The elephant in the room in debate over unsolicited offers

A debate last week on analyzing unsolicited private proposals to the county ignored obvious basic questions.

Miami-Dade commissioners and Mayor Daniella Levine Cava debated when to probe whether an offer provides the maximum value for funds taxpayers would pay for a project that was tossed into the county’s lap, but ignored vital prior queries – like whether to do the project that way or at all.

The impact becomes clear in an 88-page report the county funded on a proposal to turn the Rickenbacker Causeway over to a private consortium to redevelop. The county used that value-for-money analysis last month when it delayed decisions on the proposal to next March.

A value-for-money study is useful, but as the one the county got on the Rickenbacker made clear, it was based on what it called an “endpoint” that had already been chosen – it unquestioningly assumed the consortium’s offering was exactly what the county aims to achieve.

It did not speak to questions the county should have answered to full satisfaction before a study was ever sought of the most effective way to finance that work.

The study assumed an unsolicited offer defined the scope of the project (in this case eight projects) and then looked at the best way to finance an offer of something the county had never contemplated and has yet to fully debate.

As the consultant’s report notes, “the project’s scope includes a suite of improvements.”

The most important of those eight actions is to replace the crumbling Bear Cut Bridge that links Key Biscayne to the mainland. That has been needed for a decade. It would be hard to deny that need – but it is the only vital part of this package.

Next comes a cluster of “resiliency improvements, including seawall and island shoreline construction and elevation.” Without this offering, those efforts would be independent of bridge replacement. 

In the same vein is separating bicycle and pedestrian lanes on the causeway.

But then come five more independent efforts, none of which is pressing though most could be separate jobs over time. Probably none was planned until developers tossed them into a package that landed in the county’s lap.

Those five are to expand and redesign parks, beaches and concessions; replace the fishing pier and add concessions; add an observation deck; create an interpretive resiliency center, trailhead, comfort stations, and bike repair stations; and reconstruct the toll collections area.

These clusters are mostly amenities we might want when the county has grant funds but by no means are necessary. The only reason to reconstruct the abandoned toll collections area is to give the consortium a new collections structure from which to extract revenues. Likewise, the concession area would fund the consortium. 

These become needs that run up the overall package cost of almost a half billion dollars only to help finance the developers, who expect a 14% annual return on equity.

But vital questions not touched on in the value-for-money study seem to be basic to making a solid decision on the unsolicited offer:

■Does this project make sense? Must it be this mish-mash or nothing? Or should the pieces be separate, based on county priority? The consultants’ study assumes the offer is what the county wants, but does it really?

■In fact, pieces in this vast package are unneeded – like upgraded tollbooths that have already been replaced by more modern collection methods or new concessions that would profit only the developers. Might removing them from the analysis reverse the results?

■Can we afford all this now? The developers vow to front the money, but they plan a double-digit return. Residents and visitors will fund that return plus capital costs via higher causeway tolls from day one. This is not free money.

■Does the county have options to achieve the projects that it really targets? The study assumed the county wants to do them all now, but what if it did only some? Are other ways to do so more affordable?

■What about the public? The consultants don’t consider what visitors to Virginia Key and Key Biscayne or residents of Key Biscayne would pay under an unknown higher toll structure that this offering all but guarantees.

■Most important: is this new consortium strong enough to fulfill its promises? Since it would control the only road and three bridges from the mainland to Key Biscayne, what insurance do we have that all would stay in top condition? 

If the consortium couldn’t replace a roadway damaged by a storm – I shudder at the word hurricane – the county might have to step in. So the risk is not just the investors’ but the taxpayers’ as well.

Likewise, if the consortium lost money – for example, if higher tolls meant the Rickenbacker attracted too little traffic – who would pay to pick up the pieces?

Mayor Levine Cava has made clear that she wants more public input on the plan. That may raise other questions.

It’s not that we oppose this concept. We don’t have enough details to either support or oppose it. That’s what comes from working with offers that are not fully public until the proposer gets the contract.

What concerns us is the process, a question the commission debated last week. The issue was how much time would the mayor get to dig into an unsolicited offering before moving it along to the point where it would become a  fait accompli.

The process should never get as far as a value-for-money study until questions like these are debated and answered. Until then, the county should never consider requesting other bids.

What is clear is that today, once an unsolicited proposal lands at the mayor-and-commission level it becomes the outline of a project that the county is very likely to undertake without ever coming to grips in public with such basic questions as “does this offer make sense?”