BRADENTON, Fla. — Less than 30 days remain before an expected payment default on the bonds issued by the Santa Rosa Bay Bridge Authority to build the tolled 3.5-mile-long Garcon Point Bridge in northern Florida.
State officials say they are not working on a bailout plan.
Following several resignations, the board overseeing the authority doesn’t have enough volunteer members to conduct its next scheduled meeting on July 20. Only three members remain on the seven-member panel, appointed by the governor or the Santa Rosa County Commission.
Meanwhile, the Securities and Exchange Commission has expanded an inquiry begun last fall to include a staffer voluntarily provided by the Florida Department of Transportation because the bridge authority has no money to hire staff of its own.
“I thought about resigning. It doesn’t make any sense” to remain on the board, said Morgan Lamb, who is secretary-treasurer of the board.
By law, four members are required for the SRBBA’s board to meet and take action.
So far, Lamb said he has not received an inquiry letter from the SEC. Several people have contacted him about restructuring the bonds, as well as a bondholder who claimed he owns 51% of the debt, Lamb said. That bondholder indicated that he was considering contacting other investors about taking over the bridge.
“We were hoping if traffic held up we could make this last payment” on July 1, Lamb said. “Because of the downturn in the economy, we just don’t have the traffic.”
Details about total revenue available for the upcoming bond payment, including tolls and investment proceeds, were not available. The reserve account contained $2,092,996.70 after the Jan. 1 payment. It is required to have $9,246,261.89.
Bond trustee Bank of New York Mellon notified the Bay Bridge Authority on April 27 that it is in yet another 30-day countdown to a reserve replenishment default. That letter is posted on the authority’s website at www.garconpointbridge.com/New/update.htm.
The trustee used available toll revenue and investment proceeds and dipped into reserves for $230,396.99 to make the total Jan. 1 interest-only payment of $2,359,687.50.
The payment due July 1 is $5,009,687.50 and contains principal and interest, according to a notice the trustee filed on the Municipal Securities Rulemaking Board’s EMMA website on Jan. 10.
For years, the authority dipped into reserves without replenishing them when required. It also has not filed audited financial statements as required by its continuing disclosure agreement. Many financials listed on repositories are simply unaudited compilations of revenues and expenditures prepared voluntarily by FDOT.
The SRBBA issued $75.5 million of Series A current interest toll revenue bonds in 1996 that mature in 2028 and $19.4 million of Series B capital appreciation bonds maturing between 2005 and 2028. The bonds, originally rated in the triple-B range, are secured primarily by toll revenues and their interest income. About $92 million of bonds remain outstanding.
ACA Financial Guaranty Corp. insured 23% of the debt in the secondary market and explored assisting an effort to create a bondholders committee to discuss restructuring last October.
Since then, there has been no word about whether that effort was successful. ACA could not be reached for comment Wednesday.
Some bondholders hoped that the state would rescue the bridge from default. However, the official statement for the bonds is clear: neither Florida nor any of its local governments is obligated to pay the debt.
While it still is not clear if Gov. Rick Scott intends to make his three appointments to the bridge authority, the governor’s office is not expected to assist the authority in restructuring its bonds or help pay debt service, said his spokesman, Lane Wright.
“People in the governor’s office are aware of what’s going on,” Wright said. “But the governor’s office does not have an official role in this.”
Though FDOT has an agreement to maintain and operate the bridge, agency officials said they are not discussing a plan to deal with the pending default.
According to the official statement, in the event of a default holders of a majority of the outstanding balance of the debt can demand immediate payment of the principal amount outstanding.
While there have been ongoing events of default that could have triggered accelerated payment in the past, bondholders have been paid in full. On July 1, the first payment default is expected to occur.
The SEC began an investigation last fall by calling the former bridge authority board chairman to testify and by requesting numerous documents, financial reports, and information related to disclosures that were given to the authority’s dissemination agent pursuant to the continuing disclosure agreement.
The SEC inquiry prompted at least three board members to resign. Some thought by resigning they might escape the commission’s scrutiny, but they did not.
Lamb said many people involved with the authority — though not him — have received SEC inquiry letters and have given statements, including the board’s former attorney, Roy Andrews, who for many years worked for free for the board because it didn’t have money to hire staff or conduct audits.
Andrews submitted a letter to the bridge authority in recent months stating that he would no longer have responsibility for counseling the board, according to Lamb.
Meanwhile, the bonds are trading, but at fire-sale prices, according to EMMA.
A customer bought a block of $60,000 of capital appreciation bonds in February for 14.8 cents on the dollar at a yield of 17.46%. Another customer sold $50,000 of current interest bonds on May 17 for 30.80 cents on the dollar at a yield of 21.74%.