More pain for bondholders in long-running Florida toll bridge default
Holders of defaulted bonds issued to build northwest Florida's Garcon Point Bridge got more bad news about the toll revenues that repay the debt.
The Florida Department of Transportation, which first suspended tolls to facilitate evacuations in the wake of Hurricane Sally, said Thursday that the state will continue to suspend toll collections until Nov. 13.
Tolls are suspended because the Garcon Point Bridge is one of two detours travelers are directed to use around the nearby Pensacola Bay Bridge, which was heavily damaged in the storm. The non-tolled State Road 87 is the second detour.
That means tolls haven't been collected since Sept. 15. Normally, tolls would be reinstated as soon as the storm threat passed, in this case within two days.
The Pensacola Bay Bridge became impassable when Skanska USA-owned construction barges came loose from moorings during the hurricane, completely destroying some portions of the bridge. Skanska was using the barges to do a $430 million widening of the bridge, which was expected to be done later this year.
"The Pensacola Bay Bridge has a targeted re-opening date of early March 2021," FDOT said in a release Thursday. Although the release detailed some of the actions necessary to rebuild the damaged bridge, FDOT didn't say how much repairs would cost or who would pay for the repairs.
FDOT did not immediately respond to questions about costs submitted by The Bond Buyer.
Toll revenue bonds issued to build the 3.5-mile, two-lane Garcon Point Bridge across Santa Rosa Bay have been in default since 2011 because the span never met traffic and revenue projections. The debt was accelerated in 2013.
On Oct. 15, UMB Bank, trustee for the bonds, sought permission from the judge in an ongoing lawsuit to file an amended complaint that seeks a declaratory judgment. UMB contends that FDOT improperly suspended tolls long after the hurricane emergency had passed.
FDOT filed a motion opposing UMB's request to amend its complaint saying that the issue of suspending tolls is not related to the underlying suit.
UMB first filed the litigation in 2018 to force the FDOT to comply with bond documents and the agency's lease-purchase agreement to increase toll rates on the Garcon Point Bridge.
On Dec. 4, 2019, Leon County Circuit Court Judge John Cooper ordered FDOT to increase tolls based on a schedule prepared by a traffic consultant. When tolls hadn’t been raised by February of this year, Cooper ordered FDOT to increase them.
That wasn't the end of the lawsuit.
UMB also contends that bondholders are owed toll revenues from the time a rate hike was first requested by the trustee in March 2015. FDOT didn't raise tolls until after it was ordered to do so by the court.
FDOT has filed a motion for summary judgment in the underlying suit, on which the judge has not ruled.
The Garcon Point Bridge opened in 1999, after the Santa Rosa Bay Bridge Authority issued $75.5 million of fixed-rate, current-interest bonds and $19.5 million of capital appreciation bonds to finance its construction. Traffic and toll collections never met consultants’ projections and when reserves were exhausted, the debt went into default.