The Maryland Transit Administration plans to pursue another public-private partnership to complete the Purple Line and operate it long-term if the state does not reach a deal with the initial concessionaire over cost overruns, a top state transit official said Tuesday.
Maryland officials have been exploring their options since the project’s original concessionaire, a team of companies called Purple Line Transit Partners, terminated the partnership as of Sept. 10. PLTP and the state had been feuding for three years over who should pay for what PLTP said were $800 million in construction cost overruns stemming from more than 2½ years of delays.
Pollack said the state is continuing to negotiate with PLTP to see whether the original 36-year partnership, valued at $5.6 billion, can be revived. However, he said, if the two sides cannot reach a settlement, the state will solicit a new concessionaire.
“Our intent right now is to continue in a P3 configuration,” Pollack said at a virtual meeting of a Purple Line project citizens advisory group based in Silver Spring. “We believe that the P3 has benefits to the state, both in its financing option and its ability to extend into the operations and maintenance period. For now, our plan is to absolutely stay with a P3.”
The state’s other options would have been to manage the remaining construction by itself or hire a contractor. However, both options would have required the state to finance the remaining $1 billion of work with government debt. The state also would have had to operate and maintain the line itself or find a contractor.
Under another public-private partnership, the state would enter a long-term contract with companies that would manage the remaining construction, help finance it and then operate and maintain the line between Montgomery and Prince George’s counties.
The state would pay off the private debt, cover the line’s costs and pay a profit to the companies as part of regular payments over many years.
Pollack declined to say how long the state will negotiate with PLTP before calling off the talks and soliciting a new partnership. State officials also have not said how much having to secure another P3 would add in project delays or costs.
“Initial indications coming back from the industry is that there is interest to participate as a P3 or as a concessionaire going forward,” Pollack said. “At this point, it would just be a matter of engaging the industry and re-soliciting it.”
The bank representing the investors who bought $313 million of project bonds gave PLTP until Nov. 30 to try to reach an agreement before it would take any action on the debt payments. However, the bank could extend that deadline as it has once previously.
In the meantime, Maryland transit officials said the state will continue to oversee more than a dozen contracts to keep some work moving, including manufacturing of the light-rail vehicles, relocating utility lines and designing storm-water management systems. However, most major construction along the light-rail alignment stopped in September.
“The state fully intends to finish the Purple Line project,” Pollack said.