More Issues In the News

NAPLES — Florida’s fractious road lease, meet Wall Street’s beleaguered bank.

There was no official word on the impact of Lehman Brothers’ bankruptcy filing on the Alligator Alley lease proposal Monday as Wall Street reeled from the news that the 158-year-old firm was going under.

Lehman Brothers subsidiary LB I Group Inc., holds a major stake in one of six teams looking to lease the Alley for 50 to 75 years. The team, GVI-Lehman Alligator Alley Access Partners, is a consortium comprising the Spanish construction group FCC, Spanish investment bank Caja Madrid, Spanish firm Global Via Infrastructure, American company Alltech and New York-based Lehman Brothers.

According to documents submitted to the Florida Department of Transportation in July, Lehman Brothers intended to hold a 40 percent stake in the project’s equity, sharing the burden with Global Via Infrastructure.

However, since Monday’s announcement that the firm would file for Chapter 11 bankruptcy, there is no indication of whether the GVI-Lehman team is in — or out of — the running.

FDOT Communications Director Dick Kane responded to an e-mail Monday to say he had “heard nothing about this new development.”

A public relations representative for the GVI-Lehman team said the firms had no comment as of press time on the status of their bid for the Alley lease.

But opponents of the Alley deal have been quick to seize upon the Lehman Brothers collapse to highlight what they call the unreliability of such long-term leases.

“Things aren’t looking so sunny for the six short listed bidders for Alligator Alley,” wrote Citizens Transportation Coalition of Collier County activist Gina Downs in an e-mail sent Monday morning soon after the Lehman Brothers news broke.

“I think the Lehman collapse just gives us pause about selling to private consortia who claim they can better manage financial risk,” said Phineas Baxandall, a senior analyst for tax and budget policy with the Florida Public Interest Research Group.

Baxandall, an opponent of public-private partnerships to lease existing roads, said the Lehman bankruptcy filing should emphasize to state governments the risks of auctioning off a public asset for a half century or more.

“We shouldn’t count on companies coming through on their promises to invest in our roads long term,” Baxandall said. “If the road operator is facing immediate bankruptcy, they won’t pour money in to keep on good terms for their 50-year lease — and good luck trying to sue them while they’re getting liquidated.”

In the case of Lehman Brothers, the company said it intends to reorganize under Chapter 11, but some news agencies are reporting that Lehman would be unable to survive a reorganization because of more stringent policies applied to financial services firms under bankruptcy law.

Lehman, once the fourth largest securities firm in the country, made a record $4.2 billion profit in fiscal 2007. In June, roughly the time Lehman Brothers jumped on the Alligator Alley deal with Global Via, Lehman reported $6.7 billion in losses, mostly a result of risky real estate investments.

During two successive meetings in August to vet the six teams looking to lease the Alley, no concerns were raised about the GVI-Lehman consortium’s financial soundness. On the contrary, the three officials responsible for scoring the GVI-Lehman team gave it “good” to “very good” ratings in the areas of experience, letters of support and statement of financial approach, putting it on par with the other five teams bidding on the lease.

Robert Harry, a Naples mortgage broker, said he would not yet rule out the viability of other firms to take over a lease of the Alley. The founder and president of Naples Classic Mortgage worked in Freddie Mac’s Los Angeles office for 10 years before coming to Florida, and was watching the financial market meltdown before Monday’s revelation about Lehman Brothers.

“This is not something I’ve been following that closely, but the end of the day, this is a strategy that other states have utilized that has been fairly successful,” Harry said. “(State officials have) got to balance their own budget and keep their own books.”

But, Baxandall points out, those successful leases were initiated when the current market volatility was nothing but a speck on the horizon.

However, the two agree on one thing: The breakdown is not confined to American financial markets. Harry said that while the world economy is slowing down, that does not rule out overseas banks interested in the Alley lease.

That’s where Baxandall disagrees.

“Global finances is truly global,” he said. “When credit is drying up in the U.S., it’s less available for Australian investment banks or Spanish banks. These leases in Chicago and Illinois all happened when there was just tons of money. The terms you’re going to get on a deal now are not going to be as good.”

But Bob Matheson, head of Matheson Financial in Naples, said public-private partnerships are turning out to be the answer to a bankrupted federal Highway Trust Fund, even as Wall Street’s major lenders go bankrupt.

“Where private industry is going to do a better job than private government, it may be a better choice,” Matheson said. “The problem is Congress has spent a lot of money that was earmarked for transportation projects. We’re getting to the point where our infrastructure is very, very old.”