borrowing against future proceeds, rather than privatizing it. They plan to present their findings to Crist soon.

Either way, Florida should be wary of the temptations of immediate gratification, said Steven L. Reich, a toll road expert at the Center for Urban Transportation Research at the University of South Florida.

"You can't just jump at the prospect of someone holding a billion dollars in front of you without understanding what the alternatives are," Reich said. "There is no free ride here."

Mike Brassfield can be reached at brassfield@sptimes.com or (813) 226-3435.

The Pinellas Bayway's tolls will soon be raised separately. The Lee Roy Selmon Crosstown Expressway isn't affected by this law.

Florida tolls will slowly rise due to a new law that indexes them to inflation, which has been averaging 2.6 percent. Electronic SunPass tolls will rise with inflation each year rounded to the nearest penny, and cash tolls will go up every five years rounded to the nearest quarter. Here, Turnpike Enterprise officials estimate future local tolls.

Veterans Expressway

Cash SunPass

Now$1.75 $1.25

In five years$2 $1.42

Suncoast Parkway

Cash SunPass

Now$3 $3

In five years$3.50 $3.41

Sunshine Skyway

Cash SunPass

Now$1 75 cents

In five years$1 85 cents

[Last modified November 24, 2007, 21:36:44]