Funding the Miami port tunnel
Miami-Dade County details the funding sources and options
The punch line for an old Washington, D.C. joke is 'a billion here and a billion there, and pretty soon you're talking about real money.'
Take that down to the state level, and the amount could change to $100 million. But the container carriers and cruise ship lines expected to come up with the final $100 million for the $1.2 billion Miami port tunnel project are not laughing. And the trucking companies, bus lines and everyday drivers who might have to cover the cost in the form a road toll probably won't think it's very funny either.
That's what it might come down to, however, as the Miami-Dade County Commissioners come down to decision time on funding the local portion of the project.
The port tunnel has been talked about for decades as a kind of futuristic idea: a direct link between the port and Interstate 395, completely bypassing downtown Miami.
Now that the Port of Miami has surpassed the 1 million twenty-foot equivalent unit threshold for annual container volumes, as local planners have approved a staggering tenfold increase in the number of downtown area condominium units'now just a seemingly modest 3,000 units'there is a much more urgent need to find a way to get 18-wheelers pulling containers off the downtown streets.
More urgent is the December 31 deadline the Florida Department of Transportation has for the $600 million it has committed to the project. If the rest of the funding is not solidified by the end of this year, the state money could be diverted to other projects.
A long road. Funding proposals for the port tunnel have followed a long and twisted road. The FDOT has been the lead agency for the project. At one point, there was hope the Federal Highway Administration would cover a sizable portion of the cost. But ultimately, all the money will have to come from in-state sources. The basic formula calls for half from the FDOT and the other half from local sources.
In July, County Manager George Burgess and the commissioners realized they needed to put together a solid financing plan, addressing the issue at a July 18 commissioners meeting. But by October 3, Burgess reported, 'Unfortunately, we have been unable to identify the level of local funding ($600 million) desired by the FDOT.'
But the county officials nonetheless have a relatively clear picture of what they will do to pay for the tunnel.
They are certain about $100 million from a general obligation bond. They expect $114 million from the re-direction of existing, locally generated transportation fees. Another $47 million of the total will come in the form of an in-kind contribution from the port, which can provide credits for right-of-ways and easements. The City of Miami can also cover $5 million the same way.
Burgess reported that heading into the final quarter of the year, however, 'We are still struggling to solidify the required contribution from port tenant (which could be as high as $211 million) and minimum $50 million participation from the City of Miami.'
As a result, he said the county had begun to discuss the possibility of using tolls at both the tunnel entrance and on the Port Boulevard Bridge that now serves as the only access to the port.
Burgess noted the FDOT supports the idea of tolls, and he pointed out that open road tolling could be introduced either in lieu of or in combination with a series of tenant fees.
'Of course, any tolls or tenant fees would be set with a view towards maintaining the competitive position of the port,' his report said.
Juggling the numbers. The least painful idea is to allow the project to move forward with a local contribution of about $490 million.
On September 5, county officials discussed the idea with FDOT representatives that included Lowell Clary, the assistant secretary, finance and administration, FDOT District 6 secretary Johnny Martinez, and District 6 director of transportation development Javier Rodriguez.
The $490 million would include $100 million already committed through the Building Better Communities bond initiative; the $114 million from transportation fees; $100 million from seaport-backed bonds; $75 million from the county project contingency reserve, possibly in the for of a Letter of Credit; $50 million from property taxes generated through Community Redevelopment Agencies bordering the seaport, plus the combined $52 million in right-of-way and easement credits from the port and the city.
While the idea $490 million from local sources was not rejected outright, Burgess reported back that for now, 'The FDOT still maintains that it is necessary that the local participation level reach 50 percent,' which would be $600 million.
Burgess said he had met with Miami's city manager, assistant city manager, chief of operations, and director of strategic planning, budgeting and performance to review the city's participation.
They decided city and county staff would explore the use of Community Redevelopment Agency (CRA) funds, which include both city and country ad volorem taxes.
The key would be to find the funding without compromising existing commitments. That would be based around projections of future property values and the accompanying tax revenues, long with possible boundary changes and term extensions.
The city is focusing on the Omni CRA, and there have been discussions of including the Overtown/Park West CRA.
For the CRAs, there would be a need for approval by both city and county elected officials.
But the biggest challenge appears to be related to final funding from port tenants.
Burgess reported that acting port director Bill Johnson has had frequent, in-depth discussions with the port's cargo and cruise stakeholders.
That involves several companies with divergent viewpoints, but Burgess concluded, 'Any support from the industry to participate in any funding for the tunnel at this time is questionable. As such, we have been advised by the county attorney that such lack of support introduces a risk factor n any assessment of user fees.'
Numbers proposed for that source include a starting amount of 62 cents per cruise passenger and $1.89 per TEU on containers, with the amount increasing by 3 percent a year. There would also be a 3 percent annual increase in the existing port tariff schedule to allow the port to cover debt obligations from the bond issuance scheduled in 2007.
If the seaport ultimately had to end up covering more than $100 million, there would be an increase in the county share or a draw on the contingency fund letter of credit. That would go along with an increase of 15 cents per cruise passenger, and 47 cents per TEU, for every additional $25 million required, the report said.
But because of the uncertainty of port tenant participation, the county is taking a hard look at the toll proposal.
The first numbers put in play are $1 for light vehicles, around $4 for trucks, and $8 for buses bringing in cruise passengers.
While the fee structure is flexible and other numbers are uncertain, Burgess reported that 'A combination of such charges (tenant user fees and tolls) will prove legally defensible, be fair for all users of the port, and be of sufficient breadth to cover the requisite local financial contribution.'