Commercial Close for $1B Port of Miami Tunnel PPP
In the latest chapter of its roller-coaster procurement saga, the Port of Miami Tunnel PPP reached commercial close this week, meeting a crucial deadline stipulated by the Florida Department of Transportation (FDOT). According to the Miami Herald, the private-sector consortium of Bouygues and Meridiam Infrastructure must also achieve financial close for the project by October 1, 2009.
Although the consortium’s offer was selected as the best-value proposal in May 2007, FDOT terminated negotiations in December 2008 as Babcock & Brown, the team’s original 90% equity partner, was forced to withdraw due to financial difficulties. (See December 16, 2008 article below.) Meridiam subsequently agreed to take Babcock & Brown’s place, but FDOT initially considered this change significant enough to necessitate re-starting the entire procurement. After intense appeals from regional leaders, though, FDOT elected to continue negotiations with the Bouygues team under a strict set of commercial terms.
The consortium had offered to accept an annual availability payment of $33.2 million (in 2007 dollars) for the 35-year tunnel concession. The Infrastructure Journal reported financing was originally to be 100% through private-activity bonds (PABs) but later switched to TIFIA loans when credit markets faltered.