Infrastructure: Critical strategies Florida can implement as it grows

Infrastructure: Critical strategies Florida can implement as it grows

The pandemic has been accompanied by an influx into Florida of people from California, Illinois, New York and other states. Tops on the list of motivations for the moves: Taxes, quality of life, business-friendly policies, school choice, economic opportunity and more attainable housing.

The question is how well all those hold up if the state adds the 2.5 million people it’s projected to attract by decade’s end. All the population growth, by the way, will come from domestic migration and international immigration, as deaths in Florida will outnumber births.

The good news is impacts will be dispersed over time. Much depends on where new residents settle. Florida is projected to add 348,878 school-age youth, for example. On its face, that number translates into the need for 200 to 500 new schools. But Florida has lots of underenrolled schools — thousands of empty seats in classrooms — so the state may need less school-building than the numbers might suggest.

In this issue, Florida Trend gives snapshots of where the state stands on some of the needs most critical to continuing what drew people here — and strategies and realities in managing the growth to come. It might be understandable to worry, but if Florida is experienced at anything, it’s growing.

ROADS & TRANSPORTATION

Maybe Los Angeles-scale gridlock won’t be Florida’s future.

“It doesn’t have to be that way,” contends Lily Elefteriadou, director of the University of Florida Transportation Institute, but “if we maintain the status quo, that’s going to happen.”

Commuters can be forgiven for having a sense of inevitability. Mobility analytics company Inrix placed three Florida roads on its 2021 list of the 25 most congested in the U.S.: I-4 in Orlando west from the Beachline to SR 429 and U.S. 17 south from U.S. 192 to The Oaks Boulevard and, in Miami, I-95 north from I-195 to 51st.

Alex Nitzman of online highway guide AARoads took a look at the state’s traffic counts and found big increases from 2014 to 2019. One example: Vehicles per day increased on I-75 near Sarasota by 18,184 to 116,233. Arterial roads all over Florida routinely saw gains of 10,000 per day. Overall, Florida commute times have increased 11.4% in the last decade, says the state transportation department.

By 2030, Southeast Florida will add nearly 600,000 more people. Metropolitan Orlando’s traffic plan through 2045 anticipates 1 million more residents, plus tourists.

Mitigating the mass of motor vehicles relies on a range of approaches. “It all helps,” says Gary Huttmann, executive director of the MetroPlan Orlando transportation partnership.

KEY STRATEGIES

  • BUILD MORE ROADS

In 2019, the Legislature with its M-CORES law pushed three new highways — extending the Suncoast Parkway to the Georgia line; connecting Florida’s Turnpike to the Suncoast Parkway; and a highway between Southwest Florida and Central Florida. Projected costs, doubts about the need for 330 miles of new highways in the hinterlands and opposition from environmentalists and local residents killed the move. Efforts to create at least portions of the roads or shift their location are ongoing.

  • EXPAND AND/OR RE-ENGINEER EXISTING ROADS

This year, the $2.4-billion, 21-mile rebuild of I-4 through Orange and Seminole counties will be completed with the addition of tolled express lanes, a feature that has become commonplace. Indeed, tolling is being considered for many areas where it doesn’t exist now, such as I-75 in Southwest Florida.

Traffic engineers have expanded their toolbox. Roundabouts and innovative interchange designs such as the “diverging diamond” interchange at University Parkway and I-75 near the Sarasota- Manatee county line smooth traffic flow. Technology can identify choke points and alternatives. In some European countries, signs direct drivers to use shoulders during heavy congestion.

  • EXPAND TRANSPORTATION OPTIONS

Between cities, the private Brightline passenger rail will eliminate some car trips. Improving lightly used Amtrak service between Tampa and Miami to draw more people could help.

Within cities, scooters, shuttles, on-demand public transit van service, express buses, regular bus routes and commuter rail may help manage traffic. Jacksonville has an autonomous shuttle running. Floridians don’t use public transit much. Only 1.6% of commuters in Florida used public transit in 2019, a slight decline from 2018. Nationally, about 5% of commuters use transit. In Miami-Dade, the Florida county with the highest transit use, only 3.8% of commuters use public transit.

  • TAKE ADVANTAGE OF NEW TECHNOLOGIES

In Gainesville, the University of Florida has a program to help the state evaluate new transportation tech. It’s called I-Street for the ungainly named Implementing Solutions from Transportation Research and Evaluation of Emerging Technologies. On the high-tech front, German company Lilium is building a hub in Orlando for intra-city air taxi service using electric airplanes.

