Tunnel finances

The PortMiami Tunnel: A private-public partnership girded with tax dollars

 

dhanks@MiamiHerald.com

Government eventually had to dig deep to pay for the new port tunnel, with a mix of cruise and cargo fees, state dollars and local property taxes funding the $900 million venture.

A Paris-based investment fund fronted a siginficant chunk of the construction money, giving government time to wait out a recession before paying for the project. The deal also made it harder for over-runs to cut into public coffers. With the tunnel set to open, the fund will reap the benefits as 90-percent owner of the operator, receiving an estimated $33 million a year from Florida through 2044.

Launched in 2009 in the midst of a global financial crisis and plunging tax dollars, the port-tunnel project offered private investors the chance to earn long-term profits in exchange for paying for construction up front. Meridiam, a fund specializing in government infrastructure projects, owns 90 percent of Miami Access Tunnel, the company formed to build the tunnel and which will receive the annual $33 million money from Florida to run it. MAT’s contract runs through 2034.

MAT secured about $420 million in private dollars for the project: a $340 million bank loan and $80 million of its own money, according to a summary of the deal provided by the Florida Department of Transportation. Washington kicked in a $380 million loan that MAT must pay back as well The rest of the $900 million design, financing and construct came from state and local dollars.

Among the sources:

• • Miami-Dade: With the opening of the tunnel approaching, a milestone moment arrived last Tuesday when Miami-Dade’s finance department wired $172 million to the project.

The payment was part of the more than $300 million Miami-Dade pledged to the project, according to Kevin Lynskey, deputy port director. About $100 million of that money comes from debt tied to countywide property taxes. Yearly payments on the debt will cost $6.3 million through 2038. The bonds sold to raise the money were part of the $3 billion capital-improvements package that county voters authorized in 2004, and commissioners voted in 2008 to actually borrow the money for the tunnel.

Another $260 million was borrowed against the port’s own cargo and cruise fees. The new debt helped push the county-owned borrowing total above $1 billion, and the burden prompted Moody’s to hit PortMiami with two credit downgrades in 12 months. In a May 1 notice, the credit-ratings firm cited a “substantial increase in port leverage’’ from the debt needed for the tunnel and other projects.

In 2018, Miami-Dade will receive a portion of state gas-tax dollars to offset debt payments on the tunnel debt.

• Miami: Miami borrowed $50 million for a tunnel designed to divert cargo trucks from downtown. The money comes from the city’s Omni taxing district, which is charged with improving the economy by spending a portion of the area’s tax revenue gained from rising property values. Debt payments on the $50 million equals about $2 million a year, a CRA spokesman said.

• Florida. The state will own the tunnel, and agreed to pay half of the cost plus the yearly $33 million payments to MAT. They rise each year with inflation but also can be less if MAT faces operational issues, like a full closure of the tunnel or excessive lane closures for maintenance. The payments are designed to reimburse MAT for construction costs, as well as pay the company as the operator.

• Private dolllars. MAT put $80 million of equity into the venture, according to the FDOT summary. But it is set to be paid a total of $480 throughout the construction period, including a $350 million installment once the tunnel is completely finished.

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