With only days remaining to resolve cost overrun issues with its public-private development partner, the Maryland Dept. of Transportation is preparing to assume management of the troubled $2-billion Purple Line light rail construction project.
On Aug. 5, MDOT and the Maryland Transit Administration notified the 171 subcontractors and suppliers hired by developer Purple Line Development Partners (PLTP) that it would exercise “step-in” rights and manage those contracts. Step-in rights give the state the authority to direct the work of contractors and suppliers, resolve claims, and process invoices and applications for payment.
Maryland’s exercise of those rights is subject to those of U.S. Bank N.A., collateral agent for lenders on the the 16-mile project, who hold approximately $1 billion of debt.
PLTP—which includes Fluor Corp., Meridiam and Star America as equity partners—has vowed to walk off the job Aug. 22 unless agreement can be reached with the state on responsibility for millions of dollars in additional construction costs. The consortium blames the overruns on multiple lawsuits, permit disputes and other factors that have added more than two years to the schedule.
The original P3 agreement gave PLTP a 36-year concession to design, build, finance, operate and maintain the rail line across the northern Washington, D.C. suburbs, for a total estimated value of $5.6 billion. The latest schedule calls for a portion of the Purple Line to begin revenue service in late 2021.
Although Maryland has insisted that termination would be tantamount to default, the two sides have reportedly continued near-daily discussions throughout the summer, albeit with little apparent success.
MDOT spokesperson Erin Henson says “certain dates and triggers in the contracts between the parties” required the move toward assuming management of the project in order to protect Maryland’s interests.
“These actions are more signs of timing than they are how the negotiations are progressing,” Henson says.
Henson adds that while Maryland is focused on achieving an equitable agreement to complete the Purple Line as “a true partnership,” the state also must be ready “for any and all scenarios on how we deliver the project.”
PLTP has not commented publicly on the issue, aside from previous statements expressing its desire to reach a mutually acceptable agreement with the state.
The consortium’s design-build arm, led by Fluor, Lane Construction and Traylor Brothers, has begun securing multiple Purple Line construction sites along the densely populated route in anticipation of its previously announced Aug. 22 departure from the project.