Florida: the closer

Florida’s no stranger to industry gatherings focused on private investment in infrastructure. After all, it was here that former Federal Highway Administrator (and later Secretary of Transportation) Mary Peters declared in 2004 “the time has come to let the free market and public-private partnerships deliver the innovation, cost savings, and quality they have brought to every other industry”.

Peters made the right call. Six years later, Florida has begun construction on the $903 million Port of Miami Tunnel and the $1.68 billion I-595 corridor improvement projects: two massive PPPs that point precisely to the innovation, cost savings and quality enhancements Peters mentioned in Orlando in 2004. Other public-private partnerships, or PPPs, are already in the pipeline.

“You couldn’t have picked a better time to do these projects. Bids are coming in at least 20 percent below our estimates. It’s the right time to really get this infrastructure built,” Stephanie Kopelousos, the Florida Secretary of Transportation, said in an interview.

Pragmatism

Securing a combined $2.5 billion of investment at favourable prices would be enviable to any state. But Kopelousos – a down-to-earth Jacksonville native who climbed to the state’s highest transportation office on merit rather than political connections – is driven more by the pragmatic consideration of what’s right for her state rather than an over-arching bias toward PPPs.

“PPPs are not the panacea to solve all our problems related to funding – it’s one of those tools in the toolbox,” she said. Nor, she makes clear, is she “recommending that what we’re doing in Florida is perfect for every state.”

“But the private sector not only has capital but they have expertise that government should be tapping into,” she added. And, as a high-growth state with growing transportation needs and a shrinking transportation budget, it makes sense to reach for the PPP tool when the right project comes along.

The I-595, which combined several phased improvements for the congested 10.5 mile Broward County corridor, is a case-in-point. “That would have taken us 15 years to build if we did it through the normal process.” The money simply isn’t there, but by “looking at it a little bit differently” and structuring the project as a toll road with private-sector financing, Florida was able to begin construction on the 595 on 26 February.

The speeding up of project delivery is one important element of how Florida picks its PPP candidates. After all, the state’s latest five-year work plan contains thousands of projects costing a total $33.3 billion. The potential PPP candidates are “those projects that you know you need to do sooner rather than later”, like the 595 or the upcoming outer beltway for the city of Jacksonville.

But while highways have been a prominent part of the state’s PPP programme, Kopelousos wants investors to understand that Florida’s infrastructure opportunities extend beyond asphalt and gravel.

“When you look at some of our more rural areas in the panhandle, there’s needed infrastructure for hurricane evacuations,” she said. “And so I think even in our rural areas, you’re seeing a real focus to look to the private sector to say, ‘hey, can we do this with a partnership?’”

Other upcoming investment opportunities include Florida’s high-speed rail line between Tampa and Orlando, which earlier this year was awarded a $1.25 billion grant from the US Department of Transportation’s high-speed rail stimulus money. “The private sector is going to be a big key in that,” she said.

And the state’s locally-managed bridges may also prove a PPP candidate someday. “One of the needs you’re going to see coming down the pipeline is, from our local governments, on the bridge infrastructure,” she said. “For the local governments, it’s that infrastructure that’s difficult to keep up.”

For the Florida Department of Transportation as well, upkeep of the state’s 6,549 bridges comes with its own struggle. “In our state, by law, and by DOT policy, we have to do safety, preservation and maintenance first. And then capacity comes,” she said. As a result, the budget for new projects is always much less than the infrastructure that needs to be built.

Which is why Florida is likely to continue to embrace PPPs where they make sense.

“I hope that people that work with us, whether it’s local governments, whether it’s the private sector, and find us open to ideas,” she said.