  • CAPITALIZE ON SOCIETAL CHANGES IN WORK PATTERNS

Elefteriadou notes that the pandemic resulted in drastic drops in traffic counts and showed that people can work remotely. “We don’t need to be in person for every single thing,” she says. The percentage of Floridians working from home was increasing even before the pandemic — to 7% in 2019, higher than the 5.7% national average, says the state transportation department.

  • KEEP THINGS IN PERSPECTIVE

Although it provides small consolation, congestion doesn’t cost nearly as much in Florida as it does in some urban areas. Even in Miami, Florida’s most congested area, the cost in wasted time per driver is less per year than in New York and Chicago, according to Inrix, a Washington state company that provides location-based data and analytics.

Federal Funds

For a sign of how well Florida does at keeping up its infrastructure, look no further than the relatively little money the state got for bridge repair under the five-year federal $1.2 billion infrastructure law. Florida got just $245 million. The funding formula was based on how many bridges were ranked “fair” or “poor” by federal standards. About half the nation’s bridges rank that way but only a third of Florida’s. Florida TaxWatch says Florida is “essentially being penalized for proper bridge maintenance.”

Florida for all infrastructure gets a total of $19.1 billion from the law, or less than $1,000 per capita, according to a U.S. News analysis. Alaska gets the most per capita at $6,700 followed by Wyoming at $4,400.

In its separate analysis, Florida TaxWatch says the state got 68.9% — the lowest percentage in the nation — of what it would have gotten if the funds were allocated on a per capita basis. “This isn’t a new issue, as Florida has historically been a donor state for federal aid, with our hard-earned tax dollars going to subsidize programs across the country,” says TaxWatch President and CEO Dominic Calabro.

Florida’s $19.1 billion includes $13.1 billion for highways. Which projects will be funded won’t be known for months. Another $2.6 billion goes to public transit, $1.6 billion for water infrastructure, $198 million for electric vehicle charging stations, $100 million for broadband expansion, $26 million for wildfire protection and $29 million for cyber-attack protection.

The package includes $1.2 billion for Florida airports. “Really, a much-needed impact,” says Sam Sleiman, Suffolk Construction’s executive vice president of national transportation. Construction and engineering firms are eager to get the work, though they worry about where they will get the labor and materials.

OPPORTUNITY INFRASTRUCTURE

By a number of measures, economic opportunity remains robust in Florida. The state ranks fifth on Forbes’ list of best places to do business. The Tax Foundation’s 2022 tax index ranks Florida as having the fourth most-competitive tax system, the only major population state on the list. California, Connecticut, New York and New Jersey are in the bottom 10 for their complex, non-neutral taxes and high rates, the foundation says.

“We are business-friendly in the state of Florida, and that helps us tremendously,” says Jerry Parrish, former chief economist at the Florida Chamber Foundation.

Florida, according to the state Chamber of Commerce, led the nation in business formations in 2020. The number of applications for business licenses increased 26.8% to 495,251 — 58,521 more formations than second-place California. Florida ranked second, up from seventh, in the latest American Legislative Exchange Council’s economic competitiveness index. New York ranked last for the ninth consecutive year. Council CEO Lisa Nelson said, “People are voting with their feet. They’re headed to opportunity states.”

Maintaining Florida’s business-friendly tag will involve keeping a keen eye on cost factors like taxation, government pensions and regulatory costs. Right now, the status quo looks pretty good. At least at the state level, for example, “Florida does a good job on regulatory costs,” Parrish says. “You can’t make them zero.”

FACTORS TO WATCH

  • Economic competitiveness is impacted by how much government consumes. State spending as a share of state GDP, until the pandemic year, had been slowly declining since 2012, according to a FLORIDA TREND analysis. It fell to 8.2% in 2019 before rebounding in 2020 to 9%, the same level where it stood in 2012. Combined state and local spending as a share of GDP also fell through the decade.
  • Florida taxes lightly at the state level, ranking 49th for state taxes. About 80% of state tax receipts in Florida come from sales tax, compared to 48.2% nationally.
  • Florida taxes more heavily at the local level, ranking 28th in local (city and county-assessed) taxes. And it ranks high (ninth) in the share of money government demands in non-tax form: Special assessments, impact fees, bills for service.
  • While it doesn’t seem to have been a disincentive to growth, businesses pay more than half (53%) of all state and local taxes in Florida. That ranks the state ninth among states for the share paid by businesses.
  • Florida ranks 24th among states in per capita property tax.

