The elephant in the room debating unsolicited offers

Written by Michael Lewis on December 7, 2021


The elephant in the room debating unsolicited offers

A debate last week on the analysis of unsolicited private proposals to the county ignored obvious fundamental questions.

Miami-Dade Commissioners and Mayor Daniella Levine Cava debated when to determine whether an offer offered the maximum value for the funds taxpayers would pay for a project that was thrown in the county’s lap, but ignored the vital preliminary questions – as whether to do the project that way or not at all.

The impact becomes clear in an 88-page report the county funded on a proposal to hand Rickenbacker Causeway to a private consortium to redevelop it. The county used this value-for-money analysis last month when it postponed decisions on the proposal until 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 she called an ‘end point’ that had already been chosen – she assumed without no doubt the consortium’s offer was exactly what the county is aiming to achieve.

He did not address the questions the county should have answered with full satisfaction before a study was ever sought on the most effective way to fund this work.

The study assumed that an unsolicited bid defined the scope of the project (in this case eight projects), then looked at how best to fund an bid for something the county had never considered and has yet to fully discuss. .

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

The most important of these eight actions is to replace the ruined Bear Cut Bridge that connects Key Biscayne to the mainland. It was necessary for a decade. It would be hard to deny this need, but it is the only vital part of this package.

Next is a set of “resilience improvements, including construction and elevation of the island’s sea wall and shoreline.” Without this offer, these efforts would be independent of the bridge replacement.

In the same spirit, the separation of bicycle and pedestrian lanes on the causeway.

But then come five other freelance efforts, none of which are urgent, though most could be separate jobs over time. None were likely planned until the developers tossed them in a bundle that landed in the county’s lap.

These five projects consist of expanding and redeveloping parks, beaches and concessions; replace the fishing wharf and add concessions; add an observation platform; create an interpretive resilience center, a trailhead, toilet blocks and bicycle repair stations; and rebuild the toll zone.

These clusters are mainly amenities that we might want when the county has grant funds, but are not needed in any way. The only reason to rebuild the abandoned toll collection area is to give the consortium a new collection structure from which to extract revenue. Likewise, the concession area would finance the consortium.

These become needs that drive the overall cost of the package up to nearly half a billion dollars just to help fund developers, who expect a 14% annual return on equity.

But vital questions not addressed in the value for money study appear to be fundamental to making a solid decision on the unsolicited bid:

■ Does this project make sense? Does it have to be this mishmash or nothing? Or do the rooms have to be separated, based on county priority? The consultants’ study assumes that the offer is what the county wants, but is it really?

■ In fact, parts of this vast set are unnecessary, such as improved toll plazas that have already been replaced with more modern collection methods or new concessions that would only benefit developers. Does removing them from the analysis reverse the results?

■ Can we afford all of this now? The developers promise to advance the money, but they predict a double-digit return. Residents and visitors will fund this return plus capital costs through higher tolls from day one. It is not free money.

■ Does the county have options for carrying out the projects it actually targets? The study assumed the county wanted to do all of them now, but what if it only did a few? Are other ways of doing it more affordable?

■ What about the public? Consultants are ignoring what Virginia Key and Key Biscayne visitors or Key Biscayne residents would pay under an unknown toll structure higher than this nearly guaranteed offer.

■ Most important: is this new consortium strong enough to keep its promises? Since he would control the only road and three bridges between the mainland and Key Biscayne, what assurance do we have to keep them all in pristine condition?

If the consortium couldn’t replace a storm-damaged road – I shudder at the word hurricane – the county may have to step in. The risk is therefore not only that of investors, but also of taxpayers.

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

Mayor Levine Cava has made it clear that she wants more public comment on the plan. This may raise other questions.

It is not that we oppose this concept. We do not have enough details to support or oppose it. This is what comes from working with offers that are not fully public until the offeror gets the contract.

What concerns us is the process, an issue the committee debated last week. The question was how much time the mayor would have to dig into an unsolicited offer before moving it to the point where it would become a done.

The process should never go as far as a value-for-money study until questions like these are discussed and answered. Until then, the county should never consider asking for further offers.

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

About Christian M.

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