Orlando expressway authority nixes deal that could save billions
Jun 12, 2011
The following article was published in the Orlando Sentinel on June 12, 2011:
Orlando expressway authority nixes that could save billions
By Dan Tracy
Florida has offered Orlando’s expressway authority a deal to take over and build the $1.8 billion Wekiva Parkway, but only if the agency kicks in a $50 million check annually for the next 35 years.
The deal could save the Orlando-Orange County Expressway Authority a huge amount of money: $65 million to $80 million a year in debt payments if it built the parkway without state or federal aid.
But the authority has turned down the proposal, much to the dismay of Orange County Mayor Teresa Jacobs, an authority board member.
“I think it’s worthy of serious discussion,” she said. “At this point, I have seen none.”
Jacobs, who campaigned against toll increases, said she fears the agency will raise tolls to pay for the parkway, the missing link in the beltway around Metro Orlando.
A toll increase would not be necessary, she contends, if Tallahassee took over the project. And, she said, it should be a state project because the road would cut through three counties: Seminole, Orange and Lake.
“My priority is to get the Wekiva Parkway built with the least impact on our toll payers,” she said.
Walter Ketcham, chairman of Orlando’s expressway board, contends it might be illegal for the agency to hand over such sums of money to the state.
“We couldn’t do this even if we wanted to,” he said.
His main worry is the authority’s obligation to pay off $2.3 billion in bonds used to build and maintain the 105 miles of toll roads the agency already owns. The bonds are paid off with tolls, a source of funds that lenders typically do not want committed to unrelated debt.
The authority raised tolls by 25 cents in April 2009 and approved future increases tied to the Consumer Price Index starting in July 2012.
Without state or federal help, the authority most likely would need toll increases to cover the cost of the parkway. Borrowing $1.8 billion — about 80 percent of the agency’s existing debt — would result in an annual debt payment of $115 million to $130 million, depending on the interest rate.
The state, especially through its Florida’s Turnpike operation, has greater reserves and income, as well as the ability to borrow money. The state Transportation Department has an annual budget of $7 billion. In theory, it could handle the cost of the parkway much easier than the authority, especially with a $50 million annual contribution.
The state could take the authority money, put in some more cash and create the equivalent of a down payment. That could greatly reduce the amount to be borrowed and the monthly debt payments.
“They can do what they want to do,” said state Rep. Chris Dorworth, R-Lake Mary, whose district would include the parkway.
The authority, conversely, could be forced to borrow the entire $1.8 billion, resulting in a total payout, including interest, of nearly $4 billion during 35 years.
That was some of the logic employed by state Senate Majority Leader Andy Gardiner, R-Orlando, who wrote a bill stipulating that the authority give the state $50 million during 35 years for the parkway. The bill died during the final hours of the session last month.
Though professing no preference for which agency controls the work, Gardiner said, “I just want to see the road built.”
Dorworth, the presumptive House speaker in 2015, is among the politicians who want the road because he said it “opens up much economic development on my end of the county.”
Gardiner said he and other area legislators have grown tired of authority promises to build the road. To date, the agency has conducted several studies — including one that could make the road eligible for federal money — but has not started construction, which could take four to seven years to complete.
Even though they have balked at the state plan, authority officials are talking with the Florida Department of Transportation about creating some sort of partnership to construct what would be one of the most expensive roads in Central Florida history.
Numerous details need to be worked out, such as: Which agency would be in charge, the authority or the state? Who would pay for what? How would the tolls be split?
Florida’s initial proposal would have had the state running the operation and, in what is a deal-killer for the expressway authority, keeping all toll revenues from the parkway, as well as the $50 million annual payment from the authority.