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Bridge Authority's $9.4m Bond Repayment Deficit

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Paradise Island Bridge Authority requires $3.5 million in 'emergency' annual funding over a five-year period to cover a $9.4 million "deficiency" in its bond repayment fund.

The Authority's 2016 financial statements, tabled recently in the House of Assembly, reveal that the 'sinking fund' created to finance repayment of its $29 million bond debt contained just 45 per cent of what management felt it should have accumulated. "The sinking fund was established voluntarily by the Authority to reserve funds periodically to assist in retiring the bonds as they mature," the financial statements said. "On December 31, 2016, the Authority had $29 million in bonds payable and $7.65 million in the sinking fund.

"However, according to management's calculations, the estimated amount that should have accumulated in the sinking fund at the balance sheet date was $17.026 million. As a result, management recognises that there is a deficiency of $9.376 million ($17.026 million versus $7.65 million)."

The Authority's bonds are divided into four tranches, with the first $7 million in principal due for repayment next year on March 24, 2019. The 'sinking fund' had barely enough funds to cover this repayment at year-end 2016, although further injections should have been made in 2017 to boost it further.

There is nothing to suggest that the Bridge Authority is in danger of defaulting on its first $7 million long-term bond repayment, but the financial statements laid out a plan to immediately correct the deficiency.

This involved injecting $3.495 million in 'emergency' funding into the 'sinking fund', in addition to the Authority's regular $3.009 million annual contribution, every year for a five-year period through to 2021.

The Authority's projections thus call for a total $32.5 million contribution over that period, with the net injection amounting to $25.5 million as a result of 2019's $7 million principal payout.

The financials define the 'emergency funding' as "the amount calculated to be funded annually for the next five years to prepare for the bond maturity when due". However, there is no mention of how this multi-million dollar sum will be obtained.

The two obvious sources are an increase in Paradise Island bridge tolls, which will have implications for the tourism industry, and impact frequent users such as taxi drivers, tour operators and the employees of resorts such as Atlantis, the Four Seasons Ocean Club, Warwick, RIU and a host of other workers on the islands.

The other is the Bahamian taxpayer, via the Public Treasury, although it is unclear whether the former Christie administration - or its successor - have yet acted on the 'emergency' funding plan.

Given that the Authority's total income for the 2016 calendar year was $2.75 million, and total revenue some $7.733 million, it appears unlikely that it can fund the 'emergency' financing alone without a substantial toll increase or government support.

The Authority's financial projections placed the present value of combined principal and interest payments on its bonds at $70.759 million. It derived the $17.026 million that should have accumulated in the 'sinking fund' by subtracting 'paid interest' of $25.198 million from a "theoretical" sinking fund balance of $42.223 million.

Elsewhere, the Authority's financial statements note that it has an unpaid $97,920 Value-Added Tax (VAT) bill due to the Government on the revenues collected from its bridge tolls dating back to 2015. This is due to be repaid when there is "resolution", but was still on the balance sheet at year-end 2016.

The Authority also earned $71,500, a 24.7 per cent decrease from the prior year's $94,900, from various lease and concession agreements. These included the light pole and tollbooth plaza advertising concessions with Hillside Investments Company and MF International, respectively, plus leases with Cable Bahamas and Paradise Island Marina Development.

Comments

joeblow 1 year, 9 months ago

Some political appointees need to be fired! That's the fastest way to cut costs!

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John 1 year, 9 months ago

The bridge only serves the benefit of the persons living on Paradise Island or those who work over there. And since it is a necessity it shouldn’t be a burden on taxpayers. The toll should be doubled to $2.00 and $4.00 respectively. And $8.00 When the airport was rebuilt parking went from $3.00 to $6.00 to now $8.00 and sometimes you have to pay for the entire weekend (25.00) even if you park for just one day. Since most guests don’t leave the island until they are leaving The Bahamas the toll should be automatic. It’s a luxury island right?

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John 1 year, 9 months ago

Well maybe they can charge taxis with fares $5.00 and keep employees tolls at $1.00

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hrysippus 1 year, 9 months ago

Sounds right, residents same as employees?

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TalRussell 1 year, 9 months ago

Ma Comrades, if this doesn't freak you out what will.... $9.4 million "Bridge deficiency" and still the Imperial red state is attempting convict Cabbage Beach, Bridge protesters. {You can't make this up}. Hand over Bridges to foreigner owners Paradise Island.

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bogart 1 year, 9 months ago

Sell it Sell portion, all, have protective, security clauses etc and fire all those in charge of action or inaction leading to this failure. Again its the poor who can least afford it an are the majority who av to pay while those responsible still collect a salary.

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MonkeeDoo 1 year, 9 months ago

I agree with John. Ocean Club Estates alone have 40 luxury properties for sale srarting at 16.5 million down to a dock for 990,000 and we are going to tax out island people and others living in one room houses to bail out the Bridge Auth. They gotta be crazy.

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TheMadHatter 1 year, 9 months ago

Pure insanity....and possibly worse. Would they give me the "authority" to manage the bridge? I promise to do it for less than half the current management fee.

No. Of course they wouldn't. Too many "line items" would go missing.

It's all good. Bahamians love paying taxes.

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Well_mudda_take_sic 1 year, 9 months ago

Two simple words describe the reason for the shortfall in expected funds: MASSIVE FRAUD.

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sealice 1 year, 9 months ago

2016 - So this is more crap left over from the PLP and what a coincidence the minister in charge just got bounced at the house!! When the PLP saw all this money laying around they were like this easier den tiefin from NIB!!!!

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