Bondholders cry foul over ‘Bo’s Bridge’

Any deal would require approval by the Legislature.

A bank representing bondholders filed a lawsuit Thursday seeking to force the state Department of Transportation to raise tolls on Northwest Florida’s Garcon Point Bridge to pay off construction bonds that are in default.

The 3.5-mile toll bridge, which spans a portion of eastern Pensacola Bay, has had a troubled financial history since it opened in 1999. Neither tolls nor the number of motorists using the bridge have been sufficient to pay off the debt from the bridge’s construction.

A report from the state Division of Bond Finance last year showed the debt on the bridge had ballooned from an original $95 million bond issue to $135 million as of July 2017. The span is known in the Capitol as “Bo’s Bridge,” after former House Speaker Bolley “Bo” Johnson, a Milton Democrat who championed the project.

The lawsuit, filed in Leon County circuit court by UMB Bank, a Kansas City, Missouri, corporation that represents the bondholders, is asking a judge to order the Department of Transportation to “upwardly adjust” the tolls. The $3.75 one-way toll has not changed since 2011.

The lawsuit alleges the failure to increase tolls is a violation of the original bond agreement that stated the Santa Rosa Bay Bridge Authority, which has since disbanded, or the Department of Transportation would maintain tolls that “would always generate sufficient revenue” to pay off the bonds.

“The authority expressly acknowledged and covenanted that the tolls would be adjusted, if necessary, to ensure that the bonds were timely and fully paid,” the lawsuit said. “This adjustment feature or covenant to adjust fees is an indispensable part of the transaction and was specifically intended to protect the bondholders who lent the authority the monies to construct the bridge.”

Since the bridge authority has no members, the lawsuit said the responsibility to raise the tolls falls on the Department of Transportation, and the agency’s “intentional failure to timely respond to the revenue shortages” has resulted in the loss of toll revenue that should have been collected and paid to the bondholders.

“Plaintiff reasonably estimates the forfeited tolls since the initial default, coupled with the continuing harm to the bondholders if the tolls remain at their current level, are in excess of $75 million,” the lawsuit said.

The lawsuit cited a series of studies that have shown tolls could be raised on the bridge without heavily impacting the number of motorists who use the bridge.

A Department of Transportation study over the summer showed bridge tolls could be raised by an assumed annual rate of 2.1 percent and would produce “a significant increase in bridge revenues (but an insignificant change in bridge usage) — between the years 2018 and 2047,” the lawsuit said.

The study also showed bigger factors in the bridge’s usage were gas prices and economic conditions, rather than toll rates.

“Despite the findings, substance and tenor of the FDOT revenue study, FDOT has not implemented any revisions to the current and outdated toll rate schedule for the bridge,” the lawsuit said.

UMB Bank is represented by the Greenberg Traurig law firm.

As the lawsuit proceeds, the Garcon Point Bridge issue is likely to return to the Florida Legislature.

Last year, lawmakers failed to agree on legislation to address the bridge’s financial problems. One proposal involved either the Department of Transportation or the Florida Turnpike system refinancing the old debt and taking over the facility from the defunct bridge authority.

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Republished with permission of the News Service of Florida.