Maryland’s Purple Line has uncertain future after contractor quits, claiming $800M in overruns

Ricardo Velis doesn’t have a car, so he spends an hour and a half commuting each way on two buses between his home in Montgomery County and work in Prince George’s County. It’s a less than 30-minute drive, but he said one of the Montgomery County buses stops 20 times.

Velis, a 31-year-old construction worker, is one of the many in Maryland’s Washington suburbs eagerly awaiting the Purple Line, a 16-mile, east-west light rail line between Bethesda and New Carrollton, connecting to two MARC and four Washington Metro lines.

“We need more connections,” he said. “The bus is very slow.”

Decades in the making, the 21-station rail line is about 40% built. A 100-foot hole has been dug for elevator shafts in Bethesda. Utility and steam line relocation is underway along University Boulevard and on the University of Maryland, College Park campus. Bridges for the elevated sections of the mostly street-level rail line have begun rising in Chevy Chase, Silver Spring and Riverdale Park.

But many of the line’s construction sites now stand dormant. The project’s construction contractor terminated its deal with the state in September over $800 million in unpaid cost overruns. The state said it still plans to finish the project and will decide in the next six months how to proceed, but Velis and others won’t ride the Purple Line until at least 2024.

“Right now, for a domestic worker to go to Bethesda to work, it takes two hours because they take three buses. On the Purple Line, it is going to take between 15 and 20 minutes.”

—  Gustavo Torres, executive director of CASA, which advocates for rights and opportunities for Latinos.

Mike Ricci, a spokesman for Maryland Gov. Larry Hogan, said negotiations between the state and Purple Line Transit Partners, the construction contractor, are ongoing while some work continues.

“We are still very committed to a settlement, to solving this issue and working through these challenges long term,” said Maryland Transportation Secretary Greg Slater. “The last thing we want to do is solve this issue today and be back here in six months to a year.”

The unraveling of the $5.6 billion public-private partnership — an increasingly popular financing vehicle through which Maryland planned to pay a consortium of companies nearly $150 million a year to build, maintain and operate the Purple Line for 36 years — could carry implications for other projects, including Hogan’s proposed $11 billion highway expansion plan.

The delays that led to the cost overruns stem mostly from citizen lawsuits to halt the project. But critics, including Democratic officials, also question the Republican governor’s handling of the project. They note his initial opposition to the Purple Line, the six months his administration spent studying the project after he first took office before deciding to proceed, and his shifting of millions of dollars in costs from the state to the counties.

U.S. Rep. Anthony Brown, the former Democratic lieutenant governor, helped set up the framework for the Purple Line’s financing before losing the governor’s race to Hogan in 2014. The Purple Line is the largest transit project and one of the largest public-private partnerships in the United States, he noted.

“And right now," Brown said, “it is the biggest failure of a public-private partnership in the country.”

Hogan, who has blamed the contractor for trying to “gouge” taxpayers, declined to be interviewed for this article. Pete Rahn, Hogan’s transportation secretary from 2015 until December 2019, took issue with critics in an interview, saying the problems “are related substantially to the delays.”

“We’ve had to overcome various legal hurdles and delays over the last few years, but we are going to get the Purple Line built,” Ricci said. "It’s critical to the long-term recovery of the state and the region.”

A winding route to approval

Barbara Sanders and her late husband, Harry, used to wave to the conductors in the freight trains that carried coal along the old CSX Georgetown Branch between Bethesda and Silver Spring.

The couple, who lived in Berwyn Heights before moving to Silver Spring, were among the first advocates for what would become the Purple Line — a light rail part of the Washington Metro subway system. Noting the growing congestion on the Capital Beltway, the Sanderses urged Montgomery County to purchase the old CSX right of way in the 1980s, laying the groundwork for the line’s initial leg.

“Commuters were no longer all on the spokes of the wheel going downtown” to Washington, Sanders said. The Purple Line offered “an avenue for increasing transit, connecting communities and helping people move crosswise.”

The project suffered decades of stops and starts due to political hurdles — opponents included former Montgomery County Executive Doug Duncan, a Democrat, in the 1990s, and former Gov. Robert Ehrlich, a Republican, who favored bus rapid transit over light rail in the 2000s.

Former Gov. Martin O’Malley, Hogan’s Democratic predecessor, signed an unpopular gas tax in 2013 to pay for the Purple Line and the Red Line, a 14-mile light rail project in Baltimore. Each project received a $900 million federal grant during the Obama administration.

