South Florida toll road agency awaits new court rulings

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A Florida judge will decide if his order protecting the Miami-Dade County Expressway Authority’s ability to continue operating should be stayed pending an appeal.

Leon County Circuit Judge John Cooper ruled on Aug. 29 that a portion of House Bill 385 signed by Gov. Ron DeSantis terminating the Expressway Authority and replacing it with another agency was unconstitutional, a decision handed down in a lawsuit filed by the authority challenging the legality of the bill.

The Florida Department of Transportation filed a notice of intent to appeal Cooper’s ruling and, in a separate motion, has asked the First District Court of Appeal for a writ of prohibition. If the writ is granted, it would overturn Cooper’s decisions and void the authority’s lawsuit.

FDOT’s appeal invoked an automatic stay that prevents Cooper’s ruling from becoming effective.

Cooper will hold a hearing Friday on a motion by the authority to vacate the stay so that the current governing board can continue overseeing the expressway system. The authority is also known as MDX.

“If the motion is not granted, the status quo will change in a way that irreparably harms MDX, the [expressway] system, MDX bondholders and, most importantly, the public traversing the system each day,” the authority’s motion said.

MDX has about $1.5 billion of outstanding revenue bonds.

If the stay remains in effect, control of the system will revert to the Greater Miami Expressway Agency, an entity created in HB 385 that doesn’t have a complete governing board and that hasn’t adopted operating policies, MDX said.

FDOT has objected to Friday's hearing, and has argued that Cooper cannot make decisions in the case until the First District Court of Appeal rules on its request for a writ of prohibition.

On Wednesday, S&P Global Ratings said that it removed MDX’s bond rating from CreditWatch and affirmed its A rating on the debt because of the Cooper’s Aug. 29 ruling in favor of the authority.

S&P said it maintained a negative outlook because of the appeal.

“The negative outlook reflects our view that these developments still pose some level of uncertainty in terms of when this legal dispute will be resolved and what the final form of the organization will be,” said S&P analyst Kevin R. Archer.

S&P said its enterprise risk profile for the MDX includes its strong market position because of demand on its five toll roads, offset by constrained rate-setting flexibility due to a bill passed by the Florida Legislature’s requiring toll rate reductions in 2018; an “extremely” strong service area with favorable income levels and economic activity; and low industry risk relative to other industries.

The enterprise risk profile also includes a “vulnerable management and governance, reflecting a history of interference by the state legislature that we believe could persist, potentially constraining rate-setting autonomy,” Archer said.

S&P said the authority’s financial risk profile reflects its view of adequate financial performance and historically strong total debt service coverage well above 1.25 times, offset by constrained rate-setting flexibility. The MDX also has “very strong” debt and liability capacity, liquidity and financial flexibility.

“We view the mandated 2018 toll-rate reduction as an unprecedented intrusion on the MDX's autonomy to freely set its toll rates and independently determine its financial future,” Archer said. “Therefore, we believe that this reduces the authority's pricing power, which is a negative consideration in our market position and financial performance assessments.”

S&P lowered MDX's rating to A from A-plus on July 16 citing governance problems caused by the Legislature.

In similar moves, Moody's Investors Service cut its rating to A3 from A2 on July 5, and to A2 from A1 on May 10. Fitch Ratings downgraded the authority to A-minus from A on May 8. Moody’s and Fitch also have negative outlooks.

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Toll revenue bonds Transportation industry Lawsuits Ron DeSantis Miami-Dade County Expressway Authority Florida