HomeMy WebLinkAbout03-27-2007 S.R. 417 Toll Rates between S.R. 434/Red Bug LakeMAR Z 8.20J7
BROWN, GARGANESE, WEISS & D'AGRESTA, I�:�"Fr � ' U"''"
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Attorneys at Lary "-I y rnl� M1*0L
Debra S. Babb-Nutcher'
Joseph E. Blitch
Usher L. Brown'
Suzanne D'Agresta"
Anthony A. Garganese''
J.W. Taylor
Jeffrey S. Weiss
'Board Certified Civil Trial Lawyer
"Board Certified City, County b Local Government Law
Offices in Orlando, Kissimmee, Cocoa,
Ft. Lauderdale & Tampa
March 27, 2007
The Honorable Mayor John F. Bush and
Members of the City Commission
1126 East State Road 434
Winter Springs, Florida 32708-6912
Re: S.R. 417 Toll Rates between S.R. 434/Red Bug Lake
Dear Mayor and City Commission:
Vivian Cocotas
Michael O'Brien Colgan
Scott J. Domstein
Mitchell B. Haller
Katherine W. Latorre
Amy J. Pitsch
Erin J. O'Leary
Catherine D. Reischmann
William E. Reischmann, Jr.
Of Counsel
As you requested, I am providing a preliminary report which outlines some of the legal issues
that the City will face should the City attempt to challenge the S.R. 417 toll rate between S.R. 434
and Red Bug Lake Road. The purpose of this report is to facilitate a more strategic discussion on
what it would take to file an action challenging the rate. In addition, this report identifies what the
best case outcome would be if the City prevailed. This report is not intended to evaluate the merits
of any toll rate challenge at this time because analyzing the merits will require an evaluation by a
qualified toll expert.
General Factual Background:
The Seminole Expressway (a/k/a S.R. 417) is approximately 18 miles long. The Seminole
Expressway runs from the Orange/Seminole County line, north, to I-4. In doing so, it also passes
through the cities of Oviedo and Winter Springs. It is important to note that the Seminole
Expressway is part of the Florida Turnpike System and controlled by the Florida Turnpike
Enterprise.' It is not part of the Orlando/Orange County Expressway Authority. Relevant to your
inquiry are the toll plazas at S.R. 434 (75 cents) and Red Bug Lake Road (50 cents). One trip
between these two toll plazas costs a motorist $1.25 each way. Based on distance traveled, some
' The Florida Turnpike Enterprise is a separate business unit of the Florida Department
of Transportation and is responsible for every owned and operated FDOT toll road and bridge.
See www.Floridatumpike.com
225 East Robinson Street, Suite 660 - P.O. Box 2873.Orlando, Florida 32802-2873
Orlando (407) 425-9566 Fax (407) 425-9596 • Kissimmee (321) 402-0144 - Cocoa (866) 425-9566 • Ft. Lauderdale (954) 670-1979
Website: www.orlandolaw.net • Email: firm@odandolaw.net
Mayor and City Commission
March 27, 2007
Page 2 of 5
have commented that this may be the most expensive segment on the entire S.R. 417 toll system, but
that comment may have been made on the false assumption that S.R. 417 is one toll system and
controlled by one toll authority. That is not the case. S.R. 417 is actually controlled by two separate
toll authorities. S.R. 417 running through most of Orange County falls under the jurisdiction of the
Orlando/Orange County Expressway Authority. As mentioned above, S.R. 417 within Seminole
County is under the jurisdiction of the Florida Turnpike Enterprise. See attached map. More details
regarding the Florida Turnpike Enterprise and the Seminole County Expressway (including toll
information) can be found at the website address stated in footnote 1.
Issue:
Assuming the City had standing to challenge the toll rate at the S.R. 434 toll plaza, what legal
issues will likely be presented and what legal result could the City achieve if successful?
