The situation is changing hourly in Miami as local and state officials scramble to rescue the Port of Miami Tunnel Project. This morning (September 25, 2009) the Florida Department of Transportation (FDOT) demanded that the City commit its funding to the project by no later than 5pm today in order to meet a looming deadline critical to the project's survival.

Undersea tunnel to link Wilson Island and Dodge Island

FDOT delivered its ultimatum in a letter to Mayor Manuel Diaz. In it, the State blasted the Mayor for the City's inaction, adding that it "either fails to recognize the urgency of the matter or is simply evidence that it does not support the project. We are hopeful it is the former, but we are running out of time to cure."

The letter, written by Kevin Thibault, FDOTs Assistant Secretary for Engineering and Operations, said that the State must submit confirmation that the Letter of Credit from Miami-Dade County and the City are in hand by today. The State has received the County's Letter of Credit, but not the City's. "Despite the dire circumstances we find ourselves in, where literally each hour counts, I am now advised that on your direct instruction, the City will not hold and emergency meeting to authorize the City Manager to deliver the $50 million Letter of Credit" said Thibault. "Mayor, if the City does not support this project then please advise immediately as there are numerous people on behalf of the Department, the concessionaire, and the banks, working diligently into each night trying to bring this to a close," he said.

When TunnelTalk called the Mayor's office this morning it was told that the City is working on a response. As of 3pm today (EST) the city had yet to announce a resolution.

TunnelTalk was the first to report that the on-again, off-again project is once again in jeopardy just when a financial deal was seemingly at hand. The City's $50 million share represents 5% of the estimated $1.3 billion project. Federal funding expires if a financial agreement isn't signed by the October 1 deadline, and the Letter of Credit must be in hand before the deal is signed.

"At this point, without the funding plan in place, I am not sure we would ever be able to proceed with this project, even with a new procurement," said Thibault in a separate letter delivered yesterday to Miami City Manager, Pedro Hernandez. Thibault said the State had been working diligently with the MAT team to reach financial closure and had included the City in the developments and negotiations "to ensure that all necessary coordination and expectations were met. I now find in the 11th hour a sense of déjà-vu, because the City has not set in motion the appropriate mechanisms to provide its share of the funding."

Miami cannot deliver the Letter of Credit because the City Commission has not voted on it. Even though the Commission met yesterday, it could not address the funding issue as the item was not on the agenda and discussing the issue would have violated public disclosure laws. The earliest the Commission could vote is at its October 8, 2009 meeting. The State is urging the City to call an emergency meeting to resolve the issue.

"Failure to close by October 1, 2009 will result in the expiration of Federal Transportation Infrastructure Finance and Innovation Act (TIFIA) funding," said Thibault. "Therefore, the City's failure to deliver threatens the success of this deal and the necessary Federal funding will be lost."

The City of Miami was the lone holdout back in 2007 as well, when an initial signing deadline was missed due to protracted negotiations between the State and MAT. At the time, 95% of the project's funding was secured, with Miami's 5% share still outstanding.

This recent setback comes just when it seemed all was in order. As recently as August 28, FDOT officials were optimistic that a deal was at hand. In a letter to the Federal Highway Administration to confirm the State had met the necessary requirements for eligibility of Federal TIFIA funds, James B. Jobe, Manager of FDOT's Federal Aid Management Office said, "a financial closing is expected in September." He said initially the state did not contemplate the use of any Federal funds to finance the project. "Unfortunately, the economic downturn which began in the latter part of 2008 severely impacted the credit markets and resulted in the proposed concessionaire being unable to reach a financial closing with the Department," he said.

As a result, FDOT canceled the project in December 2008, but did an-about-face due to pressure from local officials and project supporters. FDOT gave MAT a second chance to secure financing in an effort to avoid a lengthy re-procurement process, and in June 2009 announced that a commercial agreement had been reached. It gave MAT until October 1, 2009 to reach a financial close with the State. With the deadline looming Thibault appealed to the City of Miami saying he could not "stress enough the importance of meeting the commitments we jointly established several months ago. I do not want all of the hard work and efforts of the Department staff, and especially the MAT team, to go to waste."

The Port of Miami Tunnel would take most of the freight traffic to and from the Port off Miami's congested downtown streets, and divert it onto Interstate 395 and the MacArthur Causeway, then into the tunnel under the main shipping canal to the Port. If the October 1 deadline is missed and Federal funding lost, it is almost impossible to believe that the project, considered key to the redevelopment of the Miami waterfront and vital to the regions economic future, could be resuscitated yet again.

TunnelTalk will keep you posted on the day's developments as they evolve.

References

Miami Port Tunnel finally a project! - TunnelTalk, Oct 2009
Miami Port Tunnel troubles continue - TunnelTalk, Sep 2009
Miami Port Tunnel on life support - TunnelTalk, Jan 2009
Miami still on hold - TunnelTalk, Aug 2008