Bridge Boss Disputes Downgrade

Garnett Breeding, chairman of the Santa Rosa Bay Bridge Authority, said in an interview Tuesday that he disagreed with the basis for Moody’s Investors Service’s downgrade last week of the issuer’s revenue bonds to B2 from B1.

The downgrade affects about $94 million of outstanding debt. Moody’s action came after the authority withdrew $250,754 from its debt service reserve fund in July to meet its semiannual debt service payment.

The SRBBA did not begin replenishing its reserve in August as required by covenants, placing the bonds in technical default. The authority in 1999 opened the 3.5-mile long Garcon Point toll bridge — which was constructed with the proceeds of $95 million of revenue bonds sold in 1996 — in the Florida panhandle.

About a year after opening, the SRBBA’s credit ratings began spiraling downward, largely because toll collections never met expectations. Moody’s said a recent toll increase, which makes the round-trip toll $7, could cause drivers to seek non-tolled alternatives, which are available.

The rating agency also said: “In our opinion there is no certainty that the state government would help prevent a bond default given that the previous governor, Jeb Bush, vetoed an expected $1.4 million loan from [the Florida Department of Transportation] Toll Facilities Revolving Trust Fund.”

“We totally disagree with the evaluation of our bonds,” Breeding said. He pointed to statistics provided by traffic consultant URS Corp., based on a toll increase that went into affect July 1. URS said that while traffic was down 6.8% in July .compared to July 2006, revenue was up 12.3%. From June to July this year traffic was down 0.9% but revenue was up 13.3%, the URS report said, adding: “The results, so far, are about as we had estimated.”

Breeding said local travelers can receive a 50% discount on their tolls, so for a two-axle vehicle the latest increase amounted to 25 cents one way.

“People would have to drive 30 miles out of their way” to avoid the toll, he said. “It’s erroneous and irresponsible to say that a local person would drive 30 miles out of their way,” Breeding said, adding that the Sanibel Causeway Bridge about 600 miles south of Santa Rosa County costs $6 each way.

“Our cost for our bridge, to me, is not out of the ordinary for what bridges and toll roads are costing in our state.” Breeding said the authority will not go back to the state for a loan, even though Bush has been replaced by Gov. Charlie Crist.

But the agency will refinance the bonds at some point because of backloaded debt service payments, he said, adding that several different firms have come forward with proposals.

“We get calls all the time from people wanting to buy our bonds. We’ve never defaulted and they are paying good interest,” Breeding said. “We even had a foreign government call and ask to buy us in the first couple of years after the bridge opened. They have money to burn.”

Breeding would not identify the prospective buyer, but he noted that the state has the first option to take over the bridge and assume its debt. The bonds were sold with Baa2, BBB, and BBB-minus ratings from Moody’s, Fitch Ratings, and Standard & Poor’s, respectively. This April, Standard & Poor’s affirmed its current B-minus rating. Fitch affirmed its BB-minus rating in March 2006, the most recent available.

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