MIAMI--(EON:Enhanced Online News)--Most road construction stories are fraught with details about cost overruns, construction delays and perpetual traffic tie-ups. One Spanish-based company, however, believes Florida is ready to consider new public-private partnerships (PPPs or P3s) to tackle one of the state’s foremost transportation challenges. This past September, Florida Governor Charlie Crist directed the state’s Department of Transportation to do just that in order to leverage private capital and know-how to reduce congestion for Florida’s drivers and boost the state’s economy in the process. His message is being heard around the world as major international companies look to Florida as the place to invest their millions.
“These deals have a proven track record in Europe and Australia. They’ve shown they can mobilize more capital and shift significant financial risks away from taxpayers on onto private investors.”
Global Via Infraestructuras, S.A. (GVI), a global leader of major urban highway projects, which include those developed on an availability payment basis, has opened an office in Miami and hopes to grow its presence in South Florida and throughout the United States. Jointly owned by FCC Construction, S.A. (FCC), the major construction subsidiary of 100-year-old FCC Group, a $13.5 billion conglomerate providing long term public infrastructure support (such as water supply, transportation, street cleaning, waste management,) and Caja Madrid, a 300-year-old Spanish savings bank whose mission of investing in public works projects as part of regional economic development goes back to its founding principles, GVI specializes in the investment and management of infrastructure concessions, such as toll roads. Among the top five largest concession developers in the world, GVI currently manages 37 concessions, 20 of which are toll roads.
The company’s unique approach to infrastructure development, which is common in Europe, Australia and other major countries, is focused on creating needed infrastructure while enhancing regional economic development, including congestion relief. While the local governments retain ownership of the highways, project developers are compensated based on what are known as “availability payments”, which are earned only if strict contractual performance measures, such as quality construction, operation and management, are met. Stiff penalties are incurred if performance falls short. Performance priorities are established by the government. Financial risks are shouldered by the concessionaire, not local tax payers. Under these arrangements, concessionaires do not control or collect the tolls; these remain within the control of the state or local government. Money saved by the governments can be used for other priorities.
The arrangement allows the concessionaire to make money on the long-term return on investment and the contractor on short-term construction margin, avoiding financial conflicts of interest and allowing a clear focus on building the project on time and within budget.
“This September, we reached a successful financial close on a highway project in Dublin that was based exclusively on availability payments,” said Enrique Sanz, Director of International Business Development for GVI. “The urban road way carries more than 130,000 vehicles per day and this approach allows the local government and the public to benefit from the lowest possible costs.”
GVI’s strategy for entering the local market involves leveraging their international experience and track record with firms in the community that can handle the actual construction and know the local market. Among the U.S. firms partnering with GVI are Broward County-based Bergeron Land Development, the largest road contracting and site development business in the state, and Weekley Asphalt, an asphalt paving contractor founded in 1948; HNTB Corporation, a national infrastructure firm with offices in Fort Lauderdale and Miami that provides planning, design, program management and construction management services for highway, toll road, bridge, airport, rail and water projects; and Infrastructure Corporation of America (ICA), a Tennessee-based asset maintenance management firm that currently manages about 2,000 lane miles of interstate and state roads for FDOT and handles total maintenance and upkeep of 70 percent of Florida's rest areas and welcome stations.
“I’ve been impressed with the high integrity and experience of GVI,” said Ron Bergeron, whose three companies employ more than 750 people throughout Florida. “They are committed to an approach that keeps the financial investments locally and produces on time, within budget results.”
In multiple studies conducted by non-profit think tanks, such as The Reason Foundation, public-private partnerships were found to attract investment from overseas and create jobs locally in the states that embraced public-private partnerships.
According to a new Reason Foundation report by Director of Transportation Studies Robert Poole, who has advised the last four presidential administrations on transportation and policy issues, long-term toll road concessions aren't just a private-sector version of public toll agencies. Poole states "These deals have a proven track record in Europe and Australia. They’ve shown they can mobilize more capital and shift significant financial risks away from taxpayers on onto private investors."
GVI’s long-term goal is to establish its US base in Miami and to become a major contributor to Florida’s public-private partnerships. Their business philosophy is “providing infrastructure for today through partnerships for lifetime.”