BRADENTON, Fla. — The $1 billion Port of Miami Tunnel project inched forward Tuesday when Miami-Dade County commissioners approved an irrevocable $75 million letter of credit provided by Wachovia Bank NA to be used in helping to fund a portion of the project.

Florida transportation officials also said the project appeared headed for financial close by an Oct. 1 deadline.

The LOC is a portion of the county’s commitment toward the project, which involves boring two 3,900-foot-long tunnels under the water to provide a secondary route to the Port of Miami to relieve severe congestion through downtown Miami, which is the only access to the port now.

The LOC will fund a reserve to pay unforeseen geotechnical costs associated with digging the underwater tunnels. But some commissioners were concerned, given the economy, about the port’s ability to repay the LOC and its other obligations.

Port director Bill Johnson said the port is in the best financial shape it has ever been in despite the fact that cargo shipping is flat. However, the port also expects to finish the year with cruise passenger activity on par with last year, which was a record year, he said.

“The Port of Miami has the financial resources to pay for [the LOC],” Johnson said, adding that without the tunnel project the port will cease to grow by 2015.

“I’ve never seen a project like this,” Johnson said, noting that it has been well vetted. “The risk is clearly shouldered by the concessionaire.”

The Florida Department of Transportation is overseeing the project, which will be accomplished using a public-private partnership and a concession agreement. The state will pay the majority of the cost but the county and the city will also participate in the funding.

The Florida DOT this week said that a contract with MAT Concessionaire LLC, formerly Miami Access Tunnel LLC, is expected to be signed by the end of the month.

MAT will have five years to design, finance, and build the tunnels and another 30 years to operate and maintain them using the first availability payment scheme in the United States. That 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. Tolling is not currently anticipated.

With an 89.8% interest in MAT, Meridiam Infrastructure Finance SARL is now the majority owner after replacing troubled Babcock and Brown Infrastructure Group US LLC earlier this year. Bourgues Travaux Publics owns a 10.2% interest in MAT.

In July, county commissioners gave their approval for the Miami-Dade County Industrial Development Authority to be the conduit issuer of up to $980 million of transportation revenue bonds for construction. That represents the maximum amount of private-activity bonds authorized by the U.S. Department of Transportation that MAT could issue. In a finance plan submitted to the county, MAT said it anticipated financing construction with approximately $450 million of private-activity bonds.

It also would use a $400 million subordinated loan through the federal Transportation Infrastructure Finance and Innovation Act, a $50 million equity contribution from shareholders, and $100 million in milestone payments from the Florida DOT for construction.

MAT also said Barclays Capital and Macquarie Group would be managing underwriters for the bond sale and Financial Security Assurance Inc. or Assured Guaranty would insure the debt. In August, FSA determined that it would no longer insure structured deals and that it would be a muni-only insurer.

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