Hogan, a suburban real estate developer, campaigned against higher taxes and opposed both light rail projects, favoring highway expansion. Once elected, he ordered Rahn to review both the Red Line and the Purple Line.

Six months later, Hogan canceled the Red Line. He said the state would move forward with the Purple Line but reduce its upfront share of construction costs from almost $700 million to $168 million. He required the concessionaire to find cost savings and Prince George’s and Montgomery counties to take on more of the burden.

“It was important to the governor that the cost situation be brought under control in order for him to decide it should be undertaken,” Rahn said.

Delays ‘out of left field’

Construction was delayed by a year in 2016, when U.S. District Judge Richard J. Leon ordered work halted, ruling in favor of Chevy Chase residents who argued that ridership projections needed to be updated in light of the Washington Metro’s ridership declines.

“We are still very committed to a settlement, to solving this issue and working through these challenges long term.”

—  Maryland Transportation Secretary Greg Slater

“That is an event out of left field you simply could not anticipate,” Rahn said.

A federal appeals court reversed the ruling the following year in what the former transportation secretary called “as close as you can get to a slap.”

During the delay, the construction contractor, Purple Line Transit Constructors, claimed losses of $800 million, which the state determined to be far too high. Rahn said the state repeatedly made settlement offers that were rebuffed by the consortium, which included construction giants Fluor Corp., The Lane Construction Corp. and Traylor Bros. Inc.

“We agreed there were effects from the delay," Rahn said. “But we couldn’t reach agreement as to the cost.”

Bruce L. Marcus, an attorney representing Purple Line Transit Partners, declined to comment, citing ongoing litigation.

In June, Purple Line Transit Partners announced that it planned to exercise its right to terminate the contract after more than a year of delays “outside of PLTP’s control.” Maryland sued unsuccessfully to keep the firms on the job.

Hogan criticized the construction contractor during an Oct. 1 news conference for “trying to gouge the taxpayers for hundreds of millions of dollars.” He said the state remains open to the “possibility” of resolving the disputed costs.

“But if not, we don’t have much more time to waste negotiating with them,” the governor said. “We’re going to move forward and get it built without them.”

The high likelihood of delays to the project was one of the reasons then-Prince George’s County Executive Rushern L. Baker III had pushed for Purple Line construction to begin simultaneously in both counties. Work could move forward in Prince George’s, the Democrat reasoned, while the state resolved any issues in Montgomery.

“Clearly, if you’ve done any of your homework, you would know that these problems are going to arise,” Baker said. “And so you should have prepared for them. There’s going to be delays.”

All down the line

Wallace Loh’s appointment in 2010 as president of the University of Maryland, College Park helped make the Purple Line possible. His predecessors had rejected a Metro station on campus decades earlier and called for the Purple Line to go underground, significantly increasing the cost.

“The first time that train kills a student," Loh remembered being warned, “it will be on your conscience.”

Right now, it is the biggest failure of a public-private partnership in the country.”

—  U.S. Rep, Anthony Brown, the former Democratic lieutenant governor

But he recalled thinking: “I also know there are students being hit by cars going across Route 1.”

Loh, who retired in June, saw the Purple Line as a way to better integrate the university into Prince George’s County, spur hundreds of millions of dollars in development, and bring more jobs, internships and research opportunities within reach of Maryland students.

“The flagship university of this state can really not flower and grow into the future if it continues the way it used to be in the past,” Loh said. “It has to be not a college in a park, but a university integrated in the greater Washington area.”

In nearby Langley Park, Gustavo Torres sees a need for improved public transportation serving the Latino and immigrant workers who commute to domestic and service jobs in Bethesda, Silver Spring and Washington.

Torres is executive director of CASA, the organization that advocates for expanded rights and opportunities for Latinos and immigrants in Maryland.

“Right now, for a domestic worker to go to Bethesda to work, it takes two hours because they take three buses,” he said. “On the Purple Line, it is going to take between 15 and 20 minutes.”

Langley Park has already been stung this year by the coronavirus pandemic and the ensuing job losses, Torres said. Now, steel plates cover dug-up streets, and orange construction fencing and traffic barrels abound, with no work — or end — in sight.

“Our neighborhood has become a construction zone,” Torres said. “We are calling on the governor and the consortium to resolve this.”

CASA is a member of the Purple Line Corridor Coalition, which laid out goals for affordable housing, economic development, small business preservation, workforce development and other initiatives along the route, including art and cultural preservation, in 2017.

“We’re trying to prepare the corridor, which at one time seemed really urgent,” said Gerrit Knaap, who established the coalition as director of the National Center for Smart Growth Research and Education at the University of Maryland. “It seems a little less urgent now, but we still think it’s important.”

