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 went into effect Thursday, adds $1.46 billion to the Purple Line’s construction costs, bringing the total to $3.4 billion. That’s almost 75% more than the $1.97 billion the state initially budgeted. About $1.1 billion of work was completed before the original contractor quit in fall 2020 after several years of cost disputes with the state.
Reaching “financial close” on the replacement construction contract means funding has been secured. It’s also significant because it allows major work on the stalled 16-mile project to resume, which project officials have said will occur starting this spring. Under the latest timeline, 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 have attributed the escalating construction costs to changes in the project’s “risk profile” and the coronavirus pandemic’s effects on insurance rates, labor shortages and materials.
“We are excited to start a new chapter and deliver the Purple Line to Maryland,” said Holly Arnold, chief 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 U.S. subsidiaries of Spanish construction firms Dragados and OHL. It replaces the original team led by Texas-based Fluor.
The construction contract is between the new firms and Purple Line Transit Partners, the private concessionaire led by infrastructure investor Meridiam. The consortium is managing the project for the state as part of a broader public-private partnership in which it is building the Purple Line and helping to finance its construction before operating and maintaining it for 30 years.
The new construction contractor has met “frequently” with Maryland transit officials and PLTP “to smoothly transition responsibilities and plan for the efficient mobilization of construction,” PLTP said in a statement. The contractor has been adding staff in preparation to reinitiate 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, insuring and operating the line long-term. The value of the partnership agreement has grown from its original $5.6 billion to $9.3 billion.
“Our rock-solid partnership with MDOT MTA is the reason we’re able to make today’s announcement, which brings the Purple Line an important step closer to serving the people of Maryland,” said PLTP Chairman Jane Garvey. “Leading up to today’s milestone, ‘Team Purple Line’ has spared no effort to ensure the restart of construction hits the ground running.”
Maryland officials have said the consortium will finance the increased construction costs. The state will pay back those costs with higher monthly payments — averaging about $255 million annually — over the 30 years. The consortium’s new financing includes a $1.76 billion low-interest federal loan, which has grown from the original $875 million loan, $643 million in private activity bonds issued to PLTP and $293 million of its own equity.
The Morning Sun
The project’s delays and cost overruns have drawn 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 as a way to tap private investment to build transit, highways and other major infrastructure.
The finalizing of the new construction contract will be welcome news in Maryland’s inner suburbs, where the original contractor’s departure left behind hastily patched roads, partially built rail bridges and a string of mostly abandoned construction sites.
The state has paid for some work, such as to refine the design and move utility lines, to continue in the past 18 months. However, residents eager to ride the long-planned line have been frustrated by the delays, and local business owners say they’re worried about surviving a longer period of lost parking and torn-up 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 with Metro, Amtrak and the MARC commuter rail system. Local governments also are counting on its 21 stations to attract and focus economic development.
It will be the Washington region’s first direct, suburb-to-suburb rail line.
The state has agreed to assume more financial risk for the construction, including for “any unknown defects” in the original contractor’s work and any additional pandemic-related problems, state officials have said.
The partnership agreement’s dispute resolution process also has been streamlined, while other changes would make it more difficult to terminate for additional extended delays, state officials have said.