BRADENTON, Fla. —  Financial closing on the $1 billion Port of Miami Tunnel project has been delayed at least a week so that Miami commissioners can act on a $50 million letter of credit at their next meeting on Oct. 8.

It is not clear why the city needed extra time to approve the LOC. However, commissioners have been through lengthy budget hearings and union negotiations trying to cure a $118 million deficit.

The city late Tuesday adopted a $512.9 million general fund budget for today’s start of the new fiscal year, which represents an $8.7 million decrease over fiscal 2009.

In addition to service cuts, Miami will reduce workers’ pay, lay off 159 employees, and eliminate another 217 vacant positions.

The Florida Department of Transportation announced nearly six months ago that the 35-year concession contract for a public-private partnership to construct the tunnel project needed to reach financial closing by Oct. 1, which required funding sources for construction to be in place.

FDOT is paying for most of the project from its budget while Miami-Dade County is funding $400 million and Miami is contributing $50 million plus right of way.

In the last week, though, confusion erupted when Miami commissioners did not act on the LOC to fund most of their contribution.

FDOT assistant secretary Kevin Thibault said he believed that a master agreement with Miami appeared to grant the city manager authority to approve certain documents, including the LOC.

But yesterday officials disagreed with that interpretation and still planned to seek the city commission’s approval of the LOC next week, according to Helena Poleo, spokeswoman for Miami Mayor Manny Diaz,

“We feel very confident that we are going to be able to find a solution to this,” Poleo said, noting that the city is in touch daily with FDOT. Poleo also said the state agreed to an extension of time to get the LOC approved.

The city’s delay is an interesting development since it will benefit most from the project, which will construct two 3,900-foot-long tunnels under the water to provide a secondary route to the Port of Miami.

Right now trucks and cruise passengers making their way to the port must travel through downtown Miami sometimes creating severe congestion.

A consortium calling itself MAT Concessionaire LLC will have five years to provide up-front financing to design and build the tunnels, plus it will have another 30 years to operate and maintain the tunnels.

MAT’s majority owner is Meridiam Infrastructure Finance SARL, which is expected to use federal loans and private-activity bonds to finance part of the construction cost.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.