ATTAINABLE HOUSING

How much trouble future Floridians face finding a home depends on the productivity of people like Noah Breakstone, CEO of Fort Lauderdale’s BTI Partners, which is riding the two development waves the state needs to house its growing population: Urban infill in places like Hollywood, Orlando and the 1,350-home Westshore Marina District in Tampa, and master-planned developments in spots with open land such as Osceola County.

Florida, like the rest of the nation, isn’t producing as many rooftops as people need. The state’s housing deficit is the nation’s fourth-highest, according to mortgage finance giant Freddie Mac. It estimates the state needs 487,000 to 523,000 more housing units to catch up. Florida also has seen the biggest percentage decline in the nation since 1980 in the share of starter homes built. Based on population growth projections, Florida will need 1.05 million more homes by 2030.

Permits for new housing in Florida are below historic norms even after posting doubledigit growth in seven of the last nine years, according to the state Office of Economic & Demographic Research.

A difficulty: Existing residents will turn out to fight new development. Fights over redevelopment and new developments are common. Hillsborough and Pasco counties are continuing development-related moratoriums in parts of those counties.

Housing scarcity drives up prices, slows family formation and affects workforce availability. Factors like rising labor and materials costs are beyond the control of state and local governments, but there are other ways to create more attainable housing.

KEY STRATEGIES

  • CHANGE DENSITIES

Open land provides more opportunity for affordably priced housing than expensive urban infill sites. But expect a denser number of houses per acre and adjusting land-use regulations so that employment centers can be located near homes. In northern Osceola County, Breakstone and BTI are developing Crossprairie, a 1,400- acre, 5,200-home project that also will include 1 million square feet of commercial space and 1.9 million square feet of offices.

Local governments around Florida have shown an eagerness to consider new development in their communities when it provides “attainable” or “affordable” housing so locals can find a home. Palm Beach County commissioners, citing a lack of housing the workforce can afford, have considered allowing more development in a 21,000-acre farming area.

Developers know the lower-end price point has the most demand and want to deliver, says Lesley Deutch, managing principal of John Burns Real Estate Consulting. Deutch says she’s getting inquiries from out-of-state firms about sites and markets beyond Florida’s traditional urban centers. “The areas that are open are going to see massive growth,” she says. “St. Lucie is an example of that. They’re getting jobs and industrial, and they have people coming there.”

  • CHANGE ZONING RULES

In permitting new neighborhoods, don’t allow exclusive single-family zoning. To give developers more flexibility and to get more houses built, legislatures in some states have moved toward banning exclusive single-family zoning. Florida hasn’t taken that step.

  • LOOSEN REGULATIONS

Allow more and denser development in existing neighborhoods. A number of counties and cities already have moved to loosen regulation to allow denser development — near transit corridors, for instance. The city of Miami in 2009 adopted a form-based code that allows for denser and transit-oriented development. Orange County is at work on a new approach to encourage more dense development in already developed areas by allowing cottage homes and “granny flats.” St. Petersburg is considering a number of zoning changes for single-family home neighborhoods throughout the city. The measures would allow multi-family housing — including duplexes, triplexes, four-plexes and auxiliary dwelling units — in existing single-family housing neighborhoods. Those types of dwelling units are now prohibited in suburban neighborhoods.

“Everything new that’s built should be walkable and transit-focused,” says architect and urban designer Elizabeth Plater-Zyberk, whose teaching at the University of Miami and work with her firm Duany Plater-Zyberk (now DPZ CoDesign) pioneered New Urbanism concepts. “We know how to do all this. We just have to stop doing the stuff that’s not sustainable.”

In Hollywood, Breakstone and his BTI are demolishing a one-story drugstore strip center on a 3.25-acre parcel on Young Circle, a landmark park and traffic circle, and replacing it with two towers totaling 775 apartments, plus 115,000 square feet of retail and 60,000 square feet of office — the kind of urban infill project that planners say Florida needs. Achieving those goals requires dealing with existing residents, who often don’t want more neighbors, traffic and density. In Hollywood, however, BTI’s new project was welcomed. “It’s very difficult to provide housing affordably if no one wants it in their back yard,” says Breakstone.

  • EDUCATE HOMEOWNERS

Many longstanding urban neighborhoods — including many among the most desirable places to live in a city — feature a mix of duplexes, single-family homes with garage apartments and small apartment buildings. Educate the public that more housing and “affordable housing” don’t mean slums.

  • RETHINK IMPACT FEES

Two South Florida builder groups, the Gold Coast Builders Association and Builders Association of South Florida, in recent years successfully campaigned against a move by Broward’s school district to raise impact fees.

The idea of impact fees is to levy a cost onto buyers of new homes to pay for the additional services they require — schools, parks, police.

