DOT Providing $1.76B Loan for Purple Line
The U.S. Department of Transportation recently announced that its Build America Bureau has provided up to a $1.76 billion low-interest loan for the Purple Line Light Rail Transit Project in Maryland. The loan will reportedly finance up to 33% of the $5.9 billion in eligible project costs.
The 16.2-mile, 21-station Purple Line that will link Prince George’s and Montgomery counties has faced numerous delays since its start, including when the original contracted team quit in 2020 over disputes. Earlier this year, it was announced that the project was delayed again to 2026 and that costs needed to complete construction are over $1 billion than originally anticipated.
DOT Loan, Construction Plans
According to the DOT’s press release, the Build America Bureau provides Transportation Infrastructure Finance and Innovation Act loans and other types of financing for infrastructure projects across the country. The new $1.76 TIFIA loan to the Purple Line project reportedly replaces a prior $874.6 million loan closed in June 2016.
“The Purple Line will provide faster, more direct, and more reliable transit service for the suburban Maryland and DC region’s residents and visitors while easing congestion on local roads,” said Deputy Transportation Secretary Polly Trottenberg. “By cutting an estimated 17,000 vehicle trips each day and operating using electric power, this project has tremendous environmental benefits as well.”
The Maryland Department of Transportation Maryland Transit Administration is working under a Public Private Partnership Agreement with Purple Line Transit Partners to design, build, operate and maintain the light rail system for 35 years.
In addition to the Purple Line, which includes five major activity centers that will connect with 16 other stations, the project will also include completion of the Capital Crescent Trail to support bicyclists and pedestrians. It will also provide direct connections to four branches of the existing Metrorail system, all three MARC commuter rail lines and Amtrak’s Northeast Corridor line.
New construction contract for Maryland’s Purple Line signed, allowing major work to resume this spring, with ?@luzcita? https://t.co/IO7tHuPWcO
— Katherine Shaver (@shaverk) April 14, 2022
“The much-anticipated Purple Line will serve areas that will benefit from associated economic development, while creating opportunities for transit-oriented development,” said Bureau Executive Director Morteza Farajian. “We worked closely with our partners to finalize this loan, which is an essential piece of the financing to move this critical project forward.”
With the TIFIA loan, PLTP and the MDOT MTA announced financial close on April 14. According to the release, the breakdown of financing includes:
“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 Jane Garvey, PLTP chairman. “Leading up to today’s milestone, ‘Team Purple Line’ has spared no effort to ensure the restart of construction hits the ground running.”
Full-scale construction is anticipated to resume later this spring and summer, with construction being completed by fall 2026. MDOT MTA reportedly continued with design refinements, utility relocations and other priority activities while the new design-build contractor was procured.
A $2.3 billion contract with Maryland Transit Solutions, led by the U.S. subsidiaries of Spanish construction firms Dragados and OHL, went into effect the same day. The deal reportedly added $1.46 billion to the construction costs, bringing the total to $3.4 billion.
“We are excited to start a new chapter and deliver the Purple Line to Maryland,” said MDOT MTA Administrator Holly Arnold. “There will be a noticeable increase in construction activity later this spring and summer as this critical project moves forward. The Purple Line will revolutionize transportation in the Washington, D.C. region, with convenient service within an interconnected transit system.
Purple Line Saga
According to the Maryland Department of Transportation and the Maryland Transit Administration, the Purple Line is a 16-mile light rail project that will run from Bethesda, in Montgomery County, to New Carrollton, in Prince George's County, eventually providing a direct connection for Metrorail Red, Green and Orange Lines at Bethesda, Silver Spring, College Park and New Carrollton. The project will also connect with MARC, Amtrak and local bus options. The Purple Line will be powered by a catenary system.
Owned by MDOT and the MTA, plans began with assessments in 2002-08, followed by a draft environmental impact study and light rail being selected as transportation. The FTA issued the final record of decision in 2014, followed by Purple Line Transit Constructors—a partnership consisting of Fluor (Irving, Texas), Lane Construction Corp. (Cheshire, Connecticut) and Traylor Bros Inc. (Evansville, Indiana)—being chosen in 2016 to assist with the project.
Through the public-private partnership, PLTC agreed to work on the design, build and operation, as well as maintenance of the system for 35 years. Other teams collaborating on the project at the time included: the Washington Metropolitan Area Transit Authority, Montgomery and Prince George's counties, the Maryland-National Capital Park and Planning Commission, the Maryland Department of Transportation State Highway Administration and local municipalities.
In March 2019, a judge cleared a lawsuit that might have brought construction to a halt. A few months later, in September, officials announced that the line would open in phases, starting in Prince George’s County, where the first stations would open. At the time, trains were being built in New York and planned to arrive for testing in 2021.
By October, WTOP News reported that issues with concrete at a Maryland Metro entrance shaft, labeled defective by the state, were just one of many issues plaguing the project after the outlet had requested documentation on the project.
According to the documents, in 2016 and 2017, there was more than one instance of 47 oversight reports where contractors were traversing private property without necessary permission and attention to traffic safety issues. While more minor issues were easily resolved, there were also instances where construction was commenced without the proper approvals, such as in July 2018, when designs were returned with a request for revisions, but construction still began two weeks later.
In December, problems identified with the concrete included: cracks in approach slabs, concrete out of tolerance, pockmarks and footprints. By October 2020, corrective work was slated for completion by the summer, with the interior build-out commencing by the end of 2021.
In April, PLTC requested an additional $187.7 million and five extra months to complete work regarding a required “crash wall” slated to go between a portion of the Purple Line and CSX freight tracks.
