Not by design Last minute legal drama enveloped bridge project

(Editor's Note: After a recent package of articles in The Legal News about the history of the Mackinac Bridge and a first-person tale of the experience of climbing the South Tower, Miller Canfield CEO Mike McGee offered to share a lesser-known side of the Mighty Mac's construction: How skilled and swift legal maneuvering ensured it would be built.) By Beth Anne Eckerle Legal News Mike McGee is a bond lawyer whose firm, Miller Canfield in Detroit, is well known in the state when it comes to municipal bonds financing and expertise. Often, because of the firm's reputation, McGee is asked to give lectures or educational seminars on how bond issues work, for governmental entities, associations of municipalities and the like. When he thought about how to best provide a tangible example of how complicated and challenging bond financing can be, he turned to the story of the Mackinac Bridge and how two lawyers ensured its construction by securing its financing quite literally at the last minute. "The more I thought about using the Mackinac Bridge as an example, I thought, 'How in the world did they do that?'" McGee said. "It's so different than any other municipal finance project in the state of Michigan, in terms of its size, its risk, and its novelty. How did they actually sell those bonds back then to make it happen? As a professional in this line of work, it really piqued my curiosity." Over the last decade or so, McGee has become an expert in telling the nearly forgotten story of the last-minute legal drama that allowed the bridge to be built. While most historical looks at the bridge recite its awing facts, startling dimensions and committed construction corps, there is a lesser-told but equally fascinating story behind how the bridge got funded. In an article he wrote for the State Bar of Michigan in 2007, McGee and co-author John F. MacArthur tell this story, starring one of Miller Canfield's own, John Nunneley. 'Prior challenges pale in comparison' It's difficult if not impossible today to envision Michigan's Upper and Lower Peninsulas not being connected by the five-mile engineering marvel that spans the Straits of Mackinac. But before 1957, the only way to traverse the stretch of water was by car ferry. When it came time to talk about a bridge, one can imagine the conversations and the questions. The Straits could surely be considered one of the most inhospitable environments to build a suspension bridge, with a foundation in the depths between two Great Lakes known for claiming mammoth freighters time and again. It was those conditions - driving ice, brutal winds, blinding snow, punishing hail (sometimes all in one day) - and the fact that a bridge of this magnitude had never been built in the world that created major hurdles for bridge proponents when it remained only a vision with a very hefty price tag. But in 1952, after favorable feasibility studies, geologic borings, traffic analyses, and consultations with the world's premier engineers, it was determined it could be built. Enabling legislation in Michigan was adopted as Public Act 214, and the newly created Mackinac Bridge Authority was given the green light. The Authority was chaired by former U.S. Sen. Prentiss M. Brown, a life-long resident of St. Ignace and a lawyer by training. "If it seemed bridge supporters had overcome adversity, their prior challenges would pale against a roadblock waiting ahead: Financing the project," McGee and MacArthur wrote in their State Bar piece. "Prospective lenders spoke bluntly: they were skeptical. The Mackinac Bridge was too big. Too costly. Too risky to build. It couldn't be done." With an estimated price tag of $99.8 million to be issued through bonds (about $800 million in today's dollars), the Authority hired world-renowned bridge engineer David B. Steinman to design what would be the longest suspension bridge built anywhere in the world. While Steinman is rightfully credited in the history books for the design of the structure (McGee says the architect once boasted the bridge would last 1,000 years), a lesser-known but considerably important team member was also selected by the Authority, as counsel: John H. Nunneley, son of a prominent Mount Clemens family and then head of Miller Canfield's bond practice. Nunneley faced an enormous challenge ahead, but was the right man for the job. He had established a reputation as an experienced bond counsel, having successfully handled several large issues-interstate highway systems, university buildings, and large southeastern Michigan drainage and sewer projects among them. He possessed a keen intellect, and would prove to be a tireless ally and tenacious lawyer when things got tough. "And get tough they did," wrote McGee and MacArthur, Nunneley's grandson. Not yet a sure thing The bridge financing from the outset met none of the criteria common to most bond issues at least most comfortable bond issue projects. McGee explained that Act 214, which had given a "go" to the Authority, stipulated that the structure would have to be built and paid for without any financial backing of the state. Without a good-faith pledge of taxes to back the bonds, interest rates would surely be higher and financing would cost more. Lenders who were already questioning the perilous nature of the structure demanded a solid revenue stream to offset costs. By June 1953, Steinman's novel engineering design was in place and the Authority secured construction bids. All that was needed now was the money. The Authority approached the New York investment banks, but the market turned soft and no takers came forward, McGee recounted. Pleading their case before the Michigan legislature, the Authority asked the state for some type of token demonstration of confidence to make the bonds more attractive to investors. After a bit of haggling, the state agreed to back the bonds with $417,000 annually the amount appropriated to run the ferries that had been transporting cars across the Straits at the time. As with many large-scale governmental projects, there were opponents. While the governor at the time, G. Mennen "Soapy" Williams, was highly in favor of the bridge being built, other legislators, especially those who had ties to the ferry lines, were not as supportive, McGee explained. "Obviously it would put the ferry lines out of business if the bridge were built," he said. Even the state highway commissioner at the time publicly supported the bridge but privately was opposed. As recounted in the book "Bridging the Straits" by Authority Secretary Lawrence Rubin, he convinced his friend, State Sen. Haskell L. Nichols (R-Jackson), to initiate a "poison pill" in the state appropriation, once the state announced its $417,000 backing: The bonds would have to be sold by December 31, 1953, or the appropriation would lapse. With the market remaining tight through fall, interest rates started trending upward and the clock was ticking. "With year's end approaching and at the advice of investment bankers, Nunneley restructured the bond issue, dividing it into two types of bonds to make the deal more attractive. First-lien bonds totaling almost $80 million would carry one interest rate, and $20 million in second-lien bonds a higher rate. With that novel change, plus the promise of the $417,000 appropriation, a syndicate of bankers, insurance companies and other individuals was tentatively formed to bid on the bonds," the authors wrote. But it was not yet a sure thing. On December 9, 1953, just one day prior to the publication of the required bond sale notice, Nunneley and Rubin flew to New York to conference with investors. The issue on the table, McGee explained, was simple and decisive: "Was it enough? Would the underwriters buy the bonds? Would the bridge be built?" After hours of tense negotiations, agreement was reached. "The syndicate would submit its bid for first-lien Class A bonds at 4 percent; and second-lien Class B bonds at 5.25 percent. The final step formal opening and acceptance of the bid by the state Administrative Board, chaired by Gov. Williams was scheduled to occur in special session on December 17." Enter: Haskell Nichols. Nichols filed petition with the State Supreme Court on December 16 asking the court to stop the Administrative Board from approving the bond sale until a final hearing on Act 214's legality. In bypassing the lower courts, Nichols had raised the stakes. If the state's highest court issued even a temporary restraining order, the appropriation would expire, the underwriting syndicate's bid terms would not be met, and all would be lost, McGee explained. "By chance, Nunneley was in Lansing when Nichols filed his petition. Nunneley, accompanied by Prentiss Brown, sprung into action, requesting an immediate meeting with members of the Court, four of whom remained in Lansing preparing to head home for the holidays," wrote McGee and MacArthur. Nunneley agreed to Nichols's request for a court hearing but insisted that a fair contest with full arguments from both sides of the issue be held after December 16 and before February 17, 1954 when the bridge bonds were scheduled for delivery. "That way, the bond sale process could continue on schedule. If the Court then ruled against Nichols' petition, nothing would be lost," according to the writers. This request was granted and the court refused to grant the restraining order. A month later, in Nichols vs. Williams, the court unanimously upheld the Bridge Authority's position as well. At 10 a.m. on December 17, the syndicate's bid was opened and accepted. The sale of bonds was approved. Credit where credit is due Prentiss Brown, long heralded as the vision and the voice of the Mackinac Bridge, would always give Nunneley credit for saving the bridge. "Nunneley himself considered the challenging Mackinac Bridge bond work his finest legal accomplishment, joking that he really earned his fee," McGee and MacArthur noted. On November 1, 1957, the majestic Mackinac Bridge opened to traffic. The last of the bonds were retired in 1986. Nunneley remained at Miller Canfield and continued making his mark on high-profile, publicly financed projects until his retirement in 1971. He has since passed away. "And what of Haskell Nichols, whose eleventh hour maneuvering almost put the brakes on the bridge?" the authors ask. "He's remembered, too. A portion of Michigan highway U.S. 127 from Jackson County's north line, south to the intersection of I-94, is known as the Haskell L. Nichols Memorial Highway. No doubt some of the traffic on Nichols Highway is headed north - to the Mackinac Bridge." Reflecting on the Mighty Mac in Michigan McGee said before Rubin, the MBA executive secretary, passed away, he had a chance to meet with him at Rubin's home in the Upper Peninsula, on a scenic stretch of shoreline overlooking the Mighty Mac and the Straits. "When John MacArthur and I wrote that article (for the State Bar) it was fascinating to hear Rubin explain how Nunneley had this little role that ended up being so crucial, and that it's been pretty much forgotten," McGee said. "If I were Nunneley and I was looking at that type of project, I'd think, 'How the heck are we going to do this?' It presented an unusual degree of risk for new construction, let alone an untested new construction, and for a bridge longer than any bridge that's ever been built. There are a lot of things that can go wrong and as a result, many lenders are very reluctant to lend on brand new, untested construction." In architect Steinman's own book on the project, "Miracle Bridge at Mackinac," McGee noted that the entire first chapter is about the financing and political challenges faced by bridge proponents. "He says the engineering was challenging enough, but it paled in comparison to the financing," McGee noted. "It's so interesting that the engineer wrote a chapter about the financing, and that's what really got me interested in this story." "I think the bridge is a work of art," McGee commented. "We all enjoy looking it and seeing it in its changing seasons and in changing weather conditions. The Bridge is such a towering achievement of our state and its people that we should never tire of telling and retelling the incredible story of its birth." Published: Fri, Apr 15, 2016