Local governments and expressway authorities that have grown more reliant on private financing for major transportation projects now have a new tool to guide them through the complex world of public-private partnerships.
A trio of local experts from the University of Central Florida just released Private Financing of Public Transportation Infrastructure, published by Lexington Books. Co-author Owen Beitsch, senior principal of real estate research for GAI Consultants, told GrowthSpotter the book provides case studies and background on P3 toll roads - good, bad and ugly.
Beitsch said the team began its research just as the Florida Department of Transportation was beginning to craft the 2013 legislation that ultimately codified the state's P3 process. At the time, most of the examples of successful P3 projects were located outside of the U.S.
"The U.S. really hasn't had a lengthy history of dealing with sophisticated P3s," Beitsch said. "It was a very emergent, nascent form of experience."
The book provides a checklist of best practices and common pitfalls. "For the most part, the best experiences we've had here have involved overseas contractors and for the most part the biggest thing hasn't been the creation of new P3s, they've been the sale of assets."
He mentioned Indiana's sale of its 157-mile toll road as a glaring P3 failure - the concessionaire filed for bankruptcy eight years into a 75-year contract. Critics have argued the state's traffic projections were inflated.
In Florida, however, most transportation P3s have dealt with new construction as it has become a preferred method of financing for major projects. The Port Miami Tunnel and the I-4 Ultimate expansion are just a few examples of P3 projects.
Beitsch evaluated the OCX effort as it defines potential toll road routes and the political implications of building toll roads that actually cross into a neighboring county and sensitive wildlife refuges.
"Looking objectively at the totality of the effort - Osceola's well-defined needs, proposed plans and programs, the processes underlying various decisions, and likely beneficiaries at multiple levels - it is hard to reconcile the competing political agendas that can undermine effective decisions," he wrote.
Florida's approval process, which requires comprehensive planning and extensive public input, puts the agency in the best position to succeed, he concludes. "In principle, Florida's process is intended to force competing points to be excised prior to policy adoption," he wrote.
Beitsch said one of the most important lessons for OCX, or any agency contemplating a P3 procurement, is to manage expectations.
"These things take far longer to turn into a construction project than our short-term thinking often allows us the luxury to appreciate," he said. "We're a country that really believes you can do them tomorrow. You can do them more quickly, perhaps, than you can as a public entity. But if it's worthy of a P3, than it is by definition complicated. It's going to take a lot longer than you think it is, and the magic of including the private sector isn't necessarily going to speed that up as much as you'd like."
His advice to the county? Do your homework before you publish the RFLOI, but allow for flexibility.
"You need to know what the options are, but at the same time you don't want to be prescriptive because part of what the private sector does better than you do is the opportunity to be creative within the confines of state law," he said.
The book, edited by Wendell Lawther and Lawrence Martin, is available on Amazon.com.
Over the last decade, Beitsch has authored several articles for Real Estate Issues, including a piece on the post-recession recovery in Florida, Nevada and Arizona.