The design-build consortium for Maryland's $2-billion Purple Line light-rail system plans to withdraw from the public-private partnership overseeing the project amid a long-running dispute with state transportation agencies over delays and cost overruns.
Purple Line Transit Constructors (PLTP) , which includes Fluor Corp., Lane Construction Corp. and Traylor Bros. Inc, said in a May 1 statement that it has been “unable to obtain the time and cost relief to which it is entitled” from the Maryland Dept. of Transportation and the Maryland Transit Administration (MTA) to address a combination of factors that added more than a year and $500 million to the 16-mile, 21-station project across northern suburbs of Washington, D.C. that will link to existing rail lines.
Originally scheduled to be fully operational in March 2022, the project's most recent revised schedule called for a two-phase opening to be completed in mid-2023.
Fluor is also a partner with Meridiam and Star America in Purple Line Transit Partners, the development consortium overseeing project design, construction and operation under a 36-year concession with Maryland.
John Undeland, Purple Line Transit Partners spokesperson, says: "As Governor [Larry] Hogan and MTA have recently stated, the Purple Line is one of the biggest transit projects in North America, and PLTP remains fully committed toward pursuing negotiations toward an amicable solution in getting this key transit project completed, operational and delivered to the citizens of Maryland."
Purple Line Transit Constructors had last month sought an additional $188 million to cover revisions to a crash wall design required by CSX Transportation, and suggested that continuing construction while complying with COVID-19 health and safety requirements could lead to a force majeure claim.
Factors, which the P3 team says were beyond its control, include multiple time-consuming third-party lawsuits. A ruling in the third and final attempt by opponents to stop construction came in early April when a U.S. judge rejected their contention that the U.S. Army Corps of Engineers' permit for water discharge of project dredge material was improper.
Other hurdles were delayed right-of-way acquisition and environmental approvals, as well as changes to design and third-party agreements implemented after construction finally began in August 2017.
“Regretfully, [the consortium] simply cannot complete the project under these circumstances,” said Scott Risley, project director.
Within days of the Purple Line Transit Constructors announcement, Fitch Ratings cited the Purple Line’s “heightened completion risk” in downgrading ratings for two of the project’s primary financing instruments—including approximately $313 million worth of state-issued private activity bonds and the $875 million Transportation Infrastructure Finance and Innovation Act (TIFIA).
Fitch also assigned a negative watch on the instruments, suggesting the potential for further erosion of the project’s credit rating in the coming months. But the ratings agency said a settlement agreement that successfully resolves PLTC issues, sets an achievable project completion date and ensures payment on upcoming debt service obligations “would likely resolve” the negative watch designation.
The P3 team statement noted that an exit clause in its contract allows the consortium to withdraw if total delays reach 365 days and negotiations have been under way with the two state agencies to resolve these issues for nearly three years. The agencies have previously suggested that some of the consortium's schedule and cost problems were self-inflicted.
In a May 4 note, Fluor said its total project backlog will be reduced by about $1.2 billion, a clarification that delayed its 10-K filing.
Gov. Hogan and state transportation leaders stated that they remain committed to the project and are willing to continue negotiations with Purple Line Transit Constructors to mitigate cost impacts.
The consortium plans to implement an “orderly” shutdown of its worksites, a process expected to take between 60 and 90 days.