Florida’s business-friendly regulatory environment, favorable corporate and personal tax laws, a lower private sector unionization rate and growing workforce continues to attract investors from around the world. Florida, the nation's third-largest state with a population of 21.3 million, welcomed tourists at a record pace in 2017, with over 88 million visiting the State in the first nine months of the year. According to recent economic impact studies, tourists spend $300 million per day in Florida. Those tourists helped Florida gross domestic product (GDP) growth since 2010 almost double the overall GDP growth in the United States during the same period. In 2016, Florida’s GDP was in excess of $925 million, making it the fourth largest State economy in the United States and beating out the GDPs of major world economies, such as those of Argentina, the Netherlands and Indonesia. Since 2010, Florida has also significantly out-paced the rest of the United States in both job and labor force growth.
2017 was also a year of challenges for the State, with Hurricane Irma hitting the Florida Keys as a category 4 hurricane and continuing on a path that impacted the entire State. In addition, stormwater mitigation and flood prevention remain at top-of-mind for both businesses and residents. However, with these challenges come opportunities that the State is uniquely positioned to capitalize on.
In addition to its business-friendly climate, Florida's economic strengths include:
• Infrastructure and extensive multimodal transportation systems, including over 12,000 miles of highways, 3,000 miles of freight rail tracks, 15 deep-water seaports, 19 commercial service airports and 2 spaceports.
• Leading exports (nearly $52 billion in goods made in the State in 2016) and the second largest foreign trade zone in the nation.
• Workforce in excess of 9 million people in a right-to-work state, with over 5 million foreign language speakers.
• Agriculture industry that leads the Southeast in terms of farm income and produces 40% of the world's orange juice supply.
In addition, big companies and smaller entrepreneurs alike are attracted by Florida's growth in high-tech services, software industry and health technology, especially in the medical and biotech fields, which is fueled in large part thanks to one of the nation’s leading incentive programs in the sector.
In this year’s Florida Overview, we will focus on the rise of public-private partnerships (P3) in Florida. Aging infrastructure, scarcity of public funds and recent P3 success in other states and countries are all driving factors that have led to the popularity of the P3 model in the State. P3s, generally, are cooperative arrangements between the public and private sectors that provide for cost-effective risk sharing in the construction, financing and long-term maintenance of projects. Florida boasts a number of the nation’s leading P3 projects that have successfully reached financial close, including the $860 million Port of Miami Tunnel Project, the $2.3 billion I-4 Ultimate Project and the $1.7 billion I-595 Corridor Roadway Improvements Project. The most robust P3s involve private participation in all five components of project delivery (design, build, finance, operate, and maintain - often abbreviated as DBFOM), and Florida's I-595 Corridor Roadway Improvements Project was in fact the first road DBFOM in the entire country, establishing a key precedent for use of the model.
Recently, the Florida Legislature introduced two laws to encourage the use of the P3 model. The first law established uniform processes for public entities to enter into P3 agreements for a wide range of facilities, including transportation facilities, education facilities, water and wastewater. The second law was designed to boost P3 participation among private companies by creating an exemption for unsolicited P3 proposals under the Public Records Act. The new laws originated from a task force appointed by the Florida Legislature that was charged with recommending guidelines to create a uniform P3 process in Florida. In addition, municipalities, such as Miami-Dade County, have put into place the necessary ordinances in order to proceed with a procurement under a two-step request for qualifications/request for proposals (RFQ/RFP) model, as well as to receive and evaluate unsolicited proposals.
This statutory framework, in tandem with developing federal tax and infrastructure funding regulations, creates an environment that is conducive to the growth of the P3 model within the State. At the time of writing, Miami-Dade County has begun its first procurement under the RFQ/RFP model for the design, build, financing, operation and maintenance of a new civil and probate courthouse. In addition, Seminole County is in the process of evaluating its first major unsolicited proposal for a government center P3. If successful, these projects could set the tone for other major P3s in the State.
The Florida Legislature and other governmental units have identified P3s as potential solutions for problems that impact the State’s residents. For example, in order to mitigate ever-increasing traffic congestion in Miami-Dade County, the County has developed a $3 billion Strategic Miami Area Rapid Transit Plan, at least a portion of which is expected to be delivered under a P3 model. The Florida Department of Transportation is also currently looking at P3 delivery methods for a number of road widening projects in Central Florida. Other issues which impact the local communities, such as stormwater management, flooding and sea-level rise, are ripe for private sector innovation through a P3 model, particularly if smaller projects can be successfully bundled to create the economies of scale necessary for a viable P3. Finally, Florida’s rapid population growth and aging public buildings make the State a prime candidate for the delivery of social infrastructure P3s.