Broward’s public school enrollment has been shrinking. It has 51 schools with 70% or under the number of students they were built to hold. The builders groups said the district in 2020 proposed raising impact fees 31% to $9,049 for a three-bedroom home and 78% to $12,295 for a four-bedroom home.

Uncertainty about fees around Florida limits new construction and drives up costs, says Ken Johnson, a Florida Atlantic University real estate market researcher. It leads developers to plan for higher-end homes, lest their profit be consumed by impact fees, and favors bigger players who can wait out the process until they have clarity on the fees. “The price for developing needs to be more transparent,” Johnson says.

ATTAINABLE HOUSING

The Homeless

Pull in at a convenience store in Southern California and you’ll likely have to deal with someone panhandling. Southern California teems with homeless encampments, overwhelming tourist spots and back streets alike. Florida has its share of a homeless problem, from people spending the night under building overhangs in downtown Miami to tent cities in Tampa. Florida, the third-largest state, had the second-highest number of homeless at 27,487, according to the U.S. Interagency Council on Homelessness. That’s just a couple hundred more than Texas but far lower than California’s 161,548.

In Florida, affordable housing discussions usually default to how much money the Legislature apportions for affordable housing projects. Being homeless has many causes — poverty, unemployment, mental illness, addictions, inaccessible health care and poor discharge planning from hospitals, prisons or the child welfare system. But the council also lists among the causes land-use and zoning rules.

Joe N. Savage Jr., a regional coordinator for the U.S. Interagency Council on Homelessness, says land-use rules that restrict multi-family development or mandate “low density” single-family areas drive up housing costs, as do long permitting processes. “As such, housing construction costs increase and so does the cost of housing. This makes it unaffordable,” he says.

ENERGY

When it comes to electricity generation for a growing Florida, the state Public Service Commission says utilities’ 10-year plans are adequate for maintaining supply at a reasonable cost.

KEY REALITIES & STRATEGIES

  • SOLAR GENERATION

Natural gas will remain the dominant source of electric power generation in Florida for years, though generation from solar power plants is projected to grow the fastest, according to the PSC report. Utilities plan to add 15,210 megawatts of solar power in 10 years, compared to adding 6,147 megawatts from natural gas. (Nuclear is projected to hold steady while use of oil and coal decreases.)

  • ROOFTOP SOLAR

Establish a workable policy for rooftop solar in the face of inherent conflicts. The rooftop solar industry wants the state to mandate that rooftop solar buyers get top dollar when they sell their excess power to utilities. Rate payers who can’t afford rooftop solar aren’t eager to subsidize those who can, and utilities say rooftop solar owners aren’t paying their fair share to support the grid.

DEVELOPMENTS TO WATCH

  • SOLAR LAND CONSUMPTION

A typical solar power plant in Florida takes 500 to 600 acres to produce 74.5 megawatts of electricity. Utility solar construction through 2030, under that model, would consume 102,000 to 122,000 acres, or 159 to 190 square miles.

  • GROWTH IN ELECTRIC VEHICLES

Vehicle manufacturers and the federal government have ambitious hopes for consumers’ switching away from gaspowered vehicles. The Energy Institute at the University of Texas at Austin calculated Florida would consume roughly 30% more electricity if electric vehicles replaced all gas-fueled vehicles. That would entail a dramatic need for plant expansion and lots of land if the utilities meet the demand with fossil-fuel free but land-intensive solar. But at present, the market share of electric vehicles in Florida is only 0.46%, the PSC reports. Even with the nine-fold increase projected by 2030, electric vehicles still would be only 4% of the market. The power demand would comprise less than 1.5% of the state’s net energy load, the PSC says.

  • WATER

Florida is blessed with abundant rainfall, and per capita consumption has generally been declining. But a growing population will boost demand for water in Florida by around 15% by 2040, based on projections by the water regulatory bodies that cover the state, according to the state Office of Economic & Demographic Research.

None of the water management districts can meet future need from existing sources.

Floridians already suck more freshwater out of nature for homes, farms and lawns than is good for the state’s natural systems — including the world’s biggest concentration of springs. All are critical to not only nature but also to clean and store water for human use.

Worries about water span the spectrum of Florida interests — residents, cities, growers, environmentalists and businesses.

Jerry Parrish, the Florida Chamber Foundation’s former chief economist, says water and water storage will be the defining task for the state in the next few years. The headline on a 2020 report from Florida TaxWatch: “We Can’t Wait on Water — The Restoration and Protection of Florida’s Water Resources is an Essential Taxpayer Investment.”

