How Miami-Dade risks stranding yet another P3 at sea

News Analysis 12 August

How Miami-Dade risks stranding yet another P3 at sea

With berths nearing the end of their life, the port of Miami wants to use a P3 to repair its cruise ship docks. The Florida county that oversees the port is not moving efficiently to line up a developer, highlighting wider issues with how local governments in the US approach P3s.

The Port of Miami in Florida advertises itself as the cruise capital of the world but many of the berths where cruise ships dock are in an advanced state of disrepair. 

Miami-Dade County, which owns the port, is trying to line up a private developer to refurbish six of its nine operating cruise berths through a public-private partnership known as the North Bulkhead Reconstruction P3

Government officials, though, are not running an optimal process to line up a developer to fix the corroding docks, according to several sources familiar with the project, who cite problems ranging from lack of information and communication to impossible-to-meet deadlines that have later been extended. 

Sources warn a procurement that originally was estimated to cost USD 300m could end up costing hundreds of millions of dollars more.

To be sure, sources describe government officials in Miami-Dade as smart, hardworking and creative. But the county’s issues – despite individual efforts – highlight how a lack of universal guidelines for public-private partnerships in the US can leave government agencies to deal with complex infrastructure projects by themselves, often with poor outcomes.  

Officials for Miami-Dade, which incorporates 34 municipalities, including the city of Miami, did not respond to requests for comment.

Anchors away

Last October, Miami-Dade issued a request for qualifications for design-build-finance services for the North Bulkhead berths one to six realignment project. Filings for the procurement state that there is “advanced deterioration of the existing steel sheet pile structure,” adding that “numerous holes and gaps have developed over time in the existing 50+ year old bulkhead, resulting in the loss of backfill material and the formation of voids in the apron area creating hazards to operations and other unsafe conditions.”  

The county shortlisted all five firms in March that earlier submitted qualifications for the P3, advancing the process to the next stage. Two sources involved in the project say this is when problems started.

When Miami Dade issued the request for proposals in early April, teams were surprised to see they had 80 days – until 24 June – to turn in technical and financial proposals, instead of the 90 days promised during the request for qualifications stage. That amount of time, according to an engineer working on the proposal, was not enough time for a project of this scale. 

The county has since granted the teams an extension until the second week of September. Sources say that they expect the government will grant an additional extension on the RFP's deadline.

“They're in the process of preparing the contract, but it's not finished yet,” says a developer source familiar with the situation. “What that means is that the banks and developers won’t have enough time to look at this contract to turn in the price by the new deadline. What are the terms of the contract? What's the risk allocation? Who's doing what? How long do you have to build a project? We don't have any of those answers because we don't have a contract yet. That is a big stumbling block.”  

Adding to the confusion, Miami-Dade in June revealed that it may not need developers to provide financing for the project. What had been initially advertised as a P3 that would involve a team designing, building and financing the project could end up just being design-build work.

County officials may wait to provide clarity on financing in the second step of the procurement, according to an engineer source. “They're saying they’re going to give us more information later. When later? Now is the time,” he says.

Welcome to Miami

The berth procurement process is hardly an outlier in Miami-Dade.

Of the 22 public-private partnerships initiated or discussed in the county since 2010, only one achieved financial close, according to Infralogic data, the Miami-Dade County Civil and Probate Courthouse P3.  

The courthouse procurement was first started in 2017, canceled in 2018 after qualifications had already been submitted and restarted again a month afterwards. It ultimately reached financial close in January 2020, with a team led by Plenary, a major international developer of P3s.

“Miami-Dade County has a bad reputation when it comes to PPPs,” says a developer source who has worked on many of the projects. “They talk about the need for infrastructure, but they are very bad at running procurement. The joke is Miami-Dade is where PPPs go to die.”  

Another source familiar with the situation describes the county as a “project graveyard.”  

