By Giovanna da Silva
The 21st century has seen a substantial increase in public-private partnerships in the United States and around the world. The basic principle behind public-private partnerships, or P3s, is that government works with the private sector in order to build and finance public works projects. P3s have been increasingly encouraged by state and federal governments as an alternative to publicly funded roads and highways. The success of Tallahassee’s Orchard Pond Parkway, the state’s first privately operated toll road, is a recent example demonstrating the viability of P3s in Florida. Road projects with large construction budgets such as the proposed Central Polk Parkway between Orlando and Tampa would stand to benefit from public-private partnerships.
Polk County transportation officials proposed the Central Polk Parkway project in 2008 as a way to mitigate traffic congestion, address population growth, increase economic growth, and reduce freight traffic on the roads. It was designed was designed as a pair of 6-lane, 40-mile-long toll roads. The Florida Department of Transportation spent $38 million on the project before halting construction in 2015 due to insufficient funds. An estimated $1 billion is still needed for completion. Nonetheless, the Polk Transportation Planning Organization recently resumed construction plans in January 2018, deeming it a “number one priority” of the county.
The Central Polk Parkway is a part of a larger effort to modernize the county’s road system. The Polk Transportation Planning Organization plans to do so through their Momentum 2040 program, a $105 billion program that seeks to update and improve the local highway and transportation network by the year 2040.
The latest Momentum 2040 proposal briefly touches upon seeking public-private partnerships as well as implementing public and private tolls to finance projects that have no funding. Most of the revenue for Momentum 2040 projects is expected to come from federal and state grants. Local revenue, mostly in the form of local gas taxes, will fund the maintenance of Polk County roads.
Central Polk Parkway and Momentum 2040 would benefit from implementing a revenue-risk (RR) agreement with a private company to minimize fiscal impacts on taxpayers. In RR agreements, tolls are managed by private partners and revenues go towards maintaining the road or paying off loans. Companies bid for the right to construct, operate, and maintain the road for an agreed upon time period, usually a couple of decades. Governments can, if they choose, subsidize toll rates for consumers by providing a one-time monetary contribution to the project.
RR agreements have several advantages. They encourage innovation and the construction of better-quality roads. This is because, under these agreements, the private concessionaires are held responsible for the operation and maintenance of the roads. In RR agreements, companies are also incentivized to minimize costs, as they are in charge of maintaining the road with toll revenue. RR agreements allow for the creation of a market-based revenue stream through tolling while decreasing government funding to facilitate public infrastructure. The private sector carries more risk instead of taxpayers. This means projects are more likely chosen for their financial feasibility and profitability.
The solution to fully funding the Central Polk Parkway lies in the county and the private sector working together. This allows private developers to fund, operate, and maintain the roads through user fees–tolls. This not only would help alleviate budget short falls, but also decrease the amount of taxes residents would pay for road construction.