Australian Company Is Purchasing Toll Bridge Company in Orange Beach

Thursday, January 12, 2006
By RYAN DEZEMBER and VIRGINIA BRIDGES
Staff Reporters

ORANGE BEACH -- The U.S. arm of Australian financial giant Macquarie is negotiating to buy the Baldwin County Bridge Co., a corporation that was designed strictly to own and manage the Foley Beach Express toll bridge.

Meanwhile, Orange Beach, a partner in the bridge over the Intracoastal Waterway, is moving ahead with plans for a bridge over nearby Wolf Bay. The city is creating a bridge authority, choosing an engineering firm and soliciting private investment from firms that include Macquarie.

The sale of the toll bridge company has been in the works and is in "advanced final term negotiations," said Tim James, a former gubernatorial candidate and one of the bridge company's principals. Both James and John McInnis Jr., another principal, will remain with the company, James said, as consultants or directors for up to five years.

James said he could not disclose further terms of the deal, including the sale price.

Macquarie, which recently bought long-term rights to operate the Chicago Skyway toll road for $1.83 billion, also owns stakes in major pay-to-use roads in San Diego and England and large shares in airports in Sydney, Australia; Brussels, Belgium; Rome; and Copenhagen, Denmark.

Locally, Macquarie worked on the 2004 refinancing of the Foley Beach Express toll bridge, which occurred a few months after Orange Beach became a partner.

Though Macquarie officials in New York declined to comment, a Macquarie employee and McInnis met with the Baldwin County Commission on Tuesday in Bay Minette to alert commissioners of the pending sale and put in motion the paperwork needed to transfer the license to operate the bridge to Macquarie.

The original deal that laid the groundwork for the bridge will also be amended to include the Australian firm, according to county officials.

Orange Beach Mayor Steve Russo said the City Council plans to make changes to its financial agreement with the bridge company to reflect the ownership change.

In 2003, the Orange Beach City Council approved a deal with the bridge company in which the city agreed to give the firm $1.2 million annually for 10 years in exchange for a fee for each car that crosses the bridge.

In the agreement, Orange Beach collects royalties for 30 years -- at a rate that increases as traffic rates eclipse million-car increments during the first 10 years and at a fixed rate of 30 cents for each car that uses the bridge for the remaining 20 years.

After 30 years, the city can choose to buy the span for 10 times its annual revenue or continue to collect 30 cents per car for another 30 years.

Some city leaders suggested at the time that, though it would be up to elected officials three decades down the line, growth around the span would likely cause revenues to jump to a level that would make the price too high for a 30-year-old bridge. A large corporation, however, may not want the city to be able to buy the bridge at a preset price.

"I believe that option is valuable to the city," Russo said.

Russo and James said the city's financial position will not change if Macquarie buys the bridge company.

In early December, Russo traveled to New York to talk with Macquarie officials about whether they would be interested in investing in a bridge across Wolf Bay, providing another hurricane evacuation route and linking the rapidly growing beach city to swaths of undeveloped land north of the back bays.

Russo also said that Goldman Sachs, the global investment and securities firm, has expressed interest in partnering on the project.

The mayor said he approached Macquarie because of the pending partnership on the existing toll bridge. Goldman Sachs, he said, responded to solicitation from Tommy Tyrrell, a Mobile project manager who was appointed in August to be an unpaid special assistant to Russo and charged who would try to connect the city with private bridge developers and funding sources.

Since the mid-1990s it was suggested that a Wolf Bay bridge, which would launch from the end of Alabama 161 and land at Sapling Point before connecting to Baldwin County 95, would cost about $40 million.

"We're probably, with fees and everything, looking at the $60 million range," Russo said.

Though details remain uncertain, Orange Beach officials are moving forward with plans for a two-lane toll road, tasking City Attorney Larry Sutley with creating a bridge authority and negotiating with Tallahassee, Fla.- based Figg Bridge Developers Inc.

Figg has planned several bridges along the Gulf Coast, from the Dauphin Island Bridge to the $44.5 million Mid-Bay Bridge that links Niceville, Fla., to Destin, Fla., and the $53.6 million Garcon Point Bridge in Santa Rosa County, Fla. Both cost $2 per trip to traverse and were paid for with revenue-backed bonds. Both are controlled by local bridge authorities.

Russo said Figg was chosen over other firms Tyrrell contacted about the job because it had drawn partial plans for the bridge at the request of dairy magnate George Barber Jr., who along with the David Lawrenz family owns thousands of undeveloped acres where the bridge would land.

Russo said Figg also got the nod because it proposes to charge a lump sum for its work rather than a percentage of the bridge's final cost, which can fluctuate.

Within a few weeks the council will probably be asked to approve some payments to Figg for a study of traffic patterns and potential revenue, Russo said. About then, City Administrator Jeff Moon said, the council will be asked to review and approve legal documents that will create a bridge authority, which will likely be comprised of the mayor and council.

A separate body, "keeps some of the debt off the city's balance sheet by creating a different authority," Russo said, "which is probably the biggest reason to do it that way."