The true costs of building a Purple Line in the Maryland suburbs would reach $2.65 billion — about $650 million more than the light-rail project’s proposed contract would cover, according to a legislative analysis.
Since announcing the contract March 2, the Maryland Department of Transportation has referred to the Purple Line’s design and construction cost as $1.99 billion. But an analysis by the General Assembly’s Department of Legislative Services found that figure does not include $447 million of costs outside the contract or another $198 million that the state has already spent on planning the light-rail line.
Costs outside the contract include buying right-of-way, doing utility work and off-site environmental mitigation, reviewing the final design and overseeing construction, the analysis found.
The agency scrutinized the proposed $5.6 billion contract — it would be one of the largest ever awarded in Maryland — as part of a 30-day review before the state’s Board of Public Works is scheduled to vote on it Wednesday. Lawmakers may comment on the proposed public-private partnership but cannot make any changes.
The state Senate Budget and Taxation Committee has scheduled a hearing on the contract for Friday in what will probably be the only public vetting before the vote.
The contract would span 36 years. A team of companies called Purple Line Transit Partners would help finance construction, design and build the line over six years, and then operate and maintain it over 30 years. The state would pay the team monthly to cover operating and maintenance costs, as well as the private debt service.
Even as MDOT officials have repeatedly referred to the Purple Line’s construction cost as $1.99 billion, they have not kept the other expenses a secret.
In a March 4 report to the General Assembly, MDOT said it would use state, federal and local funds to pay for “costs outside the P3 contract,” although it did not specify a dollar figure. Transportation officials also mentioned “approximately $400 million” in Purple Line “associated costs” in a “Frequently Asked Questions” document distributed to reporters and lawmakers this month.
Asked whether it was misleading for MDOT officials to quote the lower figure without including the other $650 million, MDOT spokeswoman Erin Henson said in an email, “The design/build construction cost in the Purple Line P3 contract is what it is — $1.99 billion.”
Jean Cavanaugh, a Silver Spring resident who has been scrutinizing the Purple Line’s financial details, said she is “flabbergasted” at how the costs have risen over the years. Cavanaugh said she opposes the project because she believes it would take money away from more pressing transportation needs, such as rehabilitating the aging Metrorail system.
“Even if it really did cost $2 billion, it would still be too expensive in my opinion,” Cavanaugh said. “Now that we know the capital costs are really $2.65 billion, we’re just watching the costs go up as the smoke screens get lifted. . . . Little by little, the true costs are being revealed.”
The 16-mile line would have 21 stations and connect Bethesda in Montgomery County with New Carrollton in Prince George’s County.
The Purple Line is attracting national attention because it would be one of the largest public-private partnerships in the country and only the second U.S. transit project to involve private financing.
Warren G. Deschenaux, executive director of the Department of Legislative Services, wrote that the state treasurer and comptroller are still determining whether payments on the private debt service would count toward the state’s debt affordability limits.
If that analysis shows no impact on the debt limits, Deschenaux wrote, “There is nothing to suggest the procurement should not proceed.”
The legislative analysis also noted that the state did not include two key costs — for electricity and fare collection enforcement — in the monthly payments that would average about $150 million annually.
Henson, of MDOT, said electricity to operate the Purple Line would cost about $2.6 million annually, in today’s dollars, in the line’s opening year. She said the risk of electricity costs escalating over the 30 years would be shared between the state and the private partner.
Costs for security and fare collection enforcement have not been estimated, Henson said. She said state transit police and local police departments would provide security.
Fare enforcement is critical for light-rail lines because, unlike Metro and other subway systems, there are no turnstiles or gates at stations. Passengers have monthly passes or buy a ticket at machines, and inspectors do random checks aboard trains. State officials have said Purple Line fares would start at $2.
How much fare revenue is collected on the Purple Line is important because the state plans to use that money to pay off the private construction debt. Any private financing costs that the Purple Line fares do not cover would be paid for with other state transit revenues, potentially taking money from those systems.
If the contract is approved Wednesday, construction would start in late 2016 and trains would carry passengers by March 2022.