Maryland's Purple Line Readies for Restart
Light rail project spins back up with new financing arrangement
Construction on Purple Line will ramp back up with new DB team and funding. Photo courtesy of Maryland DOT
Full-scale construction on Maryland’s Purple Line light rail transit system is on track to ramp up later this spring and summer, following completion of a new financial package by Purple Line Transit Partners, (PLTP), the private consortium overseeing the project for the Maryland Transit Administration.
Meridiam, which holds a majority stake in PLTP, announced on April 14 that it had secured total investments of more than $2.5 billion to support its design-build contract with Maryland Transit Solutions (MTS), a joint venture led by the U.S. subsidiaries of Dragados and OHL selected last November to take over the 16.3-mile project.
In a statement to ENR, Jane Garvey, chair of Meridiam’s Supervisory Board, said MTS will build on the limited MTA-managed field work performed since the original Fluor-led design-build team left the half-finished project in late 2020 following years of cost disputes with the agency.
Garvey said MTS “will resume work on several major project elements, including the Purple Line’s 21 stops/stations, a tunnel in Silver Spring, a shaft in Bethesda connecting to Metrorail’s Red Line, overpasses and rail bed and track installation.”
Garvey added that PLTP’s contract includes measures to avoid the contentious problems that caused the Flour team’s relationship with MTA to deteriorate after the often-delayed project finally got underway in 2017, eventually resulting in Fluor’s departure in return for a $250-million settlement from the state.
The contract includes “a revised dispute process with faster timelines, and a third-party dispute resolution board as a mandatory step in the process,” Garvey said, adding that the management approach will also focus on improving “soft skills” such as coordination and communication.
Garvey also anticipates a smooth ramp-up to full-scale activity on the Purple Line, as MTS and MTA have conducted “transition and knowledge-transfer focused meetings” over the past several weeks with no new design or construction concerns identified.
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“A great deal of progress was achieved under MTA oversight on critical items such as utility relocation that allows MTS to come in and ramp up quickly,” she added.
The Purple Line is one of the nation’s first rail projects to use a public-private partnership. PLTP has a 40-year agreement, now valued at more than $9.3-billion, to finance, design, build, operate and maintain the system, supported by annual payments by MTA during operations.
The new financing package increases the original $2-billion total construction cost by 75 percent, and includes a new $1.76-billion Transportation Infrastructure Finance and Innovation Act (TIFIA) loan to replace the original $875-million loan to finance up to 33 percent of $5.9 billion in eligible project costs. Other elements include $643 million in private activity bonds issued to PLTP, and $293 million in PLTP shareholder equity.
Garvey noted that the added costs reflect a substantially different construction landscape since the Purple Line’s original financing package closed in 2016.
“Risks on the project have evolved both through the nature of the time passed since 2016 and most importantly, the nature of a partially completed project,” Garvey explained. “Assumption of existing construction work, subcontractors and designs is a unique risk that did not exist in 2016. Similarly, neither did coronavirus or the currently inflationary environment.”
Despite these issues and the project’s difficult history, Garvey said the project received “strong interest” from the bond market. She also cited support from the U.S. Department of Transportation’s Build America Bureau with respect to the private activity bonds and restructured TIFIA loan as “very key to the Purple Line.”