Executive Summary:
The Seminole Expressway is part of the Florida Turnpike System and is under the jurisdiction
of the Florida Turnpike Enterprise. The Seminole Expressway is not part or under the jurisdiction
of the Orlando/Orange County Expressway Authority. Toll rates levied by the Florida Turnpike
Enterprise are primarily governed by section 338.231, Florida Statutes which generally mandates,
with exceptions, that the per mile toll rate on the Turnpike System be equalized to the maximum
extent feasible. Case law generally provides that toll rates must be reasonable and not excessive and
discriminatory. Additionally, the circuit courts of Florida have express jurisdiction to hear
challenges regarding the legality of toll rates. However, once jurisdiction is invoked, the court's
authority is limited to prohibiting the imposition of illegal rates and making a recommendation on
the maximum reasonable toll rate. The court can not require a refund of illegal rates collected by
a toll authority.
General Legal Analysis:
Levying a toll for the use of a highway will be subject to applicable statutes and s=- law..
A. Statutory Requirements.
Because the Seminole Expressway is part of the Florida Turnpike System, it appears that the
toll rates on the expressway will be governed by the Florida Turnpike Enterprise Law. See §338.22,
Fla. Stat. et seq. Specifically, section 338.231, Florida Statutes, provides in relevant part:
The department shall at all times fix, adjust, charge, and collect such
tolls for the use of the turnpike system as are required in order to
provide a fund sufficient with other revenues of the turnpike system
to pay the cost of maintaining, improving, repairing, and
operating such turnpike system; to pay the principal of and
interest on all bonds issued to finance or refinance any portion of
Mayor and City Commission
March 27, 2007
Page 3 of 5
the turnpike system as the same become due and payable; and to
create reserves for all such purposes.
(1) In the process of effectuating toll rate increases over the period
1988 through 1992, the department shall, to the maximum extent
feasible, equalize the toll structure, within each vehicle
classification, so that the per mile toll rate will be approximately
the same throughout the turnpike system. New turnpike projects
may have toll rates higher than the uniform system rate where
such higher toll rates are necessary to qualify the project in
accordance with the financial criteria in the turnpike law. Such
higher rates may be reduced to the uniform system rate when the
project is generating sufficient revenues to pay the full amount of debt
service and operating and maintenance costs at the uniform system
rate. If, after 15 years of opening to traffic, the annual revenue of a
turnpike project does not meet or exceed the annual debt service
requirements and operating and maintenance costs attributable to such
project, the department shall, to the maximum extent feasible,
establish a toll rate for the project which is higher than the uniform
system rate as necessary to meet such annual debt service
requirements and operating and maintenance costs. The department
may, to the extent feasible, establish a temporary toll rate at less than
the uniform system rate for the purpose of building patronage for the
ultimate benefit of the turnpike system. In no case shall the temporary
rate be established for more than 1 year. The requirements of this
subsection shall not apply when the application of such requirements
would violate any covenant established in a resolution or trust
indenture relating to the issuance of turnpike bonds.
(Bold Emphasis Added)
Therefore, it appears that while the Florida Turnpike Enterprise was required to establish
uniform toll rates between 1988 and 1992 on a per mile basis, new turnpike projects after 1992 are
not required to immediately adopt the uniform system rates? Higher rates can be imposed under
certain financial criteria for new projects. However, once anew project generates sufficient revenues,
the statute seems to contemplate that the toll rates for the new projects will eventually be adjusted
to reflect the uniform system rate.
From personal memory, I believe the Seminole Expressway was constructed after 1992.
Thus, it would likely be considered anew project under this statute. Because new projects can have
tolls that exceed the uniform system rate until sufficient revenues are generated, it is uncertain to what
extent the uniform system rate would be applicable at the S.R. 434 and Red Bug Lake Road plazas
at this time. It is my opinion that the City would have to retain the services of a toll rate expert in
order to determine whether the Florida Turnpike Enterprise is in compliance with this statute.
