Florida sinks Miami port tunnel project
The credit crisis has derailed a major infrastructure project designed to improve freight access to the Port of Miami.
On Friday, the Florida Department of Transportation said it could not close a $1 billion public-private partnership deal to build a tunnel connecting the port and the Interstate Highway System because Babcock & Brown, the Australian private equity fund behind the consortium, cannot raise the necessary financing.
The Port of Miami tunnel was pursued by the state and the city as a way to bypass the existing road system that required shuttle truckers to haul containers through downtown Miami. The tunnel would extend from Interstate 395, a causeway that runs parallel to the port, to the north side of the port. The Port of Miami is located on conjoined, man-made islands.
Teaming to build and operate the tunnel under a 30-year concession were Babcock & Brown, giant French construction firm Bouygues Travauz Publics and Australian facilities management firm Transfield Services. Under the financing scheme, the private entities would take all the construction risk and would receive installment payments from the city, county and state contingent on the tunnel’s availability for public use.
Last month, Babcock & Brown announced a major restructuring to reduce its debt load after market turmoil had crushed its share value. The asset manager said it planned to divest its real estate, financial and other holdings to focus on its infrastructure funds. It also said it would slash 1,000 jobs and cut operating costs by more than 50 percent.
Standard & Poor’s lowered its credit rating on Babcock & Brown to “CCC+” from “BB-” because of increased risk that the company would default on terms of its $2.1 billion lending agreement.
On Dec. 4, the Australian investment fund said it had reached agreement with lenders to ease terms of its loans and receive a $100 million line of credit to fund ongoing operations.
“Although everyone has worked hard to bring this project to fruition, we must face the reality that our private partners have been overwhelmed by the effects of the financial market making delivery unworkable,” FDOT’s Miami district chief said in a statement.
But the Miami Herald reported Tuesday that Miami Mayor Manny Diaz and Miami Dade-County Mayor Carlos Alvarez plan to appeal to Gov. Charlie Crist to reconsider the project termination.
The tunnel consortium also wrote state officials saying Babcock & Brown had been replaced by Meridiam Infrastructure as the equity partner and that financing for the deal was not an issue.
Local and private partners in the deal expressed shock that the state suspended negotiations and pronounced the project dead. ‘ Eric Kulisch
Florida sinks Miami port tunnel project
