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Maryland will pay Purple Line firms $100 million by Dec. 31 under legal settlement

A construction site for the Purple Line lies dormant in Bethesda near East West Highway. Most major construction on the light-rail project stopped in September after the contractor quit over what it said were $800 million in unpaid cost overruns.
A construction site for the Purple Line lies dormant in Bethesda near East West Highway. Most major construction on the light-rail project stopped in September after the contractor quit over what it said were $800 million in unpaid cost overruns. (Sarah L. Voisin/The Washington Post)
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Maryland will pay the companies managing the Purple Line’s construction $100 million by Dec. 31 to settle contract disputes that caused most major work on the transit project to stop this fall, according to details of a $250 million agreement released Friday.

The part of the settlement made public did not say when the state will pay the remaining $150 million to salvage the project’s 36-year public-private partnership.

It also did not provide a time frame for when the private concessionaire must replace its construction contractor, which would allow work to resume in earnest. No date was provided for when the 16-mile line interconnecting Montgomery and Prince George’s counties will begin carrying passengers.

The Maryland Department of Transportation declined to elaborate on the details of the agreement, which became public as part of the state’s Board of Public Works agenda for Dec. 16. At least two members of the board — composed of Gov. Larry Hogan (R), Comptroller Peter Franchot (D) and Treasurer Nancy K. Kopp (D) — must approve the agreement, as required for changes to major state contracts.

Maryland will pay $250 million to salvage Purple Line partnership

Their approval is expected because a settlement prevents the state from having to procure another highly complex financial partnership, which experts say would take more than a year. Moreover, it precludes a potentially lengthy and costly legal battle by resolving the state’s and companies’ lawsuits against each other.

Allowing the partnership to implode, experts say, also would damage MDOT’s reputation with the private sector just as the state pursues a similar arrangement to add $10 billion worth of toll lanes to the Capital Beltway and Interstate 270. The Purple Line’s partnership was one of the first for a U.S. transit project to rely on private financing.

Hogan spokesman Michael Ricci said the agreement is a good deal, compared with the $800 million the companies originally sought in delay-related cost overruns.

“The governor looks forward to taking this next step toward completing the Purple Line,” Ricci said. “These were tough negotiations, but we were able to save taxpayers $550 million from the original claims.”

Franchot spokeswoman Susan O’Brien said she couldn’t say how the comptroller planned to vote but said, “The settlement is an important step forward to getting this critical project done.”

Kopp said she would like to see more details, but what she’s seen so far “looks very good.”

“It’s a lot of money,” Kopp said. “But it’s a lot less than what the companies were suing for. . . . We do very much want to go forward with the Purple Line, and this seems to be the right first step.”

How much more the state will have to pay to complete the rail line remains unknown until the concessionaire, known as Purple Line Transit Partners (PLTP), awards a new construction contract.

A key question will be how much another contractor will charge to assume the risk of completing work started by other companies.

MDOT officials said in November that the state will try to reduce cost risks by finishing the design, obtaining permits and completing utility relocations.

It’s also unclear how many of the previous cost escalations, such as those related to the design of a CSX crash wall and problems with state environmental approvals, remain.

“We won’t know the full cost until a new construction partner is brought in and gets back to work,” said Del. Marc A. Korman (D-Montgomery), a member of the House Appropriations Committee.

PLTP spokesman John Undeland declined to comment on the agreement or potential future costs.

The Purple Line initially was scheduled to open in March 2022, but the original contractor said it won’t begin carrying passengers until late 2024 because of the delays.

In the public posting, MDOT said the board’s approval of the $250 million deal would “substantially” reduce further delays in the rail line’s completion.

Purple Line uncertainty leaves residents, businesses in limbo

MDOT said the $250 million would come from the state’s transportation trust fund but did not say which other projects or services might be delayed or scrapped due to the additional Purple Line payment.

Most major construction stopped after PLTP’s contractor quit over the cost disputes in mid-September, leaving a string of dormant construction sites across the Washington suburbs. The state has since taken over some subcontracts to allow work to continue, but most won’t resume until the concessionaire hires a new contractor.

Local officials have said MDOT has estimated it will take up to nine months for PLTP to get another contractor on board.

However, it can then take weeks or months to mobilize workers, materials and specialized equipment from across the country for such a large, complex project.

Maryland takes over Purple Line subcontracts after construction contractor quits

Under the agreement, Texas-based Fluor will exit the partnership, state officials said previously. That leaves infrastructure investors Meridiam and Star America as the remaining members of PLTP. Fluor also was the lead company in the construction joint venture.

Under the partnership, now valued at $5.84 billion including the settlement, PLTP will build the line, help finance its construction, and then operate and maintain it for 30 years.

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