BRADENTON, Fla. — The trustee for the Santa Rosa Bay Bridge Authority’s $115.9 million of defaulted bonds is providing financial support to entice volunteers to serve on the authority’s board, according to the Florida state representative who negotiated the deal.
Five of the SRBBA’s seven board members have resigned since last November, when the Securities and Exchange Commission began an inquiry into disclosure practices of the agency, which has had no funding for support services or liability insurance for years.
The authority, which sold bonds in 1996 to build the tolled Garcon Point Bridge in Florida’s panhandle, had its first payment default July 1.
Rep. Doug Broxson, a Republican from Gulf Breeze whose district includes the bridge, said in an interview Tuesday that Bank of New York Mellon approved funding for an attorney and clerical staff as well as board members’ expenses and liability insurance.
A notice to bondholders about the funding has not been filed on the Municipal Securities Rulemaking Board’s EMMA website and BNY Mellon would not confirm it.
“We will be issuing a bondholder notice in the near future,” said bank spokesman Kevin Heine.
Nothing has been received in writing about what BNY Mellon has agreed to fund, according to Morgan Lamb, a voting member of the board along with the local district secretary for the Florida Department of Transportation.
Lamb did say that he was contacted Wednesday by the former board attorney, Roy Andrews, who reportedly has been retained by the trustee to counsel the board.
Andrews previously worked for free because the SRBBA had no money to pay for staff.
“I was notified as the last board member to be available to sign a document to accept the insurance notification,” Lamb said.
The terms negotiated with the trustee should enable the Santa Rosa County Commission to begin a search for new board members immediately, Broxson said.
By law, the commission has three appointments to the seven-member body. Lamb is serving as an appointee of the governor, who has two more board positions to fill.
Four board members are necessary to constitute a quorum, and all four must vote affirmatively to approve measures, according to the SRBBA’s enabling legislation.
“Hopefully, we’ll have a full [board] here quickly,” Broxson said. “It’s good public policy to have a board that functions and to be moving this forward. At least we’ll have two parties at the table.”
Broxson said he only got involved to improve the circumstances under which volunteers from the community would feel comfortable serving on the board.
Previously, he said no one would serve on the board without proper support, particularly since there were no funds to provide board members with legal representation in the SEC investigation.
Most of the members had resigned before the authority had its first payment default on July 1 when reserves were depleted.
In nearly every year since the bonds were sold 15 years ago, reserves were used to supplement toll revenue that never met projections. Drivers have toll-free alternatives to the bridge.
When asked if he anticipated that the new board would negotiate a restructuring of the bonds, Broxson said he got involved only to reestablish a functioning board.
It will be up to the trustee to instruct the new board members on what their responsibilities are, according to the bond documents, he added.
“I wish [the board] the best of luck resolving the problem,” Broxson said. “My involvement should be over.”
Lamb said he has talked to a “handful” of bondholders who have expressed various opinions about what should happen next.
Some are amenable to restructuring talks while others talked about suing the state because they believe FDOT has some liability in the matter, he said.
The department has a lease-purchase agreement, maintains the bridge, and collects the tolls.
Two days before the July 1 default, state Transportation Secretary Ananth Prasad said, “We will not bail out this investment by the bondholders. However, let me be clear: FDOT will continue to safely operate and maintain the Garcon Point Bridge.”
The SRBBA sold non-recourse bonds, which means that investors are only entitled to the agency’s revenue. The bonds were not insured at issuance, but some investors purchased insurance in the secondary market.
Lamb said he hopes the board can negotiate with bondholders to set reasonable tolls for the 3.5-mile-long bridge.
In response to declining traffic, the toll in January was raised 7.1%. For a car, that raised the cost of using the bridge to $3.75 each way. It also angered local residents.
The toll hike was recommended by the authority’s traffic consultant, URS Corp., which predicted that another 4% to 5% toll increase would be necessary in the second half of this year.
The second toll increase hasn’t come to pass since there is no board to authorize it.
Previous board members, though, complained frequently that their hands were tied by requirements in the bond documents, and that they were not free to lower the toll, which they felt would increase traffic.
“I want the board to have the authority to actually get involved in negotiations on what the tolls are,” Lamb said. “I would like a traffic study to see what would happen if we lowered tolls.”
When board members are appointed, Lamb said he expects their meetings to be posted on the SRBBA’s website at www.garconpointbridge.com.
ACA Financial Guaranty Corp., one of several secondary-market insurers, was attempting to create a bondholders’ steering committee. There has been no market notice about whether that was accomplished.