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New Hope for Florida Bridge Bonds

BRADENTON, Fla. — Santa Rosa Bay Bridge Authority bondholders, in limbo since a majority of authority board members resigned and having seen a payment default July 1, may see some relief soon.

The authority, which built the tolled Garcon Point Bridge in northwest Florida with $95 million of revenue bonds issued in 1996, has seen all but one of its volunteer board members step down since late last year because there was no money for an attorney to represent those that received letters from the Securities and Exchange Commission, which opened an inquiry.

State Rep. Doug Broxson, R-Gulf Breeze, has discussed getting a new board established with the trustee, Bank of New York Mellon, and ACA Financial Guaranty Corp., a secondary market insurer of some bonds.

“I sent them a letter suggesting what I thought would be a way that members would be willing to serve,” Broxson said Friday. “It’s my understanding that they had agreed in principle.”

Broxson suggested that bondholders agree to provide funds for board members’ liability insurance, a monthly retainer for an attorney, administrative and clerical support, a potential traffic study, a certified public accountant, and “travel expenses for authority board members to appear in potential litigation or testimony, if any,” according to a notice BNY Mellon filed with the bond market last week.

BNY Mellon also said that ACA Financial was in communication with several bondholders and other insurers of the bonds holding or representing a substantial amount of the debt that expressed interest in forming a steering committee.

The steering committee would assist the trustee in “reviewing potential restructuring options, choosing a financial advisor, assisting in negotiations with third parties, potentially reconstituting the board of the authority, and participating in regular communications with the trustee,” the notice said.

The board for many years had no funds to do annual audits since all tolls collected on the 3.5-mile-long bridge went to pay debt service. Toll revenue never kept pace with projections or ultimately debt service requirements, leading to the use of reserves until they were depleted this year, resulting in payment default.

Many board members stepped down because there were no funds to provide them with an attorney or other services when the SEC requested that they make statements.

Without a board, no decisions can be made about how to deal with the continuing default, and there is no authority to confer with bondholders about restructuring possibilities or consider bankruptcy.

Broxson said he has been working with the trustee and the insurer “to give them a pretty clear understanding why people will not serve on the board and what it will take to open the application process again and have a quorum.”

Broxson’s district includes the toll bridge.

“It’s good public policy to have a functioning board doing their duty according to the statute,” he said. “Without one in place, you have dysfunction.”

Last November, then-SRBBA chairman Garnett Breeding received a letter from the SEC inquiring about disclosure issues.

The SEC requested various items from the board, including “reports of listed events, instructions concerning the materiality of reported listed events and whether to report the events, and all other documents the SRBBA has given” to its dissemination agent pursuant to the continuing disclosure agreement for the toll-bridge bonds.

The SEC also asked for records that discuss or explain if any disclosure documents were not provided to the dissemination agent and to submit all financial statements and minutes of board meetings.

In addition to Breeding, at least two other board members and the board’s volunteer attorney received letters from SEC. They all resigned. It is not clear if the SEC has concluded its investigation.

The SRBBA bonds are rated D by Fitch Ratings and Standard & Poor’s, and Ca by Moody’s Investors Service.

About $115.9 million of bonds are outstanding because of increasing principal due to accretion of about $20 million on the capital appreciation bonds, according to Moody’s analyst Maria Matesanz.

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