2 At this time, I have not been able to ascertain the uniform system rate.
Mayor and City Commission
March 27, 2007
Page 4 of 5
B. Relevant Case Law.
I could not find any case law or Florida Attorney General's opinions interpreting section
338.231, Florida Statutes. However, I was able to find other case law that is very instructive with
respect to the issues that will be raised in a toll rate challenge.
A toll rate challenge against the Florida Turnpike Enterprise will substantially raise state law
issues. However, it is first interesting to note that there is some precedent from the United States
Supreme Court related to the legality of toll road user fees. In American Trucking v. Scheiner, 483
U.S. 266 (1987), the Supreme Court opined:
At least so long as the toll is based in some fair approximation of use
or privilege for use, and is neither discriminatory against Interstate
Commerce nor excessive in comparison with the government benefit
conferred, it will pass constitutional muster, even though some other
formula might reflect more exactly the relative use of the state
facilities by individual users.
Id. at 289 (citing Evansville Airport v. Delta Airlines, 405 U.S. 707
(1972).
As such, at least from the Supreme Court's view point, a toll will be deemed constitutional if it is
fairly based on the use of the highway that is subject to the toll, is not excessive relative to the
benefit provided by the toll authority, and does not discriminate against Interstate Commerce. In
addition, even if some other formula might better capture the individuals use of the highway, the
Supreme Court will defer to the formula being used by the toll authority if the other criteria is
satisfied.
In Florida, the most instructive case that I could find is Gargano v. Lee County, 921 So. 2d
661 (Fla. 2"d DCA 2006). In Gargano, a property owner who resided on Sanibel Island challenged
the $3.00 toll imposed by the county for use of the Sanibel Bridge connecting the mainland to the
Island. While the court recognized there is little statutory or case law in Florida regarding the
legality of toll rates, the court found that it had jurisdiction to review the appropriateness of the rate.
Id. at 665.
The court made the following important pronouncements which will be relevant should the
City seek to challenge the toll rate established by the Florida Turnpike Enterprise:
1. The Circuit Court has jurisdiction to consider the reasonableness of any toll. See
§26.012(2)(c), Fla. Stat.
2. A toll is a user fee, not a tax.
3. When reviewing the "legality" of any toll, the court will generally impose the concept
of "reasonableness."
4. A reasonable toll rate can include: (a) annual cost of operating and maintaining the
toll facility; (b) a fair return on investment; and (c) the need to set aside funds to
replace the facilities in the future.
5. A limited remedy exists if a toll is declared unreasonable by the courts, as follows:
Mayor and City Commission
March 27, 2007
Page 5 of 5
(a) A court may only declare a current toll unreasonable and may only issue a
prospective injunction prohibiting the imposition of an unreasonable toll.
(b) A court can nnol fix a toll rate. However, a court can make a recommendation
on a maximum reasonable toll rate.
(c) A court can not order a refund if a toll authority imposed an unreasonable
toll.
Therefore, based on Gargano, if the City successfully challenged the toll rates, the best outcome that
the City could receive from the courts is that the toll be declared unreasonable and that the court
enjoin the collection of the unreasonable toll rate. The court could also make a recommendation on
a maximum acceptable toll rate, but the rate would require the approval of the Florida Turnpike
Enterprise. Importantly, the court could not require the Florida Turnpike Enterprise to issue a refund
for the collection of any unreasonable toll rate.
In sum, there is legal course against a toll authority that imposes a toll that is either statutorily
prohibited or generally unreasonable and discriminatory based on case law. Determining the
unlawfulness of a specific toll rate will require an evaluation by a duly qualified toll rate expert.
However, even if a party can establish an unlawful toll, it appears that a successful challenge will
only result in an injunction against the collection of an unlawful rate. Perhaps, a court may also make
a recommendation on a maximum acceptable toll rate. A refund of any unlawful rate collected
appears to be barred by the Gargano case.
Should any of you wish to discuss this matter more fully, I would look forward to the
opportunity.
z
ly,
Anthony A. Garganese
City Attorney
aag/
cc: City Manager
City Clerk (Archives)