BRADENTON, Fla. — ACA Financial Guaranty Corp. is asking Santa Rosa Bay Bridge Authority bondholders if they are interested in creating a committee to investigate potential resolutions to the northwest Florida issuer’s looming payment default.
The request was made in a material event notice Thursday on the Municipal Securities Rulemaking Board’s EMMA site, and posted by the Bank of New York Mellon, the bond trustee.
Though the $95 million of current and capital interest bonds sold by the SRBBA in 1996 were not insured, ACA Financial is one of several secondary market insurers, EMMA records showed.
Neither ACA nor the Bank of New York Mellon would comment further on last week’s notice.
The authority has been in “technical default” since 2002 when it began dipping into reserves to supplement debt-service payments because of toll revenue shortages.
It is currently projected to deplete its debt-service reserve in the current fiscal year, resulting in a payment default next July.
Bond proceeds, secured solely by tolls, were used to build the 3.5-mile-long Garcon Point Bridge, which has suffered from much lower-than-forecast traffic since it opened in May 1999.
The SRBBA’s situation is being monitored by the Florida Transportation Commission, which has limited oversight for most transportation entities in the state, including the Florida Department of Transportation.
“We’re trying to facilitate getting the bondholders and the [SRBBA] board together,” said David Tassinari, the FTC’s manager of finance and performance monitoring. “We’ve asked the department to ask the Division of Bond Finance for an independent review of what the board’s options are in terms of restructuring the debt.”
“I don’t know how that would be done given the financial situation unless bondholders took a loss,” Tassinari said.
Though Tassinari has been in contact with ACA and the bond trustee, he said the FTC is trying to assist in an unofficial capacity to get the affected parties together to discuss a potential resolution.
The SRBBA’s problems worsened late last month when its guaranteed investment contract provider, WestLB AG, said it wanted to terminate its contract, the board’s attorney Roy Andrews said during a board meeting.
Andrews did not specify what funds were invested, though construction bond proceeds, sinking and reserve funds are often invested in GICs.
During the meeting, some bondholders voiced frustration that no action had been taken to avoid the inevitable payment default next July despite knowing that reserves were declining and debt-service payment amounts were increasing.
Some speakers felt that FDOT should take a lead in resolving the debt problems because it is responsible for operations and maintenance, and once the bonds are paid off, the department becomes the owner of the bridge.
Default, another speaker said, could reflect negatively on FDOT.
Andrews suggested that large bondholders should organize to come up with a restructuring plan or they could take possession of the bridge. He added that bankruptcy is a possibility.
The SRBBA’s bonds are non-recourse, meaning that bondholders are paid only from toll revenues.
The bonds are not a full faith and credit of the state or Santa Rosa County.
