By Chris Joseph
By Chris Joseph
By Allie Conti
By Chuck Strouse
By Chris Joseph
By Chris Joseph
By Allie Conti
By Kyle Swenson
Somebody stop Charlie Crist.
Stop the Florida governor from hawking Alligator Alley to foreign companies. Stop him from leasing the 78 miles of fenced and flat highway stretching across the Everglades to investors who will bleed motorists dry with higher tolls and no accountability to the people.
Stop him from padding the wallets of law firms and investment banks whose take will amount to tens of millions of dollars.
Just stop Charlie Crist, because right now, it looks like his outrageously ill-advised plan is going to slide through.
South Florida drivers will pay for the lion's share of it, likely with little in return. North Florida politicians are licking their overfed lips at the thought — which is why they overwhelmingly passed the legislation that made selling off Alligator Alley possible last year. All the powerless Democratic delegation from South Florida could do was whimper and vote "no" to allowing the privatization of toll roads.
One is that adding toll roads and selling them to high bidders will raise some fleeting cash without forcing legislators to admit that they had to raise taxes.
Tolls, you see, aren't taxes, even though they still come out of our pockets.
Put simply, this is a cash grab by this governor and this Legislature. The next generations will have to deal with the loss of annual revenue that the alley will bring over the next 50 to 75 years.
It's true that leasing the alley over the next half-century will create some quick revenue, with unofficial estimates averaging about $1 billion. But it's also true that tolls will rise from the current $2.50 to as much as $10 in the next several years, according to a state estimate. And we'll be giving up the annual revenue stream from the alley, which now stands at about $25 million a year and is expected to rise exponentially.
The company that wins the contract won't be alone in milking taxpayers. Financial and legal firms are already circling, looking for a bite of the pie. The proposals from six approved companies — all of them backed by foreign interests — haven't been submitted yet, but the money is already flowing to two firms, financial services giant KPMG and the New York law firm Freshfields Brukhaus Deringer.
Both have inked contracts to assist the Florida Department of Transportation in setting up the complicated deal. While numbers weren't made available from the Florida Department of Transportation, neither of those companies comes cheap.
Boca Raton financial adviser Arthur Bernstein has studied the plan and says the "arrangers" of the deal — banks, lawyers, etc. — will likely collect about $25 million, or a year's worth of alley revenues. "I am convinced that this lease is of no benefit to taxpayers," says Bernstein, whose firm, Amber International, provides financial services to aviation firms. "Worse, it sucks tolls from South Florida residents and commercial vehicles while promising to keep the money here. We know this is not going to happen. The revenues will be diverted elsewhere. Doesn't Charlie realize that these folks expect a profit and that it will come out of our pockets?"
The state can raise it by selling bonds that are backed by the alley's revenue stream, Bernstein notes. There's no need to give away the store.
Bernstein wrote a memo to Palm Beach County Commissioners last month urging them and others in surrounding areas to fight the proposal. "All commissioners and legislators [in South Florida] must join together, not withstanding political affiliation, to protect their constituents from having their 'toll pockets' picked for private gain," he wrote.
He's not alone in his sentiments. It's hard to find anybody in South Florida who likes the idea (other than Bogdanoff and Hasner). Collier County activist Gary Eidson has started a petition against it and says he rarely finds anyone who likes the plan.
"It's just a bad idea," says Eidson, who is founder and chairman of the Citizens Transportation Coalition of Collier County. "And it's part of Charlie Crist's plan to make our roads toll roads and lease them off. This is just the first of many."
The good news is that the alley project is still in the early stages and isn't set in stone. The FDOT, which is waiting for proposals, could reject all offers.
"The whole reason for the solicitation is to let the market tell us what the market is," says Clay Massengill, special counsel for FDOT. "If the market is high enough compared with what we can do on our own, we'll go in that direction. If whatever the private sector puts on the table is not significantly better, then it wouldn't be indicative of going with a private approach. We hope we are going to be pleasantly surprised."
The problem with that: Big companies working with big investment banks and teams of top lawyers almost always find ways to pleasantly surprise bureaucrats — only to juice taxpayers down the road.
For instance, the FDOT says the state will share in any "excess revenues" from the Alligator Alley lease. Unfortunately, we've been through that drill before. Remember that the Florida Panthers' arena in Sunrise (now called BankAtlantic Center) involved millions for taxpayers in revenue sharing. Somehow, almost all the revenues we were supposed to split never materialized.
"That's like a movie producer who tells you you can share in the net profits," Eidson says. "Net profits always get eaten up in the books."
Crist, though, doesn't need to listen to Eidson or Bernstein or any South Florida politician to realize that he's skipping down a fool's path. All he has to do is look at what happened this month in Pennsylvania. Gov. Ed Rendell, a Democrat who's often mentioned as a potential vice presidential pick for Barack Obama, planned to privatize one of the best-known toll roads in America, the Pennsylvania Turnpike. The state went through the same process that Florida has begun, with many of the same international players (from Portugal, Italy, and Australia, among other places) vying for both contracts.
He told his state that it "couldn't afford to wait" to do the deal and collect the upfront money for repairing and building roads. Abertis, a Spanish company that was working with Citigroup, won the bid, and the state hammered out a deal that involved a $12.8 billion upfront payment. When it was announced on May 19, Rendell declared, "This is a great day for Pennsylvania."
Some might argue that a better day came a month later when the Pennsylvania House voted 185-12 against allowing Rendell to execute the deal. The plan was basically killed in committee on July 4.
Pennsylvania House Transportation Committee Chairman Joe Markosek said lawmakers discovered that the actual money that would get to the state wasn't $12.8 billion but $8.5 billion. And tolls could rise to exorbitant rates with little accountability. In short, he said, it was "simply a bad business deal."
Markosek was properly outraged by not only the specifics of the deal but by the concept itself.
"Clearly, the private sector's priority is not providing a top-quality highway but finding a way to make the most money," he said at the time. "Concerning public infrastructure, I find this philosophy outrageous... What do we do for the future generations that follow and will be shortchanged... and we no longer have control over one of our most valuable assets?"
Let's hope Charlie Crist, if he's paying attention at all, takes those words to heart.