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 2018, with over 95.8 million visitors in the first nine months of the year. This represents a 6.7% increase over the 89.8 million visitors during the same period in 2017. 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 US during the same period. In 2018, Florida’s GDP was in excess of $1.04 trillion, making it the fourth largest state economy in the US and beating the GDPs of major world economies, such as those of Saudi Arabia, Switzerland and Argentina. Since 2010, Florida has also significantly outpaced the rest of the US in both job and labor force growth. More than 180,200 jobs were created in Florida during 2018, and the employment rate was recently at 3.8%, below the US rate of 4%.
The state also faced some challenges in the past couple of years with category 4 Hurricanes Irma and Michael making landfall in 2017 and 2018, respectively. 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:
• Modern 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.
• Nation-leading exports (nearly $55 billion in goods made in the state in 2017) 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. This is particularly the case in the medical and biotech fields, which is fueled in large part by one of the nation’s leading incentive programs in the sector.
In this year’s Florida Overview, we will focus on the continued 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 is already among the most successful states in the nation in implementing P3s. The Florida Department of Transportation, in particular, 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 by local governments and other public entities in the state. 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, and water and wastewater facilities. 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, which is considered a best practice in the industry, as well as to receive and evaluate unsolicited proposals.
This statutory framework, in tandem with developing federal tax and infrastructure funding regulations, create an environment that is conducive to the growth of the P3 model within the State. At the time of this Florida Overview, Miami-Dade County, the most populous county in Florida, is well underway with its first procurement under the RFQ/RFP model and the new P3 process for the design, build, financing, operation and maintenance of a new civil and probate courthouse. The County is also currently preparing to begin the procurement process for other P3 projects in its pipeline, and is evaluating P3 delivery options for portions of a proposed multibillion-dollar expansion of its mass-transit system.
In addition, Seminole County is in the process of evaluating its first major unsolicited proposal for a government center. P3Brightline, now Virgin Trains USA, recently commenced operations of its privately funded higher-speed rail system between Miami and West Palm Beach, and submitted an unsolicited P3 proposal to deliver a similar system between Tampa and Orlando. If successful, these projects could set the tone for other major P3s in the state. At the other end of the spectrum, smaller municipalities are looking to the P3 model for delivery of their own, smaller infrastructure needs, such as the City of South Miami's new city hall and police headquarters, which is currently in the negotiation process after the selection of a preferred proponent for a design-build-finance P3.
The Florida Legislature and other governmental units have identified P3s are potential solutions for problems that impact the state’s residence. 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.