BRADENTON, Fla. — Florida lawmakers are in a last-minute push to make major changes to the high-profile Orlando-Orange County Expressway Authority on the heels of a scandal that continues to dog the agency.
The Florida House Wednesday passed an amended Senate Bill 230 to create a new Central Florida Expressway Authority that would replace the Orlando-Orange County agency, assume its debt, and expand to include Seminole, Lake and Osceola counties.
The annual session ends Friday.
The Senate must agree with the amendments, some of which appear aimed at strengthening the security of the Orlando-Orange County Expressway Authority's investors, who hold $2.6 billion of revenue bonds.
Action on the bill revved up this week following the Orange County grand jury's April 24 indictment of the OOCEA board's vice chairman, Scott Batterson, on one count of bribery and two counts of solicitation for receiving unlawful compensation. The charges are felonies.
Gov. Rick Scott, who appointed Batterson to the board three years ago, suspended him after the indictment was announced. The governor currently appoints three of the five board members.
No details were released about what led to the charges, but they are not believed to be related to an ongoing investigation by the grand jury and Jeff Ashton, the state attorney for Orange and Osceola counties.
Ashton indicated last week that more indictments are possible.
"The work of the grand jury is not done," he said. "This is a preliminary indictment covering one issue."
The grand jury is still reviewing whether three of the five OOCEA board members improperly spoke with each other before they voted to seek a new executive director last year. Florida law prohibits elected and appointed government officials from talking to each other about agency business outside of a public meeting.
The three board members under scrutiny are Batterson, who is a civil engineer, Marco Pena, a marketing and growth strategist a Florida Hospital, and Noranne Downs, the District Five secretary of the Florida Department of Transportation whose territory includes Orange County.
Before handing down Batterson's indictment, the grand jury heard testimony from Downs, board chairman Walter Ketcham, and Orange County Mayor Teresa Jacobs, who is also a board member.
Batterson and Pena declined to testify, as did Chris Dorworth, a former state representative who is a lobbyist with ties to companies doing business with the Expressway Authority. Communications uncovered during the investigation show that Batterson talked with Dorworth before and after the executive director's vote.
It is not clear if lawmakers were prompted by the OOCEA scandal to move quickly this week. The House had the Senate bill in hand for nearly a month before bringing SB 230 to the floor.
The bill would abolish the OOCEA and create a nine-member regional toll authority with strict ethics standards written into the law.
One amendment this week to the bill creating the new Central Florida agency cut the number of board appointments to be made by the governor to three from six.
Elected county officials from Seminole, Lake and Osceola would appoint one member each, while the Orange County mayor would appoint a county commission member. The mayors of Orlando and Orange County would be permanent board members.
The bill would prohibit board members and the executive director from representing a person or company before the authority for two years after leaving, among other restrictions.
To avoid conflicts of interest by a board member, employee or consultant, the measure requires annual disclosures of certain relationships to be filed, including whether any relative is a registered lobbyist and if any land is owned within a half-mile radius of an existing or proposed authority roadway project
The bill also prescribes how the fledgling Osceola County Expressway Authority — which recently sold $70 million of current interest and capital appreciation bonds for the Poinciana Parkway — will be folded into the regional toll authority in 2018. The bonds were rated BBB-minus by Standard & Poor's.
The Poinciana project is essentially a start-up toll road, and its incorporation raised concern about how its debt might impact the new agency and current OOCEA bondholders.
To insulate those bondholders from the weaker credit, the bill says Osceola's transfer must be delayed beyond 2018 until the current and forecasted total debt-service coverage ratio on all of Osceola's obligations is equal to or greater than 1.5 for each year debt is outstanding, according to an amendment adopted Tuesday. Osceola's toll roads also must be considered "non-system projects," which essentially segregates those projects from OOCEA's bond-financed expressways.
The Central Florida Expressway Authority would be created as soon as Scott signed the bill. He has supported regionalizing transportation agencies in the past.
Late last week, Fitch Ratings affirmed the OOCEA's A rating on $2.6 billion of outstanding bonds, and said that it's monitoring the legislation that would create the Central Florida toll authority.
On April 11, Moody's Investors Service affirmed its A2 ratings on the debt, and revised the outlook to stable from negative. Moody's also said it is monitoring the grand jury investigation and the bill, and that "further governance instability could also put downward pressure on the rating."
S&P assigns A ratings to the OOCEA bonds.
The Orlando-Orange County Expressway Authority operates five toll roads covering 109 miles. The agency is working on a new project called the Wekiva Parkway, which is designed to complete a beltway around the Orlando area. SB 230 includes measures to ensure that the Wekiva is constructed.
In other legislative action, bills making it harder for the Miami-Dade Expressway Authority to increase tolls were stuck in committees and appear unlikely to reach the floor of either chamber for a vote before the session ends Friday.
Two bills that would have required municipalities across the state to get voter approval for bond offerings that exceed $50 million appear dead as the legislation has not been heard by a single committee during the 60-day session.
A conference committee early in the week hammered out negotiations over Florida's $75 billion budget for 2015. A 72-hour "cooling-off" period is required before lawmakers can vote on the spending plan, which means final action will come on the last day of the session.
Last week, legislation that would protect investors in nursing homes cleared the House and is headed to the governor's desk for action.
SB 670 limits who can be sued in nursing home litigation because of the death or personal injury of a resident due to the home's negligence. The bill also makes other changes in the law, including restricting punitive damages.
The bill says that "passive investors" cannot be named in such lawsuits. Passive investors are defined as individuals or entities that do not participate in the decision-making or operation of the facility.
The legal shield could prompt more investors in Florida nursing homes, according to Rep. Matt Gaetz, R-Fort Walton Beach, who sponsored companion legislation.
"The state has a compelling interest in ensuring that these homes are operating at the best level and that there is more investment in those homes," he said during debate.
It's not clear if SB 670 will limit damage claims against nursing homes that are part of a continuing care retirement community because the claim could be against the CCRC,and not the nursing home itself, according to attorney Paul Mandelkern, a shareholder at Lowndes, Drosdick, Doster, Kantor & Reed PA who specializes in health law.
"However, the CCRC may be able to successfully argue to a court that since it's nursing home is subject to all of the statutory requirements imposed on nursing homes under Florida law, it is also subject to the damage limitations enacted by SB 670," he said in an email to The Bond Buyer.
Many CCRCs, and some nursing homes, are publicly financed in Florida.
Mandelkern said a nursing home in the state cannot be constructed without first obtaining a certificate of need from the state, with limited exceptions, and there has been a moratorium on new CONs for several years.
"So currently in Florida, public financing has been used for the acquisition of existing nursing homes as new nursing homes are not being constructed," he said.