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Alligator Alley

GREG KAHN / Daily News

Cars head west on I-75, in the area commonly known as Alligator Alley, in the early morning on April 23, 2008.

Courtesy of Helen Weinfeld

Joe Weinfeld stands by a sign touting the advent of Alligator Alley in Collier County. This same photo is in the permanent collection of the Jewish Museum of Florida in Miami Beach.

Try predicting the value of your home 75 years from now.

Or forecasting the return on an investment over 99 years.

It’s a tricky business, but one state officials soon could be banking on to boost revenue.

Alligator Alley, the 78-mile stretch of Interstate 75 between Naples and Fort Lauderdale, has caught the state’s eye as a candidate for leasing to a private company. Tolls have been raised only nominally since the road was completed in 1969, but privatizing the road could mean big changes.

Across the nation, billions of dollars in road maintenance isn’t getting done each year because there isn’t enough money. In the present economy, lawmakers are loathe to increase gas taxes to make up the difference.

So some governments are turning to alternate means of raising revenue, such as public-private partnerships. Plans to lease public roads to private entities are either being instituted or debated from Pennsylvania to Texas to California, and even internationally.

In 2005, the city of Chicago undertook a partnership that launched the trend in state revenue production. Chicago was interested in leasing out the 8-mile Chicago Skyway, part of which arches over the Calumet River before connecting with the Indiana East-West Toll Road at the border.

The skyway was taken over by Cintra-Macquarie, a consortium of Spanish and Australian companies. Cintra-Macquarie’s bid for the 99-year lease was $1.8 billion, 160 percent more than the next-highest bidder.

Florida Department of Transportation officials said they are examining a 50- to 75-year lease for Alligator Alley. The schedule for toll increases are an ongoing topic of discussion as the state moves forward.

This would be Florida’s first foray into a public-private partnership for an existing toll road since Gov. Charlie Crist signed a bill into law allowing the DOT to engage in the deals.

Much of the $1.8 billion netted in the Chicago deal was used by Chicago Mayor Richard Daley to retire outstanding debt, including $430 million in skyway bonds -- the city had invested $250 million to widen and improve the bridge in 2003 and 2004, just before announcing plans for the lease. The remainder is either covering annual budgetary needs or earning interest as an emergency reserve.

In Florida, the state hasn’t yet identified a specific use for any revenue generated by an Alley partnership. The toll road generated $23 million in profits in 2007, and is ahead of projected earnings for fiscal 2008. Operating costs were just $3 million in 2007.

Following the Cintra-Macquarie deal in Chicago, the state of Indiana entered into a partnership with the same company. Indiana Gov. Mitch Daniels announced a plan in 2006 to form a public-private partnership to lease the Indiana East-West Toll Road -- the same toll road that connects with the Chicago Skyway.

The 157-mile highway was leased for 75 years to Cintra-Macquarie. Indiana gained a quick $3.8 billion for the deal, but some observers contend the state got shorted on the exchange.

According to news reports, Macquarie, the Australian half of the consortium, reported to investors that it would return its $3.8 billion investment in the Indiana Toll Road after just 15 years. In addition, toll payers were expected to pay $120 billion over the 75-year lease.

Advocacy groups opposed to the deal argued that the full details were only disclosed after negotiations were finalized. Provisions include a non-compete clause that prevents Indiana from upgrading to a four-lane divided highway any 20-mile stretch of road within 10 miles of the toll road for at least 55 years.

Marsha Johnson, Florida’s director of financial development for DOT, told contractors at a forum Thursday in Orlando that the state is considering an initial 3- to 5-year lease before offering a concessionaire the opportunity to renegotiate. Also, she pointed out, Florida law requires that the state receive a cut from the revenue generated by tolls.

“Our goal is to balance the following: value to the state, but also, no matter what, we want to protect the public sector interests,” Johnson said.

Critics of these prior deals warn that financial connections were discovered between politicians and firms that performed work on the transactions.

An Indiana law firm that received $1.3 million in legal work during the transaction was found to be a major contributor to Daniels’ political campaign starting in 2003. The firm and seven attorneys or public affairs specialists that worked on the contract made a total of $39,000 in campaign contributions to Daniels prior to the deal.

