Port of Miami set to close next week

The City of Miami has delivered a $50m letter of credit needed for the the project to proceed to financial close.

The City of Miami has delivered a $50 million letter of credit toward the financing of the Port of Miami Tunnel, enabling the $1 billion project backed by European infrastructure investor Meridiam to proceed toward financial close next week.

The transaction’s sponsor, the Florida Department of Transportation, received the letter of credit yesterday, Kevin Thibault, Assistant Secretary for Engineering and Operations at the department, told InfrastructureInvestor.

The letter of credit was the final piece of the financing package needed to close the financing. Thibault said the department has already notified the US government’s TIFIA credit office that “we are ready to close next week”. 

The TIFIA credit program extends loans to infrastructure projects under the 1998 Transportation Infrastructure Finance and Innovation Act.

The TIFIA loan will come through first, Thibault said, followed by all the other sources of funding.

Besides contributions from FDOT, Miami, Miami-Dade County and TIFIA, the transaction includes financing from an investor consortium backed by Meridiam and bank debt from a club of about a dozen lenders, sources familiar with the deal have previously told InfrastructureInvestor.

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.

The deal, which has been in procurement since 2006, is significant not only for its size and complexity but also for its use of availability payments to remunerate private investors.

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.

In the Port of Miami Tunnel, the private investors have bid a maximum annual availability payment of about $32 million, which will be adjusted prior to financial close, Thibault said.

They will have a five-year horizon to complete the construction and will hold a 30-year operating concession for the tunnel, Thibault said.