Local officials in Florida’s Miami-Dade County are fighting the state’s proposal to rebid the stalled Port of Miami tunnel, calling it a “critically flawed” alternative that would result in a web of litigation and delay job creation.
Miami-Dade County mayor Carlos Alvarez argues in a letter to the state’s congressional leaders the only viable way to move the project forward is to re-establish and finalise negotiations with the project’s winning bidder, the Miami Access Tunnel (MAT) consortium.
MAT would likely pursue legal action if the state does not seek financial close with them, which would tie up the project for years in litigation at a time when the county is in dire need of job creation.
It would also cause the project to lose $400 million of cheap debt financing from the government’s TIFIA (Transportation Infrastructure Finance and Innovation Act) program, which the MAT team has already secured, Alvarez argued. As a result, rebidding the project would be a “critically flawed” alternative, he added.
The letter was a response to last week’s memo from Florida Department of Transportation head Stephanie Kopelousos, who argued for such negotiations to be dropped in favor of restarting the bidding process.
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In February 2008, Florida awarded the $1 billion tunnel development project to MAT after a competitive bidding process in which the consortium, made up of Australian investment bank Babcock & Brown and French construction firm Bouyges Travaux Publics, beat out rival proposals from ACS- and Morgan Stanley-led groups.
In December, the state refused to close on the deal after Babcock, teetering on the brink of bankruptcy, proposed switching out its equity interest in the MAT consortium with Paris-based Meridiam Infrastructure fund.
The refusal sparked fierce debate over the fairest and quickest way to move forward with the project.
Kopelousos argued against reopening negotiations with MAT since Meridiam would not have qualified as a financial sponsor for the project when proposals were originally solicited in 2006 and changes in financial and construction could lead to cost savings if the project is rebid.
“The financial vetting of Meridiam was all but complete in December when the State suspended the project,” Alvarez disclosed. “While it is true that this new partner was not configured to take on the principal equity role when this project was originally competed, they are, more importantly, qualified now,” he added.
He also argued rebidding the project to capture cost savings from new proposals that reflect lower financing and building costs is not necessary since “the MAT team has informed us that they are willing to reprice the project according to formulas previously negotiated with the State’s team”. The original proposal from MAT estimated construction costs of $600 million.
“As a result of these formulas the benefits of rebiding have been nearly eliminated. The consequences of rebidding, however, have not”, Alvarez concluded.
He proposed a meeting for 17 April with all of the project’s major stakeholders to decide on a path forward for the project.