The following month, PLTC announced that it planned to withdraw from the project as a result of a three-year ongoing dispute with MDOT and the MTA over extensive delays and cost overruns. However, PLTC reported that its other consortium, Purple Line Transit Partners (Meridiam, Fluor and Star America Infrastructure Partners) had agreed to take over the project.
According to reports, PLTP also held a public-private partnership with the state of Maryland for a larger design-build and operating contract, worth $5.6 billion. In its release, PLTC said it would be exercising a clause in the design-build agreement which allowed for withdrawal if total project delays reached 365 days. However, according to The Washington Post, the project was already approaching 1,000 days’ worth of delays from various legal battles, right-of-way acquisition and design changes.
In June, the PLTP formally notified state transportation agencies that it intended to terminate the partnership in 60 days, citing more than $800 million in cost overruns. Two months later in August, Baltimore Circuit Court Judge Jeffrey M. Geller filed a temporary restraining order that prevented PLTP from walking off the project.
At the beginning of September, Geller ruled that the joint venture could quit over the cost overrun dispute, though transit officials could attempt to salvage the partnership. By the end of the month, construction came to a halt, as PLTP proceeded with its decision to depart from the endeavor.
Following the court’s decision, Maryland transportation officials planned to take over day-to-day management of the project but were still making efforts to come to a settlement with PLTP. Should the JV stick with its plans to leave, state officials estimated the decision would add another one to two years of delays to the project, which is already two-and-a-half years behind schedule.
In November, MDOT announced that it had agreed to pay an additional $250 million to the remaining companies that have agreed to manage construction of the delayed and cost disputed Purple Line project in an effort to salvage the 36-year, $5.6 billion PLTP partnership. The settlement amount was reported to cover what PLTP and its associated construction team spent on a lawsuit filed by project opponents and the state’s delay in providing right of way.
Originally made up of primary construction contractor Fluor, and infrastructure investors Meridiam and Star America, despite the settlement, Flour announced that it would still be leaving the partnership, having quit last month over delays and cost escalations.
According to The Washington Post, the deal revived one of Gov. Larry Hogan’s signature transportation projects and a public-private partnership that imploded in September following three years of cost disputes. The settlement was sent to the state’s Board of Public Works in December.
In January, the Maryland Board of Public Works, comprised of Hogan, Comptroller Peter Franchot and Treasurer Nancy K. Kopp, unanimously approved a $250 million legal settlement to resume construction on the Purple Line project.
Regarding Flour, the prior contractor and its construction partners received $100 million before the end of 2020, with the state intending to pay the remaining $150 million within 12 months, after the contractor was replaced and a new agreement was signed between it, the state and PLTP. As part of the settlement, Meridiam and Star America agreed to spend up to an additional $50 million to keep construction moving until a new contractor was on board.
And in March 2021, PLTP announced that three design-build contractors were short-listed to complete the project. The contractors include: Halmar International; Maryland Transit Solutions (a team of Dragados USA and OHL USA); and Tutor Perini and Lunda Construction Co., a joint venture.
In June, Maryland’s three-member Board of Public Works approved an agency request to add $183.5 million to cover expanded project responsibilities for the partially built Purple Line project.
The contract modification will reportedly bolster the budget for the project management consulting team (AECOM, RK&K and WSP USA), which has overseen a much scaled-back construction effort since the original Fluor-led design-build group quit the half-finished project last year in a dispute relating to cost overruns totaling $800 million.
Agency officials reported that the unanimously approved funds were driven by the costs associated with the unexpected need to assume temporary control. In addition, the modification of the “program management consultant services” contract would add four years to the original agreement.
The funds are noted to be unrelated to the $250 million settlement the state reached with PLTC last fall.
Later that year, Veronica Battisti, spokeswoman for the Maryland Transit Administration, reported that the agency's private team managing the project planned to select a new contractor in December and have a new construction contract finalized by Feb. 17.
In a submission to the state’s Board of Public Works, MDOT reported that a new opening date and cost to complete would be determined once the contractor was onboarded and the contract finalized. In its submission, MDOT also requested to the Board of Public Works that it would like to pay the private consortium an unspecified amount “to facilitate the restructuring of the project financing” that would occur after the new contractor is selected.
MDOT pointed out that the money wouldn’t be an additional cost, in that it would pay for completed work now, rather than via the future payments, thus reducing financing costs associated with the project’s risks.
In November last year, transit officials selected Maryland Transit Solutions (MTS), comprised of Dragados USA Inc. and OHL USA Inc., as the new design-build contractor to complete the Purple Line.
In January, it was announced that the project was delayed to 2026, and that costs needed to complete construction are over $1 billion than originally anticipated. WTOP News reported that MDOT cited the rising cost of materials, a shrinking labor force, material shortages due to supply chain challenges, increases in the insurance market and other factors post-pandemic as reasons for the delay and rise in price.
Originally estimated to cost $2 billion to complete construction, officials estimated they would need $3.4 billion, also pushing the service opening back from March 2022 to fall 2026. This includes about $1.1 billion of construction costs already paid.
Additionally, the cost for the public-private partnership (P3) agreement increased from $5.6 billion to $9.3 billion. The new, proposed P3 agreement funding would go towards building, operating and maintaining the line for several decades. The additional $3.7 billion for the long-term financial agreement would include the additional construction costs, as well as a $250 million legal settlement previously paid to the original contractor after the team quit, state officials said.
State officials say that full-scale construction is currently scheduled to start later in the spring. Under the new contract, the entire line would open at once and not in two phases as previously planned.
