BRADENTON, Fla. - The Florida Department of Transportation on Friday suddenly pulled the plug on the long-awaited $1.2 billion Port of Miami tunnel project and said it would not close on the state's largest pubic-private partnership with the consortium known as Miami Access Tunnel.
The announcement will require that Miami-Dade County determine what to do with proceeds from $102.5 million of general obligation bonds it sold in April to fund a portion of its payment toward the P3, in which the county and city of Miami also were partners.
"We are obviously disappointed we could not bring this project to close," according to a statement from Gus Pego, secretary of FDOT's District Six. "Although everyone has worked hard to bring this project to fruition, we must face the reality that our private partners have been overwhelmed by the effects of the financial market making delivery unworkable."
The project, spearheaded by the department, involved boring two 3,900-foot tunnels about 100 feet below the water to create a bypass for freight trucks and buses carrying cruise ship passengers to the Port of Miami. Currently, the only access to the port is through downtown Miami, which causes extreme congestion through the city.
Miami-Dade County agreed to fund $402.5 million of the tunnel project, while the city of Miami agreed to contribute $55 million in funding and right of way. FDOT agreed to fund the remaining amount through its annual budget.
In February after nearly a decade of planning, the department announced that a consortium called Miami Access Tunnel would design, build, finance, operate, and maintain the tunnel project through a concession contract that provides it with availability payments for 30 years after the tunnel opens to traffic.
MAT's main partners are Australia-based Babcock & Brown Infrastructure Group US LLC, the main equity partner, and Bouygues Travaux Publics SA, a French construction company. MAT, as part of its financing, obtained a private-activity bond allocation of up to $900 million from the U.S. Department of Transportation.
In a report to Miami-Dade commissioners in mid-October, FDOT said it had reached agreement on major contractual terms regarding the project. But last month in another report, the department told county commissioners that MAT was trying to replace Babcock & Brown with another equity partner and that they should expect documents regarding a substitute firm shortly. The report also said financial close of the concession agreement was anticipated by February.
FDOT officials did not immediately respond to questions about what happened to the substitute equity firm.
"I am disappointed," Miami-Dade Mayor Carlos Alvarez said in a statement. "The Port of Miami Tunnel remains a project that I firmly believe in and will continue to advocate. However, without DOT's financial commitment, this project is not currently feasible."
"At this point, the tunnel project is no longer moving forward," he added. "We hope to reassess as financial conditions improve."
Bonds sold earlier this year to pay a portion of the county's payment toward the tunnel project were part of Miami-Dade's Building Better Communities, a $3 billion GO program approved by local voters in a referendum in November 2004.
Bond documents for that sale said that if proceeds were not used for the tunnel project, proceeds would be used for other infrastructure projects under the Building Better Communities program.
"We are holding these funds in escrow," Miami-Dade finance director Rachel Baum said yesterday.
Baum said she expected the county mayor and manager would ultimately recommend whether to reallocate the bond proceeds to other eligible projects.
