BRADENTON, Fla. — As bonds issued to build north Florida's Garcon Point Bridge fall further into default, the trustee says tolls must be raised.
The proposal left the bridge agency without any formal leadership after its last board member resigned in protest and drew the ire of politicians and residents who have a love-hate relationship with the 3.5-mile Pensacola Bay span.
The bridge provides drivers in Florida's panhandle with a convenient, safer alternative than competing freeways, though it already has some of the highest toll rates in the state. The tolls, however, don't raise enough money to cover the non-recourse bond payments.
As of Jan. 1, bondholders were owed $134 million on the current interest and capital appreciation bonds that were issued to build the 16-year-old, two-lane bridge.
Traffic and toll revenue never met projections. After draining the debt service reserve and several years of defaults, the bonds were accelerated in 2013. The tolls, the only security for investors, still do not cover debt payments.
As trustee, the Bank of New York Mellon asked the Santa Rosa Bay Bridge Authority to increase tolls in November.
"I had stated earlier that I would not preside over a toll increase," said former board chairman Morgan Lamb, who had become the lone SRBBA board member as of late last year after others resigned citing their frustrating at being bound by bond documents and having little decision-making power.
"The trustee said if I had not acted within 30 days, they would instruct the DOT to increase the toll," Lamb said. "I resigned effective Dec. 1."
The FDOT pays for operations and maintenance through a lease-purchase agreement with the SRBBA.
It is not clear if the FDOT has been officially asked by the trustee to increase the tolls. The tolls are collected by the Florida Turnpike Enterprise, which did not respond to requests for comment.
BNY Mellon said it hired FTI Consulting to do a rate study last year. The study concluded that cash tolls should be raised to $5 from $3.75, while the transponder rate should be increased to $4 from $3.75, and the transponder discount for heavy users should be decreased to 25% from 50%.
"This is literally highway robbery," Santa Rosa County Commissioner Robert "Bob" Cole told his board in December as news about the planned toll increase filtered through the community. "I won't support it."
The County Commission adopted a resolution opposing the toll increase.
Cole plans to accompany state Rep. Doug Broxson, R-Gulf Breeze, to Orlando Feb. 26 to meet with the trustee, and to try and negotiate a discount rate for county residents if the tolls are increased as proposed, he said last week.
"What we're trying to do is cool things down between the perception and my constituents on this issue since the trustee sent a letter to the [SRBBA] board," Broxson said Wednesday about the upcoming meeting. "It created some real bitterness about how arbitrary this process is, and people don't understand that's a privately owned bridge."
Broxson said he is meeting with the trustee to report on the "wishes of his constituents and not representing the state of Florida."
He described the bridge as privately owned because even though the SRBBA has a lease-purchase agreement with the FDOT, which will own the bridge after the bonds are paid off, the bridge is in default and the debt won't be paid for many decades. Until then, bondholders are in charge of the revenues.
Broxson said he had some ideas that he plans to discuss with the trustee "to help them and use at the same time," though he declined to provide any details. He said he already has asked BNY Mellon to fund a "legitimate" traffic and revenue study before requiring the toll increase.
The upcoming meeting will be the second time that Broxson has stepped in to broker a deal with the ailing bridge authority.
In 2011, after all but one board member resigned due to an ongoing investigation by the Securities and Exchange Commission, Broxson negotiated with the trustee to fund officer's liability insurance so that new board members could be appointed.
The SEC has not released any details about its investigation, which came after numerous reports that the SRBBA went for years without publishing financial information that it promised to investors when $75.5 million of current interest bonds and $19.4 million of capital appreciation bonds were sold to build the bridge in 1996.
Last year, the authority asked the trustee for funds to do a traffic and revenue study. That never came to fruition.
In the last few months, several residents have applied to the Santa Rosa County Commission to be appointed to the board.
Commissioners have delayed making appointments because the officer's liability insurance policy is due to expire soon and the trustee has not stated if funds will be released for that purpose.
Broxson said he planned to inquire about insurance at the Feb. 26 meeting.
The board, according to its enabling legislation, is to be composed of three members appointed by the County Commission, three appointments by the governor, and the district FDOT secretary. Four members constitute a quorum.
While Lamb was appointed to the board by a number of governors over the years, Gov. Rick Scott has never appointed his remaining two members.
Over the years, attempts were made to organize bondholders and possibly restructure the debt. That never happened and leaves the default uncured.
"It's very frustrating," said Broxson. "There's no end in sight. This could go on for 20 years."
When asked if bankruptcy has been discussed for the Bridge Authority, he said that kind of action would require the governor's signature.
"I don't think the governor is inclined to do that because with his financial background he doesn't believe in bankruptcy, and he might think it would signal to other authorities not to live up to their obligations," Broxson said.
Meanwhile, costs for maintenance and operations continue to pile up for the FDOT and the state, which won't be paid until after the bonds mature. Those costs include a $7.9 million toll facility revolving loan obtained in the 1990s.
As of June 30, 2013, the total owed the FDOT and the state was $27.1 million. In 2008, those costs totaled $19.4 million.
The state has no liability for the bridge's debt, and has said that no "bail out" will be forthcoming.
Broxson said the fact that the state won't intervene, even as FDOT absorbs bridge maintenance costs, is not hard to understand. FDOT will ensure roads and bridges under its purview remain "safe and sound for the public."
He also said that FDOT will raise the tolls, if asked to do so by the trustee. However, he plans to discuss ways to generate new revenue with the trustee next month.
"What would be the best course would be to generate more revenue to protect the bondholders and give people in my district a sense that they have some value for crossing a bridge that they can afford?" Broxson said.
"People made an investment in Florida, and they deserve a return on that investment," he added. "There are also users paying on that investment who are not happy, and that's my dilemma."