Taking a toll
VIEWED FROM ABOVE, THE TRAFFIC builds throughout the morning like ants drawn to sugar. Commuters travel to work. Visitors explore beaches. Toll collectors pleasantly snatch dollar bills, or overhead scanners silently debit funds from drivers’ accounts. The trail of cars moves along. One transaction at a time, millions of dollars become county funds.
Almost 20 million cars crossed over Lee County’s three toll bridges last year.
County residents owe those drivers a debt of gratitude. As it turns out, those motorists — from the coifed 50-something real estate broker in the Orion Silver BMW M3 or that dude vaping and eating a sandwich in his 2003 Ford Escort — they all have something in common. They are Lee County’s roadway sugar-mommies and daddies. These toll-paying commuters shoulder the burden not only of paying for the bridges themselves, but also for a long list of other traffic projects that might otherwise go unfunded.
Last year, the county collected more than $44 million in tolls. After expenses and the bonds on the bridges were paid, the county found itself with a record-setting $17 million in excess revenue. Lee County as well as Sanibel and Cape Coral have come to rely on those profits as a matter of course.
“Not until some miracle source of revenue appears, I imagine we will continue to charge the tolls,” said Lee County Commissioner Frank Mann.
Big bridge finance
Drivers cruise over a bridge with their windows rolled down, sun glistening on the Caloosahatchee, without a thought to the complicated funding mechanisms that made the experience possible. Bondholders, the financial companies that fund the bridges, require a minimum debt-service ratio to show that toll revenues can cover the cost of the loan. The county is required to maintain a debt service ratio of 1.1 percent on its bridges.
However, toll collections are so robust that the ratio for 2015 was more than double the required amount. The excess money could be used to pay off more of the debt or it can go to other road projects. There’s no limit on how much revenue is too much revenue, it’s all funds for transportation in the eyes of city and county leaders.
“The county ensures you have an adequate floor, but they don’t worry about a ceiling,” said Wayne Daltry, the former head of Smart Growth for Lee County. “Typically, you have a life span on a toll. When the bond is paid off you have run out of your rational for having a toll.”
Mr. Daltry points to the Cape Coral Bridge as an example of a toll that for a time was lifted once the facility was paid for. However, once the Midpoint Bridge project was underway, a toll was reinstated.
There are enough projects in the pipeline, directly and indirectly related to the bridges, that removing tolls seems an unlikely prospect.
“Why doesn’t a toll come off a bridge?” Assistant County Manager Pete Winton asks theoretically. “If you had a bridge that lasted and never needed maintenance, then you could get rid of a toll. The westbound span of the Cape Coral Bridge, for instance, we’re going to have to replace that in 2028. That’s an $87 million project.
“Surplus tolls are a major revenue source for the county’s transportation and road infrastructure,” continued Mr. Winton. “I wouldn’t call the surplus tolls ‘profit.’ It’s a revenue source.”
Using toll profits as a revenue stream to fund other road projects is a common accepted practice.
“There could be many appropriate uses of any excess funds: building more transportation infrastructure; subsidizing other public expenditures, or lowering tolls,” said Michael S. Bomba, a transportation researcher at the Jim McNatt Institute for Logistics Research at the University of North Texas. “Ultimately, these are political decisions by local and/or state officials.”
Political battles have always surrounded the bridges, which belong to and are run by Lee County.
Throughout the 1990s, the original Sanibel drawbridge was deteriorating. While county engineers recommended replacing it, island residents resisted. Instead, the city and county spent millions extending the bridge’s life. That was until dangerous cracks were discovered under the bridge in 2003. By 2004, plans were underway to build a new fixed-span bridge for $66 million. But again, Sanibel residents fought the idea, this time by filing two separate lawsuits against the county. While the legal and political wrangling ensued, the cost of construction kept rising. The bridge project would end up costing $144 million by the time it opened in 2007.
Today, the city and county appear to be getting along. The interlocal agreement that governs the deal states that Sanibel receives 21 percent of surplus toll revenues. For the past nine years, Sanibel and Lee County together used their surplus revenue to pay off more than $20 million in commercial debt. It wasn’t until late 2015 that the funds finally started flowing to be used on city projects.
“We had to use general fund money for roadways. We made a conscientious decision to take money out of property taxes,” said Sanibel Mayor Kevin Ruane. New projects and some road maintenance on the island were deferred while the debt was paid down. “The taxpayers of Sanibel, it fell on their back.”
The city of Fort Myers opposed the building of the Midpoint Bridge for more than 20 years. It would take a Florida Supreme Court decision to put an end to Fort Myers’ obstruction. The Midpoint opened on Oct. 18, 1997.
Under the interlocal agreement, Cape Coral receives 40 percent of surplus toll revenues collected on its two bridges, while the county receives 60 percent. Unlike Sanibel, where the city takes the funds and uses it for its own projects, Cape Coral directs the surplus tolls back to the county so that it can improve the roadways leading into the bridge. Throughout the years, the agreement has evolved, expanding the stretch of road that’s covered. A vocal group of Cape Coral residents argue that the deal makes the Cape residents chumps who end up paying twice for road building and maintenance.
“These are county roads, for them to operate and maintain. We pay gas tax over here and some of that gas tax is to maintain their roads,” says Phillip Boller, a former city of Cape Coral engineer who sits on that city’s Transportation Advisory Committee.
“Should the citizens of Cape Coral be taxed and tolled twice for the same roadway? I don’t think it’s right. I don’t think its fair.”
Both city and county officials counter that without the surplus tolls, many necessary projects couldn’t be done.
Local gas taxes paid by all motorists represent the largest part of road building revenue, ranging anywhere from $17 million to $28 million a year. Still, the money isn’t enough to cover the county’s fast-growing road needs. Alternately, impact fees charged on new construction only bring in between $2-3 million a year and they can only be used in the districts where they’re collected.
Impact fees have been set at a reduced 45 percent rate, and some argue that the fees should be raised, more than doubling the amount that’s collected.
“Why don’t we ask these newcomers to pay their fair share?” asked Commissioner Mann. Even still, the commissioner admits that the amount generated from higher impact fees wouldn’t be enough to cover the revenue that tolls bring in.
For example, excess funds are being used in the Cape to widen two-lane Burnt Store Road from Pine Island Road all the way to Van Buren Parkway. Eventually, the entire roadway is expected to be widened to four lanes and include a bike lane to the Charlotte County line into Punta Gorda.
The total cost of the Burnt Store projects alone is estimated at $81 million. Surplus tolls will pay a large portion of that.
“If you take that revenue source away, what do you replace it with?” Mr. Winton asks rhetorically. The answer, of course, is a something that politicians dare not utter: more taxes. ¦
Road construction revenue sources
>> Gas tax. Locally the cost is about 11 cents/gallon.
>> Total gas tax collected in 2015: $16,638,544.
>> Impact fees: Can only be used in the districts where they are collected.
>> Total impact fees collected in 2015: $2,323,134.
>> Surplus toll revenues. The money left over after operating costs and debt have been paid off.
>> Total surplus tolls collected in 2015: $16,796,159.
>> Growth Increment Funding. A new funding source taking effect this year that dedicates revenue from property value increases to building infrastructure.
>> Total GIF collected in 2015: $0. Takes effect 2016.
>> Total debt including interest owed on Lee County’s bridges: $194,915,408.
>> Cost of Sanibel Causeway: $144 million.
>> Cost of Midpoint Bridge: $170 million.