Thursday, February 17, 2011

Florida Toll Bridge Faces Bankruptcy

The white sands of Florida's emerald coast may be oil free finally, but the tourism driven area still faces some stiff economic headwinds.

Images Courtesy of
Images Courtesy of

The emerald coast will be making history soon, for all the wrong reasons.  The Garcon Point Bridge that is located in Gulf Breeze, FL is on track to default on it's approximately 2.2 million dollar bond payment that is due July 1, 2011.  Tolls are the bridges sole source of revenue and unless there is a sudden surge of traffic, the Santa Rosa Bay Bridge Authority will default on it's payment and subsequently file for bankruptcy.  Making it the first toll road in the state of Florida to do so. 

No pity needed here.  This project was scrutinized from day one, and should have never taken place.  The proposed Garcon Point bridge would only benefit those traveling to Gulf Breeze or Navarre beach.  Neither of which draws anywhere near the numbers of the Destin area beaches.  Thanks to some lofty traffic estimates, from a San Francisco agency, the project was deemed a good idea and began to grow legs.  Not without criticism.  Santa Rosa county and the State of Florida had there reservations and chose not to finance the project forcing the Santa Rosa Bay Bridge Authority to seek it's capital in the private sector.

The debatable project received it's financing from the issuance of  $94,993,714.05 in Santa Rosa Bay Bridge Authority (Florida) Revenue Bonds, Series 1996.  The individuals with the vision to go through with the project have all departed except for one, Morgan Lamb.  Who I must commend for sticking around to clean up this mess.  As for the rest of them, I am going to defer to one of my mother's favorite sayings, "If you can't say anything nice, don't say anything at all."  In case you were wondering, here is a list of the Santa Rosa Bay Bridge Authority members in 1996, and other key players:
  • Mahlon W. McCall, Chairman
  • David Morres, P.E., Vice Chairman
  • I. H. Northup, Jr., Secretary/Treasurer
  • Charles G. Baxley, P.E., Member
  • Shirley Lee Brown, Member
  • R. S. Burch, Member
  • H. E. Prescott, P.E., Member

  •  Feasibility and Traffic Consultants: URS Greiner, Inc., formerly URS/Coverdayle & Colpitts, New York, New York
    • Financial Advisor: Public Financial Management, Orlando, Florida
    Unfortunately for the Santa Rosa Bay Bridge authorities debt holders there is only one thing for certain, a very large loss of principal on their investment.  The bridge authorities bonds have been trading as low as $39 (par = $100).  Politicians across the state are watching Gulf Breeze while also saying a prayer of thanks that this didn't happen in there region.  If this doesn't lead to a more conservative fiscal policy, I don't know what will.  Let's all keep our fingers crossed for some traffic. 

     All of the above information is public knowledge and can be found at the Municipal Securities Rulemaking Board's website.

    The municipal bond market is much more diverse than Meredith Whitney makes it out to be.  Debt issued by municipalities should no more be lumped into a single class than the debt of Enron and GE.  Municipal bonds, a.k.a. Muni bonds, are created to fund dozens of different types of projects, and sometimes just to fund other bonds. Read, research, and read some more before you do anything. 

    As with any investment, you must perform your due diligence before making a purchase.  If you are not familiar with the different types and structures of municipal debt please consider reading this fellow bloggers' recent post:  Default and Bankruptcy in the Municipal Bond Market

    Thanks to the Northwest Florida Daily News for some of the information.

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