BRADENTON, Fla. - Confusion continues to surround the $1 billion Port of Miami Tunnel concession project, which was expected to reach financial close by Thursday.
In his most recent communiqué regarding the tunnel, Florida assistant transportation secretary Kevin Thibault said that Miami's city attorney had raised last-minute questions about a $50 million letter of credit that the city was expected to approve last week as part of the financing package for the project.
Thibault also raised questions about whether the delay might jeopardize the project's $300 million subordinated loan under the federal Transportation Infrastructure Finance and Innovation Act, or TIFIA.
The Miami City Commission last week was expected to approve a $50 million LOC as part of its funding commitment to the public-private partnership that will construct two 3,900-foot-long tunnels under the water to provide a secondary route to the Port of Miami.
The project will be built using the first concession contract based on availability payments in the U.S. Such concessions are used widely in other countries, so the fate of the tunnel project is being watched closely here.
Miami commissioners were to consider an LOC from Wachovia Bank that was essentially the same as the $50 million letter of credit that the Miami-Dade County commission approved toward its funding commitment on Sept. 15, Thibault said in a letter to Miami Mayor Manny Diaz last Friday night.
But Thibault said the city's attorney raised last-minute objections that "not only lack merit, but appear designed to do nothing other than frustrate a successful closing of this project."
City officials could not be reached for comment by press time yesterday.
Thibault went on to say that the Florida Department of Transportation had needed to advise TIFIA officials no later than 5 p.m. last Friday if it had the funding commitments necessary to commit to financially closing the tunnel project this week.
"TIFIA notified [FDOT] that it was returning the designated TIFIA funds to its funding pool," Thibault wrote to Miami's mayor.
Local and state officials were meeting Monday to sort out the status of the project. But no word about it came before press time.
A federal official told The Bond Buyer that there appeared to be confusion about the TIFIA loan simply because the federal fiscal year ends this week. And that means TIFIA funding for the tunnel project might have to be earmarked again in the new budget that begins Oct. 1.
This oft-delayed, almost derailed project was placed on a drop-dead schedule earlier this year when FDOT decided to pull the plug on it.
City and county officials from South Florida used their influence to convince the state to continue supporting the project, and had agreed to a schedule that would bring it to fruition this week.
If the recent problems are resolved, FDOT will pay a majority of the cost through its budget, with the city and county paying smaller portions.
Under the plan that requires financial close this week, MAT Concessionaire LLC, whose majority owner is Meridiam Infrastructure Finance SARL, will have five years to design, finance, and build the tunnels, then another 30 years to operate and maintain them.
MAT will receive availability payments, which means certain milestones and operational standards must be met in order for the company to receive full, regular payments.
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 in addition to the TIFIA loan.