BRADENTON, Fla. - The Florida Department of Transportation has set Thursday as the ultimate deadline for financial close on the state's most unique public-private partnership - the $1 billion Port of Miami Tunnel Project. But late last week several FDOT letters to Miami officials placed in doubt, once again, whether the nation's first P3 based on availability payments would come to fruition.
"As I warned last night, the city is threatening the success of this project," FDOT assistant secretary for engineering and operations, Kevin Thibault, said in a letter Friday to Miami Mayor Manny Diaz.
Thibault referred to a letter he sent late Thursday to the city manager in which he said: "I now find in the 11th hour a sense of deja vu because the city has not set in motion the appropriate mechanisms to provide its share of the project to financially close by the agreed-upon date."
The Miami City Commission last week was expected to act on a $50 million letter of credit to support a portion of its commitment toward funding the project. But that did not happen at the commission's meeting on Thursday, which prompted Thibault's letters warning that the project was in jeopardy.
City officials, facing a budget deficit, were involved with union negotiations most of the day on Friday so an update on the LOC was not available at press time, according to a city spokesperson.
According to Thibault, failure to close the project by Thursday would result in expiration of a $400 million subordinated loan through the U.S. Transportation Infrastructure Finance and Innovation Act, or TIFIA.
"Therefore, the city's failure to timely deliver [the LOC] threatens the success of this deal and the necessary federal funding will be lost," Thibault warned. "At this point, without the funding plan in place I am not sure we would ever be able to proceed with this project even with a new procurement."
The city largely was at fault for stalling the project nearly a year because commissioners would not agree on a plan of finance. Ultimately, the city and Miami-Dade County adopted a global agreement to do several major projects with various sources of funding, including tax-increment financing. The two main projects in the agreement were the Marlins Major League Baseball stadium and the tunnel project.
Then the credit crisis threatened to derail the tunnel project late last year when majority owner, the troubled Babcock and Brown Infrastructure Group US LLC, had to bow out.
FDOT, which will pay a majority of the cost through its budget, tried to pull the plug on the project when a replacement majority owner had to be found. After some political intervention by city and county officials earlier this year, the department finally accepted Meridiam Infrastructure Finance SARL as the majority owner with an 89.8% interest in the P3, which is now called MAT Concessionaire LLC. Bourgues Travaux Publics owns a 10.2% interest in MAT.
MAT will have five years to design, finance, and build two 3,900-foot-long tunnels under the water to provide a secondary route to the Port of Miami. MAT will have another 30 years to operate and maintain the tunnels using the first availability payment scheme in the United States.
The deal means MAT must arrange all the financing and meet certain milestones and operational standards or it won't get full regular payments for the project. MAT reportedly has 10 banks lined up to finance a portion of the project. It also has received a $980 million private-activity bond allocation from the U.S. Department of Transportation, and the TIFIA loan that is now in jeopardy.
Miami-Dade County commissioners on Sept. 15 approved an irrevocable $75 million LOC with Wachovia Bank NA for a portion of their funding commitment to the project.
