BRADENTON, Fla. — PortMiami calls it the “Deep Dredge.”
It is so important to the future of shipping and South Florida’s economy that bonds will finance nearly all of the cost to deepen the port’s harbor in the race to be ready for the expansion of the Panama Canal.
Bond financing is not unusual for port projects. But in this case Miami-Dade County is believed to be the first local government or port to say it will finance most of its half of the estimated $180 million cost for the Deep Dredge as well as the federal government’s half, if need be.
The commitment catapulted the long-planned project forward this week when the U.S. Army Corps of Engineers began soliciting bids for contractors to deepen PortMiami’s channel to 50 feet from its current 42 feet.
The work is expected to be completed in time for the $5.3 billion expansion of the Panama Canal in the spring of 2015. The larger Panama locks will enable passage of supertankers and larger, modern container ships known as post-Panamax ships that require up to 50-foot channel depths.
Stated another way, the expanded “Panama Canal will accommodate container vessels 160% larger than today’s Panamax ships, forever altering global trade routes,” according to a white paper by Colliers International in August.
Miami plans to be among a handful of Atlantic Coast ports where harbors and dockside facilities will be ready to accommodate the bigger vessels.
“As the closest port to the Panama Canal, PortMiami is well-positioned to capture new trade opportunities and the deeper channel will enable the port to double its cargo traffic over the next several years,” said PortMiami director Bill Johnson.
Though Miami is also one of few ports that have all federal and state approvals for the dredging project, funding has been a hitch.
The Water Resource Development Act of 2007 authorized the Department of the Army to deepen PortMiami, though Congress has not appropriated federal funds for the project.
“Consequently, the only way for the congressionally authorized PortMiami deep-dredge project to go forward on a timely basis — to enable the project to be completed in time for the anticipated early 2015 completion of the ongoing Panama Canal improvements — is for the county to commit to both fund its local share of the project’s costs and to advance the federal government’s share,” said a report by Miami-Dade County Mayor Carlos Giminez.
County commissioners in July unanimously approved a Project Partnership Agreement with the Corps of Engineers to advance the federal share of costs, estimated to be about $90 million. The county plans to seek reimbursement of the federal cost if Congress appropriates the funds, and has indicated that it must be prepared to absorb the cost if federal funds do not materialize.
To jump-start the project, and be ready for the bigger Panama Canal to open, the county will finance about $110 million of the $180 million deep-dredge cost with port revenue bonds. The debt is expected to be sold in the first quarter of 2013.
The remaining costs will be paid by Miami Dade and $112 million will come from the Florida Department of Transportation.
It is believed that the county’s finance plan will make PortMiami the first facility in the United States to pay the federal share of the dredging cost for post-Panamax shipping, according to Dave Sanford, director of navigation policy and legislation with the American Association of Port Authorities.
“I’m not aware of other ports that have contributed the federal share,” Sanford said. “The two other major deepenings under way now on the East Coast, New York-New Jersey and Delaware River, are both being cost-shared” between the ports and the federal government with previous appropriations.
Whether other ports finance their projects, or wait for federal funds, depends on the White House’s budget request priorities, he said.
Meanwhile, more ports around the nation may need to make greater commitments to their projects because of federal funding issues. “Constrained federal funding both for harbor channels and inland waterways can be expected due to overall economic and fiscal conditions and concerns about the deficit,” the Corps said in a report to Congress in June.
“This underscores the need to consider new and innovative public and private funding sources and financing methods with long-term reliability that can finance the navigation system maintenance and expansion that will be necessary to ensure a globally competitive U.S. navigation system,” it said.
The competition is fierce among ports to be post-Panamax-ready with channel depths of 50 feet and sufficient dock and crane capacity. On the West Coast, ports at Seattle, Oakland, Los Angeles and Long Beach already have 50-foot channels.
Along the Atlantic Coast, Baltimore and New York have, or will soon have, 50-foot channels, and Norfolk already has the required depth, according to the Corps report. Below Norfolk, Va., along the Southeast and Gulf Coasts, no ports have 50-foot channels, though Charleston can accommodate most of the big vessels with five feet of tide and Miami has begun its channel-deepening project, the Corps report said.
There are currently 17 active studies investigating possible port improvements, most associated with post-Panamax projects.
The preliminary estimate to expand some ports along the Atlantic and Gulf Coasts is $3 billion to $5 billion, according to the Corps.
The federal funding question led Miami-Dade County officials to approve the funding agreement with the Corps in July.
“This is, I believe, one of the most important infrastructure projects in the history of the port of Miami,” Johnson, the port director, told a county committee reviewing the financing plan. “It clearly will help transform our port to make it not just a regional niche player, but a national player. This is a huge step forward.”
Johnson predicted that the project “will represent billions and billions and billions annually of additional economic value” to Miami, Florida and beyond.
“It is a transformational project,” he said.
The deepening of Miami’s channel will create 33,000 new jobs, double cargo passing through the port, and increase PortMiami’s annual economic impact to more than $34 billion, according to an economic study.
Miami-Dade County will pay for Deep Dredge in phases of $108 million in fiscal 2013, $62 million in fiscal 2014 and $10 million in 2015.
Bids for the project are due to the Corps on Nov. 30, according to Becky Hope, the county’s environmental manager and project manager for the project.
“The Corps is expected to award the project in mid-February 2013,” she said.
Along with the harbor-deepening, more than $2 billion in capital improvement projects are under way or planned at PortMiami, including dockside improvements to receive post-Panamax ships. The port also is creating an on-dock intermodal rail facility offering service with Florida East Coast Railway. Shipments by truck also will be eased when the construction of twin tunnels is completed in the summer of 2014.
The tunnels will divert shipping and cruise traffic from congested downtown Miami — currently the only way to access to the port — to a quicker link to major highways.