In a recent example, the county pulled the plug on the request for proposals for the Rickenbacker and Venetian Causeways Improvement P3, whose procurement had been triggered by an unsolicited proposal by the Plan Z consortium, with Partners Group as an equity investor.  

After approving the competitive solicitation for the project in July 2021, the Miami-Dade County board canceled the RFP in January 2022, before the proposals were due, saying it would launch an environmental review process for an improvement of only the Rickenbacker Causeway, without the Venetian. 

“They pulled the plug before even seeing what it was that was being proposed,” a source familiar with the process says. “If you’re open to unsolicited proposals, as the county is, you’ve got to [let them] run their course.” 

The causeway RFP had encountered the political opposition of various local parties that saw the project as a privatization. Florida’s strict cone-of-silence restrictions prevented the competing teams from communicating with the opponents or the county. 

Sealed lips

Local governments and agencies in the Sunshine State passed cone-of-silence regulations to control how the private sector can interact with government agencies, in part to counter potential lobbying or corruption.

Under the rules, participants in a process can only interact with a government project manager through official requests for information, and officials can take time to release any kind of information.  

“The protection is in place for a reason [to prevent unauthorized lobbying] but the private sector just can't stomach the delays that occur,” says one of the sources.  

In the Port of Miami project, for instance, Miami-Dade took an average of three or more months to send responses to the developers’ requests for information, according to the engineer source.  

“Miami moves on their own time, which is very slow,” says another P3 expert source familiar with the county’s procedures. “I believe there are ways for potential bidders to have conversations with leadership without doing anything unethical, but those are not available in Miami.”  

Adds another source: “As it’s happening for the port project, the county had an idea, and then they changed their mind, changed the project, and the proposers got frustrated.”

While procurement law attempts to remove political interference, politics plays a major role in deciding if P3s move forward.

“For a P3 to be successful, you need to have a strong level of conviction from a senior leader in the local entity,” says one of the sources.  

Politicians in Miami-Dade have had different views on P3s in recent years.

The current mayor of Miami-Dade County, Daniella Levine Cava, recommended canceling the Rickenbacker Causeway procurement, writing in a memorandum to the county commissioners that this “allow[s] time to confirm federal funding availability, further develop the project, engage stakeholders and complete” an environmental review.

The mayor’s office did not respond to a request for comment. 

Cava’s predecessor as mayor, Carlos A. Giménez, was in favor of P3s and once emphasized their importance to “tackle the urgent challenge of renewing our infrastructure” in a State of the County Address in 2014. Even so, only one P3 project – the courthouse – reached financial close while Giménez served as mayor from July 2011 to November 2020.

Concrete solution

The Miami-Dade process highlights a unique aspect of how governments in the US approach P3s compared to other countries like Canada: there is no centralized decision-making process or procedure for procurements.

Each state has its own P3 enabling statutes, procurement process regulations, authorizations and even definitions of what kinds of infrastructure qualify for a P3. These rules and processes can be further modified by county and city governments. Governments are mostly left on their own to try and navigate the best approach to take for procurement.  

The city of Miami, for instance, has its own P3 ordinance that is different from Florida’s state P3 legislation or the Miami-Dade County P3 resolution.  

“When you pour concrete, the concrete has a certain strength and there’s a certain way you make it, whether you're in Florida or Arkansas or Alaska or California,” says one developer source. “We should have one for P3s, too.” 

On the docks of the Miami port, meanwhile, the cruise ship berths have reached 90% of their service life, according to documents released to teams competing for the P3. This leaves the sea walls with at most around 10 years of life.

Miami-Dade wants to limit construction on the docks to one berth at a time during the summer off-season, meaning it will take an estimated six-and-a-half years to complete the project.

Two of the sources say they believe this is one reason why Miami-Dade is trying to advance the procurement so quickly.

Without necessary documents and information, though, several of the sources say developers may conclude that bidding for the project is not worth it, especially when no stipend will be provided to the participating teams.   

One team led by Sacyr Construction USA has already withdrawn, Infralogic reported in June. The exact reason could not be learned.

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