“We’re definitely facing water shortages,” says Beth Alvi, senior director of policy for Audubon Florida. “The springs are struggling. Our drinking water is being challenged. Water demand from urban areas is becoming unsustainable.”

In 2020, the “public supply” — water from utilities for residents and businesses — consumed more of Florida’s water than agriculture, historically the state’s biggest user. Agricultural use through 2030 is projected to rise marginally while the public demand will go up 12%.

KEY STRATEGIES

  • INCREASE SUPPLY AND STORAGE

An example: To secure water through 2040 for its 300,000 — and growing — customers in Southwest Florida, the Peace River Manasota Regional Water Supply Authority by 2028 will spend $40 million to expand its treatment plant and $350 million to construct a 9 billion-gallon reservoir.

  • PROTECT SPRINGS, AQUIFERS AND OTHER SOURCES

A Clean Waterways Act in 2020 was good but not far-reaching enough, say environmentalists. Meanwhile, a separate program to cut water pollution and restore water bodies to health is “fatally flawed” because its creation didn’t include fertilizer runoff, says Paul Owens, president of 1000 Friends of Florida.

  • DISCOURAGE USING DRINKING WATER FOR IRRIGATION

Some researchers say half the “public supply” of water — the utility-provided water piped to your property — is used for yard irrigation. Then there’s the water that irrigates golf courses, parks and homeowner association common areas. If property owners move en masse to native vegetation, fund reclaimed water systems and are willing to live with something other than green grass, the state’s future need for water will change considerably.

  • ELIMINATE SEPTIC TANKS

An estimated 2.3 million Florida homes have septic tanks, which have been implicated in polluting bodies of water around Florida. In Miami-Dade alone, the estimated cost to convert the 100,000 homes and businesses to government sewer systems is $4 billion.

  • REALIZE IT WILL BE EXPENSIVE

Water will become more expensive as the state turns to harder sources to exploit — brackish water, desalination, reclaimed water. The EPA estimates Florida’s 20-year capital need for drinking water, wastewater and stormwater totals nearly $45 billion. Pipes laid down a half-century ago are aging out. Charlotte County, for example, is budgeting $6 million a year to replace water and wastewater pipes and is in various stages of expanding three of its four wastewater treatment plants. The price tag for two is $110 million, up from $60 million when the process began. Planning on the third isn’t advanced enough to have a price tag. “Charlotte County is experiencing a huge amount of growth right now,” says Dave Watson, the county’s utilities operations manager.

INSURANCE & AFFORDABILITY

August marks the 30th anniversary of Hurricane Andrew, which ripped its way through south Miami-Dade and the Florida property insurance market in 1992. Miami-Dade recovered. The insurance market has proved harder to rebuild.

The ups and downs of that effort make for a torturous chronicle. Skip to the present state: Florida’s last major hurricane hits were Irma in 2017 and Michael in 2018, yet property insurers in Florida still are buying red ink by the barrel. Through 2021’s third quarter, their net underwriting loss was $1.05 billion.

State Insurance Commissioner David Altmaier blames those losses on catastrophes, higher reinsurance costs and litigation. Altmaier has said that Florida accounted for 8.16% of homeowners’ claims nationally in 2019 but 76.45% of homeowner suits against insurers.

Florida ranks 46th in the Harris Poll survey for the national Chamber Institute of Legal Reform of views on states’ judicial impartiality and tort litigation climate held by in-house general counsels, company senior executives and attorneys. Florida came in ahead of only Mississippi, California, Louisiana and Illinois. Miami-Dade County was ranked among the worst local jurisdictions.

Attorneys for claimants say they’re just trying to get insurers to pay what they’re contractually obligated to do in cases of damages.

KEY STRATEGIES

  • MAINTAIN SOLVENCY

Insurers have been granted permission to raise premiums to maintain the surpluses required to stay solvent. It varies by company, but 22 of 52 companies averaged around 14% — in part because inflation in labor and material costs drives up replacement rates. And insurers have jettisoned property owners judged to be too risky because their roofs are slightly older or other underwriting issues.

  • CONTAIN CITIZENS’ GROWTH

Abandoned customers go to Citizens Property, the state-created and state-subsidized insurer of last resort, which added 217,000 policies in 2021. Citizens now has 10% of the state market but nearly a third of the Southeast Florida market. The state is trying to make Citizens less attractive to homeowners by, among other things, raising rates.

  • LITIGATION

The Legislature has taken steps to change the litigation climate by curtailing “assignment of benefits” and other practices it says encourage frivolous claims.