A Maryland board approved a new contractor Wednesday to complete the long-delayed Purple Line for an additional $1.43 billion — an almost 75 percent cost increase to revive the stalled light-rail project.
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Under the new contract, full construction will resume in the spring. That will mean revving up abandoned construction sites along roads that were hastily patched and rail bridges that ended in midair after the original construction team quit in fall 2020.
State officials say the 16-mile line will begin carrying passengers between Montgomery and Prince George’s counties in fall 2026, more than four years behind schedule. The Purple Line was initially scheduled to begin carrying passengers in March.
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The new $3.43 billion construction contract includes about $1.1 billion of work that the state has paid for.
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Comptroller Peter Franchot (D), one of the board’s three members, called the amount of the new contract “mind boggling” but worth it to complete an “essential and very important” transit project.
“This project is significant,” Franchot said before the unanimous approval. “Obviously we need to get it done, and we owe it to Marylanders to get it done as quickly as possible.”
Selected Purple Line contract would increase construction costs to $3.4 billion
The Purple Line’s public-private partnership, as well as its near-implosion after the original construction contractor walked off amid cost disputes with the state, has drawn national attention because it was one of the first U.S. transit projects to rely on private financing.
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The board — composed of Gov. Larry Hogan (R), Franchot and Treasurer Dereck E. Davis (D) — also approved an additional $3.7 billion for a separate, longer-term financial agreement with the private consortium managing the project long-term.
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That broader agreement, which will grow from $5.6 billion to $9.3 billion, includes the higher construction and financing costs, as well as a $250 million legal settlement the state paid to the consortium after its original contractor quit.
The financial agreement is between the state and the private consortium, known as Purple Line Transit Partners and led by infrastructure investor Meridiam. The construction contract is between the consortium and a team led by the U.S. subsidiaries of Spanish construction firms Dragados and OHL.
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State officials told the board that the new team, known as Maryland Transit Solutions, had the strongest technical proposal and lowest price of the two bidders. The board’s approval of the new construction contract was required as part of the legal settlement over the original contractor’s departure, even though the state isn’t a party to it.
New Purple Line contractor selected to resume full construction this spring
The Dragados-led team will replace the original construction team led by Texas-based Fluor.
Maryland officials said the concessionaire will cover the additional construction costs by contributing more of its own equity and taking on more debt. The state will then repay those costs over 30 years after the line opens, as part of regular payments to the concessionaire, as it operates and maintains the line long-term.
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The state’s payments are expected to grow from an average $154 million per year to an average $240 million annually. Maryland transit officials have committed federal funding and fare revenue from all state transit systems, including MARC commuter rail, to pay off the private debt and equity.
State officials attributed much of the cost increase to changes in the project’s “risk profile” and the pandemic’s effects on insurance rates, labor shortages and the supply chain. The state will assume more financial risk under the new contract, including for “any unknown defects” in the work done by the original construction team and any additional pandemic-related problems.
Meet the Maryland transit official responsible for getting the Purple Line built
The Purple Line will run single-vehicle “trains” along local roads, mostly in their own lanes, and a recreational trail between Bethesda and Silver Spring. The line is designed to provide faster, more reliable suburb-to-suburb mass transit service than buses, without passengers having to ride Metro into and out of downtown Washington. The Purple Line will connect with MARC commuter rail, Amtrak and four Metro stations — Bethesda, Silver Spring, College Park-University of Maryland and New Carrollton — but will be operated separately by the concessionaire.
Officials also are eyeing the line’s 21 stations to attract economic development in struggling, auto-dependent inner suburbs while providing better access to jobs from communities between Metro stations.
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The Purple Line’s construction started in mid-2017, about a year behind schedule, after a surprise ruling in a federal lawsuit filed by project opponents. More delays followed, including the state falling behind in providing right of way and necessary environmental permits, the original contractor said. The state rejected those claims, saying the problems were the contractor’s responsibility.
Along the Purple Line, worries that new transit will bring higher rents
The new public-private partnership agreement covers 40 years — beyond the original 36-year agreement — to cover the line’s operations through April 2056.
Under the new agreement, the concessionaire and state will no longer have an “unconditional right” to terminate the contract for extended delays — the provision the concessionaire successfully cited in court after the first contractor quit. The agreement also will “shorten, clarify and streamline” the dispute resolution process, the state said.