The Maryland Department of Transportation/Maryland Transit Administration (MDOT/MTA) recently announced that four of the six teams that submitted qualification statements will be permitted to submit proposals to design, build, finance, operate, and maintain the Purple Line light rail public-private partnership (P3) project that will run from Bethesda to New Carollton in Montgomery and Prince George’s counties. The short-listed teams are:
– Maryland Purple Line Partners, comprised of Vinci Concessions, S.A.S.; Walsh Investors, LLC; InfraRed Capital Partners, Limited; Alstom Transport SA; and Keolis SA;
– Maryland Transit Connectors, comprised of John Laing Investments Limited; Kiewit Development Company; and Edgemoor Infrastructure & Real Estate LLC;
– Purple Line Transit Partners, comprised of Meridiam Infrastructure Purple Line; Fluor Enterprises, Inc.; and Star America Fund GP LLC; and
– Purple Plus Alliance, comprised of Macquarie Capital Group and Skanska Infrastructure Development, Inc.
Transportation Secretary James T. Smith, Jr. said, “These teams clearly demonstrated their qualifications to deliver this important project in their responses to our Request for Qualifications.” MTA Administrator Robert L. Smith said, “We were quite pleased with the overall response. The interest expressed by so many well-regarded companies is a testament to both the value of the Purple Line as a transportation asset and the power of public-private partnership to deliver value for citizens over a long period.” The other two teams were M-PG Connect, LLC, comprised of Plenary Group USA, Ltd. and Bechtel Development Company, Inc., and Purple Line Development Partners, comprised of CSCEC and United Labor Life Insurance Company, Inc.
Many of the shortlisted teams have prior experience with P3 transit projects. Members of the Purple Line Transit Partners and Purple Plus Alliance teams – Fluor and Macquarie – were part of the successful team on Denver’s Eagle P3 light rail project, which is the first design, build, finance, operate, and maintain (DBFOM) transit concession that successfully closed in the United States (it is currently about mid-way through construction and scheduled to complete in 2016). John Laing Investments of the Maryland Transit Connectors team was also involved in the Eagle P3 project. It bought out Macquarie’s interest when its financing closed in August 2010.
The Purple Line shares many similarities with Denver’s Eagle P3 rail project, including using the DBFOM model and planning to make “availability” payments to the successful concessionaire over the term of the concession. Availability payments are annual payments that commence after the light rail line is operational and reimburses the concessionaire for its financial investment in the project. Deductions can be made from the payments if the concessionaire does not meet predetermined performance targets, such as on-time performance, vehicle cleanliness, and customer service.
The next step is for MDOT/MTA to issue a request for proposals to the shortlisted teams, which is anticipated in the spring, with the target for proposal submissions by the teams in the fall 2014. We will continue to monitor these exciting P3 developments in Maryland and throughout the country, and we are available to assist organizations interested in P3s.
Jason C. Tomasulo is Senior Counsel at Cohen Seglias Pallas Greenhall & Furman PC. He focuses his practice on construction law and represents owners, general contractors, subcontractors, suppliers and sureties.