Miami Port Tunnel availability concession collapses

The $950m Port of Miami Tunnel project has collapsed because the chosen concessionaire Babcock & Brown can't raise the capital to close on the deal. Florida DOT's Miami district secretary Gus Pego is quoted in a stratement as saying the private partners "have been overwhelmed by the effects of the financial market (crisis) making delivery (of the tunnel project) unworkable."

The project was not based on toll revenues but would have been a facility free to users with Florida DOT and Miami Dade County and City making annual contractually set  'availability payments' to the concessionaire over the 35 year term. Babock is a Sydney Australia based investment bank in deep financial trouble.

Babcock's market capitalization has dropped from about $8 billion to $60 million or by more than 99% in the past year. The company has investments in a dizzying array of assets - aircraft, windfarms, real estate, shopping malls, condos, rail cars, solar power, electric power lines, and power plants in 22 countries. Largest investments are in the US, followed by Australia and Germany.

Babcock has no toll projects.

For the Miami Port project Babcock was teamed with the major French construction company Bouygues, but Babcock was to put up 90% of the equity in the concession so Bouygues was clearly in the project for the construction work involved in building the tunnel.

Babcock got carried away by politically correct environmental projects and real estate, and was over-borrowed, making it highly vulnerable to the global economic downtown and financial crisis.  In addition Babock has heavily tied to Hypo, a dicey German bank, and was involved in a protracted quarrel there.

They had a staff of about 1,000 but their investments - diverse in kind and location - must have stretched the expertise they could develop in-house.

They are selling assets, probably at fire-sale prices, to raise capital, and stay afloat.

The Miami tunnel project failed to attract bids from the big US concession bidders such as Abertis, Cintra, Macquarie, and Transurban, perhaps because of the lack of a toll opportunity. 

Other bidders were the Spanish group ACS teamed with Brazilian Oderbrecht and US Parsons, and Spanish infrastructure group FCC teamed with Morgan Stanley.

Bids were for annual availability payments so the lowest bidder won, other things being equal.

The Tunnel project was designed to provide a direct connection between the local expressway network and the port with ramps leading off I-395 and the MacArthur Causeway and crossing under the main shipping channel with a pair of bored tubes each providing 2 travel lanes in 8.53m (28ft) curb to curb with 5.03m (16.5ft) overhead clearance.

The port of Miami is located on an island in Biscayne Bay immediately east of downtown Miami. With about 25 berths it caters to a mix of cruise and freight container ships. Present access is by the Port Boulevard Bridge an untolled 4-lane bridge built in 1980 which comes off local city streets.

Traffic is presently an average 25k vehicles/day of which 5k are heavy trucks and buses. Tolling would only work if the bridge and the tunnel were both tolled.

The immediate benefits from a tunnel would be mostly in reducing downtown local street traffic and providing travel time savings, especially during peaks in cruise ship arrivals. Only strong growth in port activity would generate the traffic needed to justify the extra road travel lanes to the port on pure capacity grounds.

The Port of Miami is the largest cruise ship port in the US and the largest container port in Florida but it faces strong competition from Tampa, Port Everglades (Ft Lauderdale), Port Canaveral (near Orldando) and Jacksonville. 

Both cargo tonnage and cruise passenger numbers at the port of Miami have been flat for a decade - during the go-go years of the boom. Projections for major growth in road traffic by 2020 that were used in conjunction with tunnel advocacy rather stretch credibility.

Seems to be a perfect candidate for mopping up some of Obama 'stimulus' monies - fully permitted, costed, detailed plans, ready to go. And it wouldn't be undercutting a viable toll project.

In present circumstances FDOT can probably improve on the $650m estimated construction cost of 2007.

Poole proposal - elevated I-95 to Port Blvd Bridge

Bob Poole who has followed the project says the main need is a good expressway standard connection between I-95 and the Port Boulevard Bridge, not a new crossing. He advocates a Tampa-style elevated - 1,300m or 4300ft - from a new interchange on I-95 down NE/NW 6th Street going over city avenues and merging into the bridge.

That solution which would cost a fraction of the tunnel project never seems to have got into FDOT's alternatives analysis.  It would involve some fancy ramps at the I-95 to serve all four movements and perhaps some basketweaving with ramps for interchanges eaither side. But it is difficult to see it costing more than $250m vs $500m to $600m for the tunnel rebid.

We'd bet however that if the Feds are willing to pay FDOT will stick with the more expensive but permitted tunnel.

http://www.miamidade.gov/portofmiami/business-port-statistics.asp

http://www.portofmiamitunnel.com

http://www.babcockbrown.com

TOLLROADSnews 2008-12-14