The private consortium managing Maryland’s Purple Line project has signed a $2.3 billion contract with a new construction team to complete the long-delayed light rail line, according to the consortium and the Maryland Transit Administration.
The deal, which took effect on Thursday, adds $1.46 billion to the Purple Line’s construction costs, bringing the total to $3.4 billion. This is nearly 75% more than the $1.97 billion initially planned by the state. About $1.1 billion in work was completed before the original contractor quit in the fall of 2020 after several years of cost disputes with the state.
“Financial close” of the replacement construction contract means that financing has been secured. It’s also important because it allows major work to resume on the stalled 16-mile project, which project officials say will take place from this spring. According to the latest schedule, the rail line between Bethesda in Montgomery County and New Carrollton in Prince George’s County will begin carrying passengers in fall 2026, more than four years behind schedule.
State officials attributed the escalating construction costs to changes in the project’s “risk profile” and the effects of the coronavirus pandemic on insurance rates, labor shortages and materials.
“We are thrilled to start a new chapter and deliver the Purple Line to Maryland,” said Holly Arnold, head of the Maryland Transit Administration. “There will be a noticeable increase in construction activity later this spring and summer as this critical project moves forward.”
the new construction team is a joint venture known as Maryland Transit Solutions and led by the US subsidiaries of Spanish construction companies Dragados and OHL. He replaces the original team led by Texas-based Fluor.
The construction contract is between the new companies and Purple Line Transit Partners, the private concessionaire led by infrastructure investor Meridiam. The consortium manages the project for the state as part of a larger public-private partnership in which it builds the Purple Line and helps finance its construction before operating and maintaining it for 30 years.
The new construction contractor met “frequently” with Maryland Transit officials and PLTP “to smoothly hand over responsibilities and plan for effective construction mobilization,” PLTP said in a statement. The contractor has added staff to restart construction.
The Maryland Department of Transportation also signed a new partnership agreement with the consortium to include the higher construction cost, as well as more for related expenses, such as financing, insurance, and operating the line at long term. The value of the partnership deal has grown from its original $5.6 billion to $9.3 billion.
“Our strong partnership with MDOT MTA is why we are able to make today’s announcement, which brings the Purple Line one step closer to serving the people of Maryland,” said Jane Garvey. , President of the PLTP. “Ahead of today’s milestone, ‘Team Purple Line’ has spared no effort to ensure the restart of construction gets underway.”
Maryland officials said the consortium would fund the increased construction costs. The state will repay these costs with higher monthly payments – on average about $255 million per year – over the 30 years. The consortium’s new financing includes a $1.76 billion low-interest federal loan, which grew from the original loan of $875 million, $643 million in private activity bonds issued to PLTP and 293 million dollars of its own equity.
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The project’s delays and cost overruns drew national attention because its public-private partnership was one of the first for a U.S. transit line to rely on private financing. Governments across the country are relying on similar partnerships to attract private investment to build public transit, highways and other major infrastructure.
Completion of the new construction contract will be welcome news in inner Maryland suburbs, where the departure of the original contractor has left behind hastily patched roads, partially constructed railroad bridges and a series of construction sites for most abandoned.
The state has paid for some work, such as design improvements and relocation of utility lines, which will continue over the past 18 months. However, residents keen to take the long-planned line have been frustrated by the delays, and local business owners say they are worried about surviving a longer period of lost parking and torn roads.
The Purple Line is designed to provide faster, more reliable east-west transit service than buses in older, auto-dependent suburbs and connect communities to the subway, Amtrak, and commuter rail system MARK. Local governments also rely on its 21 stations to attract and focus economic development.
It will be the first direct commuter-to-suburban rail line in the Washington area.
The state agreed to take on more financial risk for the construction, including for “any unknown defects” in the original contractor’s work and any additional pandemic-related issues, state officials said.
The partnership agreement’s dispute resolution process has also been streamlined, while other changes would make it harder to terminate for additional extended delays, state officials said.