Studer Community Institute

Garcon Point Bridge woes aren't new

November 19, 2014
/ Louis Cooper
/ government

The bank that holds the debt on the defaulted Garcon Point Bridge wants the one-way toll to increase from $3.75 to $5. The sole member of the six-person, state-chartered board that runs the bridge, however, says he can’t legally raise the toll. But, the bank could do it anyway. That’s the administrative train wreck the bridge is in – a situation born of bad decisions and characterized by broken financial promises. It’s important to remember that the Garcon Point Bridge was not built with tax dollars. Although the bridge was authorized by the Legislature – pushed through in the 1990s by then-powerful Milton legislator Bo Johnson – it was paid for with $95 million in bonds, purchased by private parties who thought they were guaranteed a set return on their investment. The bridge has never – NEVER – met its financial expectations, leaving the bondholders wringing their hands as to how to recoup their investment. Morgan Lamb, the lone member of the Santa Rosa Bay Bridge Authority, received a certified letter on Nov. 6 from a lawyer representing New York Mellon Bank, which manages the bonds that funded the bridge, demanding the toll increase. “They’re right. According to the bonding document, it should have been raised incrementally to the $5 point by now,” said Lamb, a Navarre resident. “But we haven’t had a functioning bridge authority for a long time. We had a quorum for about a year and then those guys resigned. That was earlier this year and that was the only meeting we had this year.” The governor, who appointed Lamb, is responsible for appointing two other members, and the Santa Rosa County Commission – which has no authority over the bridge – is responsible for appointing the three others. Why the exodus? “For the past several years, we have actually been non-functioning,” Lamb said. “We ran out of money a few years back. We had no discretion on just about anything. They thought we would be a functioning board, but we weren’t, so they all quit.” Joy Tsubooka, the Santa Rosa Commission’s public information officer, said the county cannot find anyone willing to serve. “According to their resignations letters, the three (country representatives) resigned because concerns of personal liability and their lack of ability to act independently from the trustees (Mellon Bank),” Tsubooka said. “No one else has stepped forward to take their place.” Questions posed to Gov. Rick Scott’s office about why the other two seats he is responsible for are vacant and when they might be filled were not answered. Even without action by the authority, Morgan said the bank administratively could raise the rates. “They have a mechanism they can use to enforce it, but it still takes a traffic consultant to recommend a toll increase, and there hasn’t been one,” he said. “It’s incumbent on them to hire one. We’re broke. I can’t hire one.” In the letter to Morgan, however, the bank said it is the authority’s job to hire the consultant. “The authority has covenanted … to engage traffic consultants,” the letter said. “The cost of engaging such traffic consultants are to be treated as part of the authority’s administrative expenses.” With seeming inability to affect the direction of the bridge, you might wonder why Lamb, too, hasn’t fled the scene. He says he’s staying on, at least temporarily. His term expires in October 2017. “My oath of office was to uphold the constitutions of the United States and the state of Florida, and to serve in this office to the best of my ability,” he said. “I owe no allegiance to that bank. They think I do, but I don’t.” How the bridge got where it is Technically, the purpose of the bridge is to make money for the bondholders. Ideally, that money is generated because enough motorists use it and pay the toll. That has simply never materialized for the span, which allows traffic to flow more directly from Milton and Interstate 10 to the Gulf Breeze peninsula. In fact, the bridge never met the projected traffic levels that were used to sell the bridge to begin with. Arguably, that was because those numbers were never realistic. [sidebar] Bridge usage From October 2013 to September 2014, there was a total 1,513,809 one-way trips across the bridge. That's an average of about 126,151 per month. Of that total, 607,774 trips were paid for by using the SunPass transponder. [/sidebar] The original traffic projections were based on the traffic at the Mid-Bay Bridge that connects Niceville to Destin in Okaloosa County. That bridge connects directly to a dense commercial/tourist area with immediate access to the beach. The Garcon Point Bridge, while shortening the trip to the beach, still lands drivers in a mostly residential area that is several miles and another toll bridge trip to the beach. Very early in the life of the Garcon Point Bridge, the bridge authority had to dip into reserves to make its payments to bondholders. That put the bridge in technical default. Eventually, there was not enough in the reserves to make up the difference. On April 27, 2011, Mellon bank sent the authority an official Notice of Default. On Jan. 1, 2013, the bank declared that the principal of all of the outstanding bonds were due. Why increase the toll? So, even if the bank has the authority to increase the toll, wouldn’t doing so decrease traffic and therefore toll revenue – the opposite of what the bank should want? Maybe not. “The Garcon Point Bridge is relatively inelastic to price changes in tolls,” according to a report Mellon Bank got from FTI Consulting. “As a result, FTI believes that tolls can be adjusted to maximize revenues.” Translation: The consultant believes the only people who use the bridge now are the ones who absolutely have to – including seasonal tourists -- so most of them are likely to continue using it regardless. The consultant also wants to cut the discount that frequent bridge users who use the SunPass transponder device receive from 50 percent to 25 percent. They believe the changes, even with any lost traffic, will bolster the bridge’s revenues from an estimated $5.4 million for 2014 to $6.7 million in 2015. The toll has increased steadily since the bridge opened in May 1999. It started at $2. In 2002, it increased to $2.50. It went to $3 in 2004, and to $3.50 in 2007. In 2011, it jumped to the current $3.75. Just judging by the timing of those changes, it could be time for another increase. Increases normally go into effect on Jan.1 or July 1. In the past, increases have been instituted with little or no public warning. Drivers don’t usually know about the toll increase until they see signs at the toll booth.

Back to Blogs

Garcon Point Bridge woes aren't new

Recent Posts