BRADENTON, Fla. — The Santa Rosa County Commission is poised on Thursday to restore a quorum to the junk-rated Santa Rosa Bay Bridge Authority by appointing three new members. The Florida agency’s board hasn’t met since 2010 and it defaulted on a bond payment in July.
Two of the prospective appointees have experience in municipal finance and one is currently a registered broker with the Financial Industry Regulatory Authority Inc.
“Looking through the resumes, we have quite a few qualified people,” County Commission chairman Lane Lynchard said in a pre-commission meeting Monday.
Nine applicants submitted their names to the commission, and Lynchard said two names stood out because of their “extensive experience in municipal bonds.” A third applicant has extensive business experience in the county.
Lynchard also noted that the bond trustee, Bank of New York Mellon, agreed recently to pay for directors and officers liability insurance for the cash-strapped board. As of Monday, the policy was not in effect.
“Any appointments we make Thursday will be made contingent on a policy being in effect,” Lynchard said.
The commission unanimously agreed to consider the three names suggested by Lynchard in their regular meeting.
They are Gerry Goldstein, co-owner of a commercial real estate brokerage company and former muni analyst; retiree David Walby, former muni bond underwriter and a FINRA arbitrator; and Donald Richards, a marketing and business development specialist with experience in financial analysis.
About $115.9 million of bonds are outstanding, and tolls collected on the 3.5-mile-long Garcon Point Bridge have never been enough to make full debt-service payments without dipping into reserves.
The bridge authority has not done an audit for years and hasn’t had money to pay for a director or insurance coverage for board members.
Santa Rosa Bay Bridge Authority bondholders have been in limbo about their investments since late last year, when most board members resigned after the Securities and Exchange Commission opened an inquiry that is believed to center around disclosure issues.
A payment default occurred July 1 after reserves were depleted.
Walby and Goldstein said Wednesday that having insurance coverage was a key element for authority board members that led them to volunteer, especially since the agency is under investigation by the SEC.
“Nobody in their right mind would get on board without insurance coverage,” said Walby, who worked in securities businesses for 36 years.
Walby, who wrote a memoir called “Bond Daddy” in 2009, said he intends to fully disclose legal difficulties he faced in 1972 when he was arrested for selling tax-exempt bearer bonds without a license in Pensacola.
Investigators declined to prosecute the two misdemeanor charges in the case against him after it was determined that a license was not required at the time, according to Walby. The case is also disclosed on FINRA’s website.
Subsequently, Walby’s career included work as an underwriter for E.F. Hutton & Co., and a senior vice president of Everen Capital.
In 2003, he co-founded Cornerstone in Panama City, Fla., which primarily focused on municipal bonds in managing clients’ assets. Cornerstone is no longer in business.
Walby recently stepped down as an arbitrator for FINRA, a position he held for 15 years. He expects experience as an arbitrator will assist him on the bridge authority board as it considers how to deal with its defaulted bonds, he said.
“The key to making … things work is transparency,” Walby said. “If the board is more transparent with bondholders, they might be willing to compromise or something.”
Goldstein was originally appointed to the bridge authority’s board late last December following the resignation of several previous members after they received letters from the SEC.
When it became clear to him that insurance coverage was not available, and there wasn’t a quorum for the board to meet, Goldstein said he resigned.
When it became clear recently that provisions were being made to provide board members with insurance coverage, he submitted his resume again.
“I bring some talent to the table,” Goldstein said, adding that his research indicates there may be repercussions for Santa Rosa County if the bridge authority fails to recover from its financial problems.
“It appears there is some correlation between a tax-exempt bond going belly-up and the county’s ability to access the markets in terms of rates” in the future, he said.
Goldstein is co-owner of Salomon-Goldstein Properties, a real estate brokerage company that specializes in commercial real estate sales and leasing. He also is president of Goldstein Enterprises LLC, which owns and manages commercial warehouses in Pensacola and condominium conversions in New Jersey.
In addition to other businesses over the years, Goldstein said he spent a decade on Wall Street beginning as a municipal analyst and trader at White Weld & Co. He also worked at Carlin Capital Markets and Matthews & Wright Governments Inc.
Goldstein said he has no political aspirations, and he is not involved in the municipal bond business any more.
However, he said he wants to bring his expertise to the bridge authority board “purely from standpoint of removing a black eye from the county” with the hope of resolving the current financial problems.
“I do have some ideas how that can happen,” he said, declining to be more specific. “I need to vet my ideas with the board and with bond counsel to make sure what I am thinking can be done.”
Goldstein said it would be essential to retain a bond attorney to analyze any restructuring proposal, which most likely would require that investors take a haircut.
Since the bridge authority has no funding to pay for bond counsel, he suggested that the board might request financial assistance from the trustee or the secondary market bond insurers.
“There is no question that the only real way to fix this is a refinancing,” Goldstein said. “I’ve run the numbers but I’m not ready to print them in The Bond Buyer.”
The SRBBA bonds are rated D by Fitch Ratings and Standard & Poor’s, and Ca by Moody’s Investors Service.
