Want to build a bridge? Charge it!

That is what they are doing in Port St. Lucie about fifty miles north of my home. City officials are using a Visa card to pay for a road and turnpike interchange. My concern is proper oversight of how this card is used. We've seen way too often how taxpayer money is wasted.

Hat tip- Don Surber, Bright & Early, Basil's Blog


PORT ST. LUCIE — When city officials went shopping for a $15 million turnpike interchange, they had two simple words for the contractor: "Charge it."

In what is believed to be the first highway interchange ever built with plastic, the city is using a Visa card to buy materials and pay contractors to build a bridge and interchange at Florida's Turnpike and Becker Road, a two-year project that will cost $24 million overall and net the city $125,000 in cash-back awards.

Although 200 state and local agencies in Florida use commercial credit cards to buy things such as paper clips and computers, bankers say Port St. Lucie leads the state in its use of plastic, ringing up $20 million in Visa purchases last year alone.

That number will climb even higher next year as work on the interchange continues and the city swipes its card for a second, costlier road project: a $27 million bridge over the turnpike at Crosstown Parkway, destined to become the quickest east-west path across town.

Though some may scoff at the idea of roads built on credit, city purchasing agents said it's saved Port St. Lucie hundreds of thousands of dollars and provided the same protection that individual card users enjoy when it comes to damaged goods or stolen cards.

"The vendors give us better prices when we pay with Visa because they get their money almost instantly," Deputy Budget Director Cheryl Shanaberger said. "Every day we can go to our account and see the transactions. Instead of 1,500 separate purchase orders, all the charges are in one spot."

Because the interchange is being built in phases, the city didn't authorize a single $15 million payment to Bartow-based Johnson Bros. contractors. The first payment of $1.8 million was authorized June 14, and subsequent payments have brought the total to $4.4 million. The city has a $6 million monthly credit limit and, like users of American Express green cards, must pay its full balance monthly, leaving it free of interest charges.

Bank of America Vice President Jeri Winkleblack, who has managed the state's commercial credit card contract with Visa since 1997, said Port St. Lucie has been the leader in Florida even among state agencies since the mid-1990s, when it used plastic to buy millions of dollars worth of water and sewer pipe for utility expansion citywide.

Since then, nothing has been deemed too large or too small to buy on credit, she said.

"We've never heard of an interchange being built on credit, but it's working to Port St. Lucie's advantage," said Winkleblack, who said state agencies charged roughly $250 million on credit cards last year and 200 local governments charged another $250 million. "The only ones who charge more than Port St. Lucie are the huge state agencies like the Department of Transportation, but even they don't build roads with it."

Universities are typically the largest public users of commercial credit cards, also called procurement cards, which differ from consumer cards in that accounts can be set up to ban purchases at certain types of stores. Some accounts are set up without actual cards being printed, further reducing the chance of fraud.

Port St. Lucie's cards prohibit use at liquor stores, and some accounts, including the turnpike interchange fund, limit payments to a single vendor.

Shanaberger said the city resorted to credit cards in the mid-1990s to solve a cash-flow problem when buying millions of dollars worth of utility pipes. Just like a consumer who says "charge it" today can wait 45 days to pay the bill, the city enjoys using the bank's money interest-free for six weeks before paying off its purchases.

Bank of America, which issues the city's cards and has an exclusive contract to issue cards for state agencies, floats the money for 45 days but profits by getting a piece of the processing fees paid by the seller, Winkleblack said. Although those fees equal roughly 3 percent of the purchase price, Port St. Lucie officials have learned that many sellers or contractors are willing to pay the fees on top of discounting their prices in exchange for getting their money electronically within a day or two.

Standard purchase orders can delay payments a month or longer, officials say.

"There are other cities watching Port St. Lucie," said Winkleblack, who accompanied Shanaberger to Brazil in April to teach government leaders how to use credit accounts to reduce fraud in the cash-only society. "A lot of times we see resistance. A city will say, 'Gosh, are you going to give employees credit cards?' when they already have keys to city cars and buildings and could do a lot more damage there.

"It's still a new concept to some people."

The Visa card even saved the city from having to pay for five computers it never received, Shanaberger said. There have not been any instances of fraud, although Bank of America would cover that, too, she said.

"On a regular purchase order, we'd have no protection," Shanaberger said. "The procurement card has a dispute-resolution process, just like my personal credit card."