The Works

Owner Sees His Legacy in Tallahassee’s Upcoming Private Toll Road

Here’s what happens in an anti-transportation-funding world.

(Photo by Urbantallahassee)

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Florida is no stranger to toll roads, but the Sunshine State’s about to experience a pay-to-drive first: a privately financed, privately built toll road in Tallahassee.

Jeff Phipps, great-great-grandson of one of Andrew Carnegie’s business partners, is building the five-mile toll road on land he owns in the state capital, in what his team says is the most environmentally responsible way to develop that part of town.

The road will replace Orchard Pond Road, a dirt road on Phipps’ property that he has allowed the county to maintain as a courtesy to drivers. As this northeast part of Tallahassee grows — and like much of Florida, it is growing at a near unbelievable pace — the roads are becoming stressed. “If those people want to go to the west side of town, [or] to the airport,” says Steve Vancore, Phipps’ public relations consultant, “it’s damn near impossible.”

The $17 million road is being financed by a low-interest loan from the Florida Department of Transportation State Infrastructure Bank and some of Phipps’ own money; Vancore estimates that the loan will be paid off in 35 years and from then on, generate about a million dollars a year for Phipps or his heirs. Ninety-nine years after the road opens, ownership will transfer to the county.

City officials call it a win-win — they get a road that was in their long-range plan and don’t have to pay for it. Locals, Vancore says, have been supportive. So what’s the catch?

Privatized toll roads, whether built privately or roads whose management was transferred to a private entity, are scary for some people — and for good reason, says Phineas Baxandall, senior analyst with the U.S. Public Interest Research Group. Baxandall, who has written extensively about privatization, says these deals result in a loss of public control and a lack of flexibility.

“If you’re a politician, you want your ribbon-cutting, [but] you don’t want the tax increase” that paid for new infrastructure, he says. That makes these “off-budget” deals look attractive in the short term. Over the past decade or so, as states and localities look at their infrastructure backlog and their increasingly cash-strapped budgets, privatized roads have become much more common. And as electronic tolling rises, toll roads, no matter who manages them, have become more convenient. They also have traditionally made for a safe investment. “There was a big push for … as banks were looking for new places to invest and diversify their portfolios, driving … looked like something you could count on.”

But if the U.S. is becoming less dependent on cars, Baxandall questions the wisdom of states and cities letting private owners buy their roads.

There are a number of concerns around privately built roads. Private operators often have to borrow money at a more expensive interest rate than municipalities can, and the fact that the road construction costs are paid off long before the operator’s contract to run it expires means millions of dollars that could go into city coffers are now staying in private hands. (The interest rate concern is less relevant in the Tallahassee tale, since Phipps is using the State Infrastructure Bank.)

“Even the best, most public-minded negotiator … doesn’t have a crystal ball, and can’t anticipate what the public’s needs will be in the future,” Baxandall says. “I think that’s especially true in transportation. Who knows if we’ll have self-driving cars in 20 years? That will [result in] completely different ways we’ll want to configure roads.” If that’s not written into a contract, a private operator would have no incentive to spend money to reconfigure that road, he says.

Then again, isn’t it often said (and often holds true) that innovation comes from the private sector?

Vancore, Phipps and the city of Tallahassee all say that this road is needed. Phipps, an avowed environmentalist, says he can build it better and more responsibly than the city could. Among the environmental features: large animal underpasses so that frogs, snakes and gopher tortoises can cross the road safely; and stormwater management in the form of holding ponds and berms to capture silt and sediment before it washes into nearby Orchard Pond. Phipps is also turning the existing Orchard Pond Road into a bike trail.

“It seems to strain credibility that building a road through a conservation area is ever going to be better for the environment,” Baxandall says. “If they’re comparing their road to some environmentally insensitive monster road, then that could be true. It’s like … ‘we’re logging this forest gently and it’s actually good for the environment, because if we cut it all down and burned it in a huge bonfire, that would be worse for the environment.”

Vancore counters that the road is good for the environment in more ways than the technology used for its construction. The 5,300 acres that Phipps owns are “in a perfect situation to be developed” — beautiful land in a rapidly growing part of Tallahassee. “He doesn’t want to do that, but he also recognizes that the county is going to come through and build this road. They have to.” Putting a toll on the road removes the pressure to develop it, he says. Phipps’ heirs will have less incentive to sell off the land if the toll is generating a million or more for them yearly, and who wants to buy a house where every time you go to the grocery store, you’ve got to pay a toll?

Anyway, says Baxandall, it’s possible that some private toll roads will work out. But we won’t know, he says, until the deals end — which is still 30 years away at the soonest, and more like 50 or 60 years on average, since most leases are for 50 to 75 years, and the idea of private toll roads really sprang up just a decade ago.

Till then, more private toll roads appear to be in America’s future. But a future where more and more roads are owned by someone other than the state is problematic, says Baxandall. “Building a road is different than deciding how to paint your house … any driver has experienced that what happens on one road affects what happens on another road. Or it affects … land use … it affects what happens to pollution and runoff. Roads are public infrastructure, because they have so much effect on what happens with future growth. All kinds of considerations are determined by roads.”

Phipps’ great-great grandfather’s business partner, Andrew Carnegie, built libraries with his wealth. Phipps’ family donated parklands to Tallahassee and supported numerous organizations, like the local museum and local universities. Now, says Vancore, “[Phipps] wants to preserve the land, he wants to conserve it for future uses, to make this part of his long-term legacy.”

The Works is made possible with the support of the Surdna Foundation.

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Rachel Kaufman is Next City's senior editor, responsible for our daily journalism. She was a longtime Next City freelance writer and editor before coming on staff full-time. She has covered transportation, sustainability, science and tech. Her writing has appeared in Inc., National Geographic News, Scientific American and other outlets.

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Tags: transportation spendinghighwaysfloridaprivatization

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