HomeMy WebLinkAboutMemoCITY OF MIAMI, FLORIDA
INTER -OFFICE MEMORANDUM
TQ
Honorable Mayor and
Members of the City Commission
GATE
SUBJECT.
December 4, 2007
IILL
Port of Miami Tunnel and Access
Improvement Project
FROM Pedro G. Hernandez ncrcRCNeEs :
City Manager
ENCLOSUHLS
Project Background
For some time, public officials and transportation planners in South Florida have attempted to
address the need for improved access to the Port of Miami. With ever increasing congestion
through a developing area of downtown, existing transportation corridors are under duress. The
revitalization of eastern portions of downtown is inextricably linked to the need for alternative
access to the port. Over the years, the Florida Department of Transportation ("FOOT") has
examined a number of proposed above and below ground transportation solutions that would
take 1.3 million port -bound trucks annually (nearly 5,500 trucks and buses per day) out of
Southeast Overtown/Park West and off Biscayne Boulevard. To this end, the City and County
have over the past year been in negotiations with FDOT to explore funding options for the
construction of what has been proposed as the most viable alternative — a bored tunnel linking
the Port with the interstate highway system by way of Watson Island. The project consists of
three primary components: (1) widening of the MacArthur Causeway Bridge; (2) tunnel
connections between Watson Island and Dodge Island; and (3) connections to the Port of Miami
roadway system.
Project Delivery
The project model calls for the formation of a Public/Private Partnership ("PPP") between FDOT
and a Concessionaire. FOOT chose a PPP because of the extraordinary complexity of building
a tunnel. The PPP structure allows FDOT to distribute risks, gain access to additional skills,
improve efficiency and increase the pool of financial resources available to the project by
selecting a qualified private Concessionaire. The Concessionaire will be responsible for
designing, building, financing, operating and maintaining the tunnel. FDOT will, in turn, pay the
concessionaire a portion of the total project cost as milestone payments during the construction
period (the first 5-6 years of the project) and then will pay the remainder as quarterly availability
payments, which are based on the availability of tunnel sections for public use, over the
remaining years of the concession. The projected concession term is 35 years, beginning at the
signing of the concession agreement and extending until 2041. The project calls for the
Concessionaire to operate and maintain the tunnel portion for the 30 years following the
construction. This concession concept was developed based on research of past tunnel
projects in the US and abroad, is preferred by industry and was designed to leverage the
advantages of long-term guaranteed cost structures, risk sharing strategies, and life cycle cost
efficiencies.
Construction on the tunnel is set to begin 9 months after the 35 year concession agreement is
signed and Maximum Availability Payments ("MAP") to the concessionaire by FDOT will begin
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once substantial completion is reached, projected between November 1, 2011 and May 1, 2013.
On February 17, 206, FDOT released a Request for Qualifications ("RFQ") for the project.
Statements of Qualifications were received on April 12, 2006, and proposers were short-listed
on April 28, 2006. An industry review was held with proposers and the Request for Proposals
("RFP") was released on November 1, 2006. The final addendum for the RFP was released on
February 5, 2007, and proposals were received on March 5, 2007.
On May 2, 2007, FDOT announced its intent to award the project to Miami Access Tunnel
("MAT"), including equity members of Bouygues Travaux Publics, SA and Babcock & Brown
Infrastructure Group US, LLC. The RFP process leading up to this announcement was intended
to arrive at a "best value" selection and the proposals were scrutinized in detail. Evaluations
were based on technical criteria, including engineering constructability of the proposal: feasibility
and financial soundness of the financing plan; and cost (the MAP). The chief determining factor
in the selection of MAT was in the area of price or MAP. The MAP is the annualized maximum
payment to the concessionaire by FDOT for the use of the tunnel over the concession period.
The intended winning proposer's cost (details to be provided) submittal results in an estimated
$457 million non -state share, inclusive of considerable contingency reserves and the $55 million
projected contribution from the City ($50 million cash contribution and $6 million in right-of-way).
Benefits to the City of Miami
A study prepared by the Washington Economics Group, Inc. on December 4, 2007 found that
Port of Miami operations supported $2.2 billion in total economic impact, $583 million in labor
compensation for City residents, and $684 million in personal income for City households. The
WEG study also showed that 17,294 jobs in the City of Miami are directly or indirectly linked to
the Port of Miami, whose competitiveness and continued economic viability are inextricably
linked to the improved access the new tunnel will provide. The breakdown of Port related jobs
by City Commission District is as follows:
District 1: 1,705
District 2: 10,153
District 3: 1,603
District 4: 1,951
District 5: 1,882
Port of Miami operations and related economic activities generated significant levels of personal
income (in Million $) in each City Commission District as indicated below:
District 1: 75
District 2: 318
District 3: 104
District 4: 122
District 5: 65
The tunnel project will be beneficial to the City of Miami and the County by providing direct
access between the Seaport, 1-395 and 1-95 which as previously mentioned, will remove 5,500
trucks and buses per day on opening day. Without construction of the tunnel, that number is
projected to double by the year 2030. In addition to relieving congested downtown streets, the
tunnel will complement ongoing urban revitalization efforts and facilitate future public
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infrastructure and private development in the Downtown and Southeast Overtown/Park West
area. Construction of the tunnel will also provide the following benefits to the City:
1 Provide short term and long term employment opportunities (500 to 600 construction
jobs during peak period, with an average of 400 jobs on -site fora 40-month construction
period) for local residents.
2 Enable continued development of upper -reaches of downtown and the Overtown/Park
West area.
3 in accordance with the principles of MIAMI 21, foster a safe, pedestrian -friendly, and
livable environment in Downtown Miami primarily along Biscayne Boulevard, NE 1"1
Avenue, and NE 2"d Avenue, NE 5`" Street, and NE 6th Street, and other secondary
streets.
4 Improve accessibility to soon -to -be redeveloped Museum Park, currently in the design
development phase, in accordance with the Downtown Development Authority Master
Plan.
5 improve the safety and quality -of -life of the downtown area by eliminating air, noise and
visual pollution caused by the large volumes of truck traffic traveling through the area.
6 Assure Miami -Dade College the ability to grow and better serve the education needs of
nearby residents.
7 Protect the federal courts and prison from potential Homeland Security risks.
8 Facilitate cultural and social interaction between Overtown residents and the Performing
Arts Center.
City's Funding Source and Payment Options
Pursuant to the Tri-Party Master Agreement, the FOOT has afforded the City three (3) payment
options. All payment options are based on a present value contribution of $50 million.
Option 1. Pay -As -You -Go Annual Payments beginning at Substantial Completion (estimated in
2012) and running concurrent with the term of the Concession Agreement (35 years up to
2047)_ Under this option, the City has the option of making static annual payments for 35 years
or graduating payments increasing as the impact of the tunnel benefits the City's tax rolls.
Option 2. Lump Sum Payment due upon execution of the Tri-Party Master Agreement: City
would deposit $50 Million in an account established by the FOOT upon execution of the Tri-
Party Master Agreement.
Option 3. Lump Sum Payment due upon Substantial Completion of the Port Tunnel: City would
deposit $50 Million plus interest accrued at the annual rate per the State of Florida rate upon
substantial completion of the project, anticipated in 2012.
Options 2 and 3 both require a voters' referendum in order to obtain CRA bonding approval.
The City Administration recommends Option 1 above as the preferred payment option. The City
will use future Omni Community Redevelopment Agency (CRA) Tax Increment Funds (TIP)
backed by State shared revenues to realize its $50 million cash contribution under the Pay -As -
You -Go option.
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