The Maryland Department of Transportation/Maryland Transit Administration (MDOT/MTA) recently announced its selection of Purple Line Transit Partners as the concessionaire for the new 16.2 mile, 21-station, light rail Purple Line that will run through Montgomery and Prince George’s counties. On April 6, 2016, the Maryland Board of Public Works, comprised of Governor Larry Hogan, Treasurer Nancy Kopp, and Comptroller Peter Franchot, unanimously approved the public private partnership agreement with Purple Line Transit Partners.
We have been following the development of this project for several years. In 2013, Maryland identified it as the first P3 project under new legislation that updated its Public Private Partnership law to facilitate the use of P3s.
There were questions about the viability of the project in 2014 during the gubernatorial election cycle. But after taking office in January 2015, Governor Larry Hogan gave conditional approval to a reduced-cost version of the Purple Line project and outlined three criteria for approval of the project: (1) additional financial support from Montgomery and Prince George’s counties; (2) reserved federal funding; and (3) aggressive pricing from the successful team. Montgomery and Prince George’s counties pledged $330 million in cash and non-cash contributions to the project. The federal government reserved approximately $900 million for the project, with $125 million recommended for FY 2017. Finally, the initial state expenditure for construction cost was reduced by $8 million to $159.8 million, and the amount of the average annual availability payments was reduced by $18 million to $149 million per year over thirty (30) years. As a result, the project is reportedly coming in $550 million below prior estimates, and the Governor approved moving forward with the project.
Purple Line Transit Partners will be responsible for designing, constructing, operating, and maintaining the project and will also help finance a portion of construction. Maryland Transportation Secretary Pete Rahn said Purple Line Transit Partners provided the best technical proposal and had the lowest overall price. Purple Line Transit Partners is comprised of three equity members: Fluor Enterprises, Inc., Meridiam Infrastructure Purple Line, LLC, and Star America Purple Line, LLC. Fluor will lead the design-build team, which includes The Lane Construction Corporation and Traylor Bros., Inc. Fluor has experience with these types of projects, as it is currently involved in Denver’s Eagle P3 light rail project.
It is anticipated that the contract will now proceed to financial close in June 2016. After the financial closing, construction is anticipated to begin in late 2016 and will take approximately 6 years. The project is scheduled to open for service in Spring 2022. Purple Line Transit Partners will then operate and maintain the project for the next thirty (30) years.
Jason C. Tomasulo is Senior Counsel in the Construction Group of Cohen Seglias. He focuses his practice on construction law and government contracts and represents owners, general contractors, subcontractors, suppliers and sureties.