Lobbyist Bob Burleson, who represents Florida’s building industry, said many international investors are open to the risks posed by public-private partnerships. He said the plummeting value of the dollar is likely to be a draw for international firms.

“It could go international, but I don’t think that’s a concern,” he said. “The fact is that international investors are more willing to take on a lower return on their investment.”

At Thursday’s meeting about Alligator Alley, DOT interim Assistant Secretary of Finance and Administration Bill Thorp asked for a show of hands to determine where attendees were from.

Many kept their hands down, but about 30 percent of those in the room raised hands for the East Coast, 15 percent for the West Coast and three people raised their hands to signify international interests.

Kevin Thibault, assistant secretary of Engineering and Operations, said there is no reason to sound the alarm bells.

He said the state will have the power to set the terms of the lease, even limit toll increases.

No matter what, he said, no leasing entity will have carte blanche with Alligator Alley.

“Remember, at the end of the day, we’re still going to own it,” he said after the conference. “People think we’re giving it away.”

Gary Eidson, chairman of the Collier Citizens Transportation Coalition, fears that any deal to lease the alley would come close to a give-away.

“There’s too much documentation to show that these deals go together bad,” Eidson said. “They’re undervalued when they’re purchased, particularly when leased to a private entity. And (the leases) run too long.”

Toll rates have remained modest for drivers using the Chicago Skyway and the Indiana Toll Road, with small increases during the first decade. However, tolls in Indiana are scheduled to spike sharply after the initial period. Some contend the grace period is meant to allow elected officials enough time to clear out before voters have reason to get angry.

Some benefits have been realized from the public-private partnerships.

The Indiana Toll Road Concession Co., the venture created by Cintra-Macquarie, has been able to secure the types of contracts that were always expensive and cumbersome for Indiana.

Newspaper reports detail the use of high-tech coin- and bill-counting machines to cut down on labor costs and electronic toll booths that eliminate the need for attendants, as well as the purchase of snow plows and road de-icing liquid at lower rates than those negotiated by the state.

While Alligator Alley clearly isn’t in need of de-icing liquid, a partnership could yield other benefits.

Along the desolate stretch, drivers share the landscape with little more than sawgrass, slow-moving water and the animals for whom the stretch was named.

When there is an emergency along the road, first responders from Broward and Collier counties are in a race against time to reach isolated motorists.

“Since the construction of the alley, Collier County Emergency Services has responded to thousands of accidents on Alligator Alley at the expense of the citizens of Collier County,” said Les Williams, an EMS technician who made the trip to Orlando for Thursday’s meeting.

He wanted to present the concerns of Collier County’s emergency responders and make potential investors aware of the county’s intent to lobby the state for rights in any concession agreement.

“There is a stretch of road that is left virtually abandoned for help,” Williams said. “Collier County covers . . . 50 miles of Alligator Alley. Over 40 percent of Ochopee’s annual call activity is on Alligator Alley, yet their funding comes from a special assessment on the people of Everglades City.”

There is no guarantee that Williams’ concerns will be integrated into the process, but privatization and the availability of greater capital could answer the prayers of those who have been crying for assistance in providing emergency services on the alley.

DOT officials have cautioned that they still are in the discussion stage of any concession agreement. However, a tentative schedule has the department putting out the request for qualifications April 30. Under that schedule, the state could pick a concessionaire before the end of the year.

But before anyone gets too comfortable with the potential for the alley’s privatization, there is one possible roadblock.

State Senate Majority Leader Dan Webster has proposed to lease the road not to a private interest, but to the state itself.

His proposal, which is waiting to go before the Senate, would use the Lawton Chiles Endowment Fund, a state-run fund set up following a major settlement between the state and tobacco companies. Interest from the $2.3 billion fund is used to finance health programs for children, primarily, but the principal from the fund is virtually untouched. Webster is calling his plan “Florida investing in Florida.”

DOT officials made brief mention of the proposal at Thursday’s forum, stating that it could cause a slight delay in the start of the bidding process as department administrators wait for a decision from the Legislature, which is scheduled to adjourn for 2008 in the coming week.

For more information on Alligator Alley and the concessions process go to alligator-alley.com.