Maryland’s Purple Line would begin carrying passengers in the Washington suburbs in fall 2026 — 4 1/2 years behind schedule — and cost an additional $1.4 billion to build under a proposed contract to complete the beleaguered light-rail project, state transportation officials said Wednesday.
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The longer-term financial implications would be steeper. The state’s cost of a broader agreement for a private concessionaire to build, operate and maintain the line for several decades would climb from $5.6 billion to $9.3 billion.
If the state’s Board of Public Works approves the new construction contract and broader financial agreement Jan. 26, the private concessionaire would need to secure financing in February. Construction on Maryland’s largest transit project would then resume this spring, state officials said.
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The soaring costs and mounting delays are hitting a project once viewed as a national model for how debt-strapped governments could partner with the private sector to build expensive infrastructure more efficiently and with fewer financial risks. The Purple Line was one of the first U.S. transit projects to rely on private financing as part of a public-private partnership.
“This is the right team and the right time,” said Maryland transit administrator Holly Arnold. “This project has been needed for such a long time. We’re going to get it across the finish line.”
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Most Purple Line construction, which started in mid-2017, stopped in October 2020, when the private consortium’s initial contractor quit after a court fight and years-long feud with the state over what the companies said were 2 1/2 years of delays and $850 million in cost overruns.
The line initially was scheduled to begin carrying passengers in March.
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Arnold said the state would not have been better off reaching a deal with the original contractor on what were then much shorter delays and less expensive cost overruns. The contractor’s claims, she said, didn’t include significant pandemic-era cost increases, such as for materials and labor, that have hit all construction projects.
“Had we come to an agreement on the $850 million, I can guarantee it would have been higher given everything that we’ve seen with the pandemic,” Arnold said.
The original contractor’s departure left behind a 16-mile swath of abandoned construction sites, half-built rail bridges in midair, closed roads and bumpy, hastily patched roads where track was to be laid.
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Meanwhile, some business owners along the alignment between Bethesda and New Carrollton have said they worry they won’t survive a prolonged period of torn up entrances and lost parking. Users of a popular recreational trail that has been closed for Purple Line construction between Bethesda and Silver Spring also have called for its reopening.
The Maryland Department of Transportation has continued some work in the interim, such as moving underground utility lines. The new contractor, American subsidiaries of Spanish construction firms Dragados and OHL, would replace the original construction team led by Fluor, Lane Construction Corp. and Traylor Bros.
Matthew Pollack, who oversees the Purple Line project for the Maryland Transit Administration, praised the new companies’ “years of experience” on highly complex projects, including public-public partnerships.
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“We think that they’re creating the missing piece to this whole program,” Pollack said. “We are going to have the right team in place now to run this project to completion.”
Asked about problems Dragados has had with delays and escalating costs on construction projects in at least four states, Pollack said, “I think the reality of the construction industry in the United States is that you can’t really Google a company and not find a problem project. There’s just too much involved with these complex projects, too many unknown conditions that you come upon.”
He said the Purple Line was at less risk of future cost overruns because state officials have the necessary environmental permits in hand while state contractors have continued to move underground utility lines — two major causes of projects going over budget.
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The Purple Line will be the first direct suburb-to-suburb rail line in the Washington region. It’s designed to provide faster, more reliable mass transit than buses and to attract economic development around its 21 stations in older, auto-centric suburbs. It will connect to Metro’s Red, Green and Orange lines but, unlike the subway system, will run single-vehicle “trains” mostly along local roads and a recreational trail.
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Under the new construction contract, the entire line would open at once — not in two phases as previously planned.
The additional $3.7 billion for the long-term financial agreement would include the additional construction costs, as well as a $250 million legal settlement previously paid to the original contractor after the team quit, state officials said. The total $9.3 billion would cover the line’s operations and maintenance for 30 years, the expense of refurbishing tracks and rail vehicles as they age and debt service payments that would balloon as part of financing the more expensive construction. The concessionaire also would make a profit.
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The new $3.4 billion construction price would include about $1 billion of construction costs already paid. In addition to the pandemic-related expenses, the new contractor also priced in the additional financial risk of completing work started by other companies, state officials said.
The state and private consortium, known as Purple Line Transit Partners and led by infrastructure investor Meridiam, also didn’t have much choice. The winning construction proposal was one of two bids.
Under proposed changes to the long-term financial agreement, the private concessionaire would cover the additional construction costs with $140 million more of its own equity and by incurring more debt. The state would then pay for those additional costs via monthly payments over 30 years after the line opens. The payments, which originally amounted to an average $154 million annually, are expected to grow to an average of $240 million annually under the new agreement, MDOT said.
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MDOT officials had avoided state limits on tax-supported debt by pledging in 2016 that they would cover the private consortium’s debt service with fare revenue from the Purple Line. Because the Purple Line’s own fare revenue isn’t expected to fully cover those private financing costs for about 15 years, state officials had said they would use fare revenue from the MARC commuter rail to make up the difference. They would then backfill MARC funding with other transportation revenue, such as from the state gas tax.
Jaclyn Hartman, MDOT’s chief financial officer, said Wednesday the additional money for the Purple Line debt could come from other state transit revenue, not just MARC. She said other transit systems can be funded from the larger pool of transportation revenue sources, including taxes on new vehicle titles and the state corporate income tax — both which have recovered more quickly during the pandemic than MDOT had projected.
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“MTA is not going to be gutted,” Arnold said.
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The Purple Line’s construction fell behind schedule and over budget before crews could even start. A judge’s 2016 surprise ruling in an environmental lawsuit filed by project opponents delayed the start of construction by almost a year. Other problems soon followed, including what the original contractor said were delays in the state securing right of way and changes in design requirements for a wall between the Purple Line and CSX freight rail tracks. The state, the contractor said, also had revised its requirements for issuing environmental permits.
Pollack said the state has resolved the CSX wall and permit issues. It also has “legal control” over all necessary right of way, though the price of some parcels is still being negotiated in court.
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