TALLAHASSSEE, Fla. (News Service of Florida) - Bondholders have gone to a state appeals court as they seek to force the Florida Department of Transportation to pay damages because of lost toll revenues on a long-controversial Panhandle bridge.
UMB Bank, which represents bondholders, filed a notice last week that it was taking the dispute to the 1st District Court of Appeal after a Leon County circuit judge ruled in November that the department could not be forced to pay damages.
As is common, the notice of appeal does not provide detailed legal arguments. But the appeal is the latest move in years of wrangling about the Garcon Point Bridge, which spans part of Pensacola Bay but has never produced enough money from tolls to pay off bonds that financed its construction.
Leon County Circuit Judge John Cooper forced the Department of Transportation early this year to raise tolls on the bridge --- known in Tallahassee as “Bo’s Bridge” because it was championed by former state House Speaker Bo Johnson of Milton.
But the case continued, with bondholders arguing they were owed damages. Cooper sided with the department Nov. 30 in rejecting that claim.
Nevertheless, another issue remains unresolved before Cooper, as the department has suspended the tolls after Hurricane Sally led to damage in September on another span, the Pensacola Bay Bridge. The department has suspended tolls through Jan. 12, saying the Garcon Point Bridge needs to serve as a detour route while the Pensacola Bay Bridge is being repaired.
The bondholders contend in court documents that such a lengthy suspension of the tolls after a storm is improper.
The underlying legal fight stems from about $95 million in bonds that the state-created Santa Rosa Bay Bridge Authority issued in 1996. The bridge opened in 1999, and inadequate toll income was complicated by the fact that the bridge authority has been effectively defunct since 2014, according to court documents.
Under a lease-purchase arrangement, the Department of Transportation operated and maintained the bridge for the authority and remitted tolls to the bondholders. UMB Bank said in the lawsuit that bondholders were owed $134.9 million as of July 1, 2018, a number that has continued to grow.
UMB Bank filed the lawsuit in December 2018, and a year later Cooper ruled that the department should raise tolls. The department did so on March 1, with, for example, tolls going from $3.75 to $4.50 for two-axle vehicles when motorists use the SunPass system and to $5 for motorists who pay cash.
In arguing for damages, attorneys for UMB Bank accused the department, in part, of failing to properly raise tolls earlier to meet financial obligations.
“As a direct and proximate result of FDOT’s intentional failure to timely adjust the tolls, millions of dollars in higher tolls were lost that could and should have been collected and paid to plaintiff (UMB Bank) for the benefit of the bondholders,” the bank’s attorneys argued in a court document this fall.
But in an October motion on the damages issue, the department’s lawyers argued that bond documents made clear that bondholders would be repaid through toll revenues --- not other department money.
“The bondholders were clearly on notice when they purchased the bonds that damages against the department would not be an available remedy for a delay in repayment they might experience because the only source of repayment is toll revenue,” the department attorneys wrote.
Cooper’s Nov. 30 decision rejecting the damages claim did not give a detailed explanation of his reasons. But during a Nov. 3 hearing, Cooper said bond documents show that “it’s clear these are not general obligation bonds of the state of Florida. These are revenue bonds to be paid for from the revenue produced by the bridge in the use of tolls,” according to a transcript of the hearing.
“It’s clearly the intent of all these agreements, and the structure set up is that the state of Florida, nor its general revenues, are liable for payment of the bonds, principal or interest,” Cooper said.