Bondholders may join Miami-Dade toll road agency lawsuit
Bondholders may join the litigation filed by the Miami-Dade County Expressway Authority, according to Eugene Stearns, the attorney who represents the authority.
Stearns recapped the ongoing legal fight for authority board members Tuesday at their first meeting in two months and first since Gov. Ron DeSantis signed House Bill 385 disbanding the authority known as the MDX.
The bill creates the Greater Miami Expressway Authority, an agency that would be under tight state control.
On Aug. 9, Leon County Circuit Judge John Cooper ruled from the bench that the portion of HB 385 abolishing the MDX was unconstitutional because it violated Miami-Dade County’s home rule powers in the state constitution. The county created the MDX by ordinance in 1994.
“The law and the facts here were clear,” Stearns told the board.
While that ruling is expected to be appealed by the Florida House of Representatives and the state Department of Transportation, there are other counts in the lawsuit filed by MDX on May 6 that still need to be heard by the court.
The lawsuit contends that bills passed in 2017 and 2018 ordering toll reductions also violate the county’s home rule powers.
In addition, the suit alleges that HB 385 and the 2017 and 2018 bills impair the trust indenture by which MDX secures its obligations to bondholders, and that it impairs the authority’s contractual rights as it relates to a contract FDOT signed in 1996 transferring the operational and financial control of five expressways to MDX.
In the next week or two, Stearns said he expected additional complaints to be filed in the MDX lawsuit by bondholders and potentially by a bond insurer.
“God knows where this is going to end up, maybe the Supreme Court,” said MDX Chairman Carlos Gimenez, who is also the mayor of Miami-Dade County.
The MDX has about $1.5 billion of bonds outstanding. Its bond ratings have been downgraded several times because HB 385 orders the successor agency’s new board to focus on toll reductions and requires that state officials approve future bond issues.
Since DeSantis signed HB 385 on July 3, MDX Executive Director Javier Rodriguez said staff has worked to keep roads safe and operational, and worked with the agency’s auditors preparing the comprehensive annual financial report.
The audit shows that the cash flow needs for MDX’s five-year work program will require issuing debt. That work includes $1 billion to build the Kendall Parkway, a 13-mile toll road that will extend the Dolphin Expressway.
Rodriguez said staff has also looked at refunding some outstanding debt because of the low interest rate environment.
Gimenez asked how bonds can be issued for the parkway project if the MDX can’t get a clean bond counsel opinion because of the litigation.
The authority may consider other instruments, such as taxable debt and a private placement, Rodriguez said, adding that financial advisors have been asked to prepare a report on all options and costs for the board’s next meeting on Aug. 27.
Stearns said if FDOT and the House don’t appeal Cooper’s Aug. 9 ruling, the MDX won’t have a problem getting a clean bond counsel opinion.
If they appeal to the First District Court of Appeal in Tallahassee, Stearns said he probably will try to get the case before the Florida Supreme Court as quickly as possible.
“We will make the argument that time is of the essence,” Stearns said.
If the Supreme Court determines that the HB 385 is valid, and that the Greater Miami Expressway Agency will take over from the MDX, Gimenez said the new agency probably won’t be able to get a clean opinion either because of outstanding legal questions about contract impairment.
“We need to win this in court. This board needs the flexibility and authority to set the tolls,” said Gimenez. “Then we can get a clean opinion and get our bond rating back up and do projects for the people of Miami-Dade County.”
S&P Global Ratings lowered MDX's rating to A from A-plus on July 16. Moody's Investors Service cut its ratings to A3 from A2 on July 5, and to A2 from A1 on May 10. Fitch Ratings downgraded its rating to A-minus from A on May 8. All have negative outlooks.