Florida extends deadline for Port of Miami Tunnel

A deadline to reach financial close by 1 October came and went, but parties to the deal are still aiming to consummate the transaction. The City of Miami has until 8 October to approve a $50m letter of credit needed for the project to close, according to a spokesperson.

The Florida Department of Transportation (FDOT) has given the City of Miami another week to get $50 million for the Port of Miami Tunnel project after a deadline for financial close came and went Thursday.

Miami will use the extra week to get city commissioners’ approval to issue a $50 million letter of credit toward the project. Sources close to the deal told InfrastructureInvestor that the financing for the deal is “effectively sealed” but financial close, or the funding of a project, cannot be achieved without the letter of credit.

Helena Poleo, a spokeswoman for Miami Mayor Manny Diaz, declined to describe why the five-member city commission took no action on the $50 million but added that the city is still committed to the project and will consider the letter of credit at a meeting on 8 October.

Miami City Attorney Julie Bru has previously argued that the city cannot issue the letter of credit because the city manager is not authorised to do so without the commission's consent, according to correspondence between Miami and FDOT reviewed by InfrastructureInvestor. FDOT disagreed, arguing that the manager is both authorised and obligated to issue the letter of credit.

FDOT spokesperson Dick Kane said Florida Secretary of Transportation Stephanie Kopelousos is committed to the project and has secured extensions of time with banks, equity investors and the federal government to allow the city more time to secure the financing. He said the state is aiming to reach financial close “in the next week or two”.

The project is a public-private partnership between Florida, Miami-Dade County, City of Miami, the Federal government and private sources of capital. These include an equity contribution from an investor consortium backed by European infrastructure investor Meridiam and bank debt from a club of about a dozen banks. All are contributing various amounts toward the project, which has previously been estimated to cost up to $1 billion.

Sources familiar with the deal have told InfrastructureInvestor that the Federal Government’s infrastructure lending program known as TIFIA (Transportation Infrastructure Finance and Innovation Act) is contributing about $350 million toward the project. That money is contingent on other sources of capital, including Miami’s letter of credit, coming through. Bank debt will constitute another $350 million, and equity will constitute about 10 percent of the total financing, the sources said.

The project aims to relieve the contested streets of downtown Miami by diverting cargo traffic from the port to a tunnel below the city’s Biscayne Bay.

If the project reaches successful financial close, it will be the second project in the US to utilise availability payments to remunerate private investors in infrastructure.

Availability payments, or periodic payments made from the government to the private sector partner in exchange for meeting certain levels of service provision, are also being implemented in the $1.68 billion I-595 corridor improvement project in Florida’s Broward County.