Local legislators want to acquire the Garcon Point Bridge, but first they have to sell the deal to fellow lawmakers and then to current private owners of the bonds that funded the bridge’s construction in 1999.
The devil will be in the dollars.
“Even if it just costs $100, you know some people are going to say it’s a bailout,” said State Rep. Jayer Williamson. Such a perception could hold up separate bills filed by Williamson and State Sen. Doug Broxson that propose various financial scenarios for acquiring the span, including the issue of new bonds to pay off the existing notes.
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The state’s proposed acquisition of the Garcon Point Bridge could cost far more than originally building it, according to a new study by the Florida Department of Transportation.
That’s because the $95 million spent to build the bridge in 1999, financed by bondholders, has morphed into a $135.2 million obligation to those investors as of last June 30.
“That shouldn’t be the taxpayers’ problem. Sometimes people make a bad investment and lose money,” said Morgan Lamb, the long-time volunteer chairman of the now-defunct Garcon Point Bridge Authority who quit in frustration in 2014 over what he said were threats from bondholders’ bankers.
“They said our attorneys are bigger than yours are,” said Lamb, a Navarre resident and high-profile Republican Party leader in Santa Rosa County.
The FDOT study was requested in early 2017 by legislators who include State Rep. Jayer Williamson. He’s among those who hope that state ownership of the bridge could lead to a reduction in the current $3.75 one-way toll. The bondholders have asked that the toll be raised to $5.
Williamson couldn’t immediately be reached for comment on the new study, which is largely a regurgitation of the bridge’s history and financial problems that have already been reported by area news media.
“If the state does nothing,” the new report stated, “FDOT would likely be sued by the bond trustee in an effort to increase the toll rates on the bridge. The resulting litigation would likely be time consuming and expensive.”
The report then recommends various financial methods by which the state could acquire the bridge, including the issue of new bonds to pay off the existing notes. But that would still leave taxpayers on the hook.
“The state should just go in and take the bridge” and let the bondholders decide if costly litigation is worth more risk, Lamb asserted. “The bondholders own notes. The state really owns the bridge.”
Indeed, the state—not the bondholders—has been maintaining and managing the bridge all along at costs that are currently about $2 million a year.
As previously reported, the trustee, the Bank of New York Mellon, has indicated that the investors might be open to negotiation and accept a reduced payout on the bonds.
The state has already essentially made what amounts to a large down payment on the bridge, according to people familiar with its finances: that’s because FDOT has so far deferred about $30 million in maintenance costs since the bridge opened.
Lamb said that the bondholders’ pressure to increase the bridge toll is several years old and hasn’t been accompanied by legal action. As chairman of the Bridge Authority, Lamb said, “I refused to raise the toll to $5. That’s when I resigned.”
Now, he said, the state should go on the offensive. “There’s no reason to pay the bondholders a lot of money. If I invest in a company…and they go out of business next year, that’s my problem.”
Still, the report concluded, if the bondholders’ potential financial loss “is not addressed in some meaningful fashion, the dispute over toll-setting responsibility…will likely degenerate into persistent, time-consuming and expensive litigation.”