Study Finds Florida Leasing Its Turnpike Could Save the State Billions

Central Florida Expressway Authority – EPASS – SunPass Toll Sign, due to covid-19, sign shows: “Keep Driving Pay Later” as seen on March 21, 2020 in Orlando, Florida, USA. Photo and Caption: Cari Rubin Photography/

In a recent study published Tuesday, August 25 by The Reason Foundation, which publishes Reason magazine, said taxpayers would, for instance, save between $11 billion and $17.9 billion if the state leased the Florida Turnpike for at least 50 years. Task forces are set to meet up this week to discuss a controversial $10 billion plan to build 340 miles of toll roads by 2030, a California-based libertarian think tank says Florida could save taxpayers’ money by leasing its network of turnpikes. Reason Foundation Director of Transportation Robert Poole, a Plantation resident who wrote the study, said, “The bottom line is the immense value of the Florida Turnpike system could be used to greatly improve the state’s fiscal condition.”

Poole suggests three possible uses for lease proceeds:

  • Address $64.3 billion in unfunded projects in the state’s 2045 Multi-Modal Plan
  • Reduce state debt “with the aim of achieving a higher bond rating, to permit future financing at lower interest rates;”
  • Slash Florida Retirement System’s (FRS) $22 billion “unfunded liability.”

“States like Florida need to examine if they are maximizing the value of their existing toll roads. Based on the valuations of overseas toll roads in recent transactions, we found Florida would have significant net proceeds after paying off outstanding tax-exempt toll road bonds as required by U.S. tax law,” Poole said. 

This study focuses on the potential of state-owned toll roads as candidates for this kind of monetization. There have been five U.S. leases of toll roads under a long-term public-private partnership concession agreement.

The best-known of these are the public-private partnership (P3) leases of the Chicago Skyway and the Indiana Toll Road. 

In the case of a long-term P3 lease, the companies that win the competition form a special purpose company, or “vehicle” (SPV), that negotiates the long-term concession agreement.

While the agreement for a major toll road or system would typically run to hundreds of pages, key factors it must address include: 

• The payment to be made to the state for the long-term lease

• Further investment to be made by the SPV to modernize, expand, and/or replace portions or all of the toll road in future years

• The key performance indicators that the SPV is held accountable to achieve

• The rates that can be charged to motorists and truckers (often linked to an inflation measure such as the CPI)

• Any agreed revenue sharing during the term of the lease.

After lawmakers adopted the Multi-use Corridors of Regional Economic Significance (M-CORES) plan in 2018, Florida’s largest highway project since the 1950s, toll roads have been a bit of a controversial topic. M-CORES outlines construction of the 150-mile Southwest-Central Florida Connector from Lakeland to Naples; the Suncoast Connector, a 40-mile span linking Florida Turnpike and I-75 with Suncoast Parkway; and the Northern Turnpike Connector, which would extend Suncoast Parkway 150 miles north to Georgia.

Construction begins in 2022 and ends in 2030. M-CORES will be funded through license plate tag revenues. M-CORES is widely opposed to the Florida Turnpike being leased.

Included in the opposition is the 80-member “No Roads to Ruin” coalition, Sierra Club, the Conservancy of Southwest Florida, Florida Policy Institute, Conservation Foundation of the Gulf Coast and League of Women Voters.

The project faces backlash because critics believe the “corridors” will traverse fragile wetlands, promote sprawl, imperil endangered species such as the Florida panther and open sensitive areas to development.