Josh and Annie Tulkin, Purple Line enthusiasts, moved to their home in Silver Spring because it was just 50 feet from a proposed stop.

But it took them months to stop late-night blasting and jackhammering for the nearby Plymouth Tunnel, one of the Purple Line’s two underground sections, Josh Tulkin said. He later learned their complaints weren’t reaching the correct officials, he said.

“The state of Maryland cannot come anywhere close to satisfying the infrastructure requirements of its citizenry without infusions of private capital and public-private partnerships.”

—  Anirban Basu, an economic adviser who served on Gov. Larry Hogan’s transition team

“The state didn’t staff up its capacity to do oversight,” said Tulkin, director of the Maryland Sierra Club, an environmental advocacy group. “We witnessed severe, disturbing disorganization, and consistent shirking responsibility and passing the buck.”

Slater, the state transportation secretary, did not dispute Tulkin’s complaints but said in response that Maryland is “committed to working to get the Purple Line construction ramped up and expanding our collaboration and coordination with the community as the project moves forward."

Michael Pope opened his Silver Spring Edible Arrangements franchise — the only Black-owned one in the region, he said — on Bonifant Street in 2018, hoping to capitalize on the nearby Purple Line station.

Maryland lawmakers are urging Hogan to release $2 million in financial assistance they allocated to aid businesses hurt by the Purple Line construction, and the 60-year-old Air Force veteran would gladly accept some grant money to help his franchise.

But Pope said he and other business owners have heard nothing about the project from the state for months.

“Just make a concerted effort to key us in on what’s going on,” he requests. “I’m mentally ready, but I just need to be able to plan for it.”

Public-private partnership concerns

Del. Brooke Lierman, co-chair of the General Assembly’s Transit Caucus, said the Hogan administration’s handling of the light rail construction makes her question its ability to manage future public-private partnerships for transportation projects.

“Gov. Hogan really set up the Purple Line from early days for, at the worst, failure, and at the best, a very difficult, rocky path forward by cutting funding and by many of the changes he demanded in the contract,” said Lierman, a Baltimore Democrat.

Slater responded in a statement: “I always have been, and always will be, a believer in the power of innovative partnerships and collaboration. The more voices we bring to the table, the better.”

Jonathan L. Gifford, director of the Center for Transportation Public-Private Partnership Policy at George Mason University, said settling the disputes — even if the state paid the full $800 million in claims — almost certainly would cost less than Maryland taking on the project or replacing the contractor.

“I’m surprised they have been arguing about this for two years until the concessionaire made the decision to withdraw," he said. “It’s not something they did lightly, I’m sure.”

The Purple Line’s woes aren’t necessarily a cautionary tale for “PPPs” or “P3s” as they’re commonly called, said Gifford, a professor at George Mason’s Schar School of Policy and Government.

The Purple Line was one of just two transit projects in the country — the other is in Denver — using public-private partnership financing and taxpayer funding. Highway projects, unlike mass transit, generally pay for themselves over their life span with toll revenue, placing less risk on the state, he said.

“Maryland’s on the hook to pay for the Purple Line,” he said.

Anirban Basu, an economic adviser who served on Hogan’s transition team, touted the success of the 50-year, $1.3 billion P3 at the Port of Baltimore, through which a private operator leases the Seagirt Marine Terminal from the state and pays for improvements such as cranes and channel dredging.

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Maryland needs public-private partnerships because the state lacks the debt capacity to finance all of its required future infrastructure improvements, said Basu, CEO of Sage Policy Group.

"The state of Maryland cannot come anywhere close to satisfying the infrastructure requirements of its citizenry without infusions of private capital and public-private partnerships,” he said.

Ben Ross, who lives a block from the Purple Line in Bethesda, spent 15 years advocating for the Purple Line with the Action Committee for Transit in Montgomery County.

Ross, 71, now president of the Maryland Transit Opportunities Coalition, a statewide transit advocacy group, said it makes no sense, with the project nearly half-finished, for Maryland to pursue a new public-private partnership for the Purple Line or attempt to bring another contractor into the old one.

The state has already taken on hundreds of subcontracts to continue some work while officials negotiate. The end of the partnership hasn’t jeopardized the $900 million federal grant or other funding sources such as Transportation Infrastructure Finance and Innovation Act loans, state officials say.

“If the state has the means of financing this and paying the lenders directly," Ross said, "why should they funnel all the money through a concessionaire?”

Baltimore Sun researcher Paul McCardell contributed to this article.