The Florida Department of Transportation has decided not to close on a proposed $1 billion tunnel linking the city of Miami with the Port of Miami after Babcock & Brown sought to switch financial sponsors for its interest.
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The department said in a statement that it could not go ahead with the project because the primary equity partner “could no longer confirm that it had the financial ability to close the deal”.
Babcock, which was to provide 90 percent of the equity for the project, was the primary sponsor. French construction company Bouyges Travaux Publics was to provide construction for the project and held the remaining 10 percent equity stake.
A person close to Babcock said the firm had put forth a proposal with the department to substitute its equity position with financing from Crédit Agricole’s Meridiam Infrastructure fund so that its financial position would not affect the project’s delivery. Except for the change in project sponsors, all other terms of the deal would have stayed the same, the person said.
“We haven’t heard a formal response on that,” the person said.
The project is structured as a public private partnership between the Babcock and Bouyges consortium and the state of Florida, the Miami-Dade County and the City of Miami.
Under the contract awarded to the consortium on 15 February, Babcock and Bouyges stipulated project construction costs of $665 million. The Florida Department of Transportation and local governments agreed to contribute capital costs equally toward the construction and the consortium would have been rewarded inflation-indexed availability payments of $33 million per year for 30 years after the tunnel’s completion in 2012.
The state estimated the total costs for project delivery at nearly $1 billion.
The project’s apparent demise was met with widespread condemnation by local leaders, who have made clear that they will continue to fight for its delivery.
“We are deeply disappointed, and frankly shocked, by your recent decision to not continue with the Port of Miami Tunnel procurement,” Carlos Alvarez, mayor of Miami-Dade County, and Manuel Diaz, mayor of the City of Miami, wrote in a joint letter to Florida State Governor Charlie Crist.
The two mayors also requested a meeting with Gov. Crist this week to discuss moving the project forward.
A spokesperson for the Florida Department of Transportation refused to comment on whether the project would be resurrected or permanently cancelled.