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Md. board approves $3.4 billion contract to complete Purple Line

The light-rail line is scheduled to open in fall 2026, more than four years behind schedule

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correction

A previous version of this article incorrectly said the Maryland Board of Public Works approved an additional $3.7 billion for a longer-term financial agreement. The additional value approved by the board was $3.44 billion. The total partnership agreement will grow by about $3.7 billion because it also includes a $250 million payment that the board previously approved. This article has been corrected.

A Maryland board approved a new contractor Wednesday to complete the long-delayed Purple Line for an additional $1.46 billion — an almost 75 percent cost increase to revive the stalled light-rail project.

Under the new contract, full construction will resume in the spring. That will require revving up work along roads that were left hastily patched and rail bridges that ended in midair after the original construction team quit in fall 2020.

State officials say the 16-mile line will begin carrying passengers between Montgomery and Prince George’s counties in fall 2026, more than four years behind schedule. The Purple Line was previously estimated to cost $1.97 billion to build and was initially scheduled to begin carrying passengers in March.

The new $3.43 billion construction contract includes about $1.1 billion of work that the state already has paid for. The Purple Line’s public-private partnership, as well as its near-implosion after the original construction contractor walked off amid cost disputes with the state, has drawn national attention as one of the first U.S. transit projects to rely on private financing.

Comptroller Peter Franchot (D), one of three members of the Board of Public Works, called the size of the new contract “mind-boggling” but worth it to complete an “essential and very important” transit line.

“This project is significant,” Franchot, a candidate for governor, said before the unanimous approval. “Obviously we need to get it done, and we owe it to Marylanders to get it done as quickly as possible.”

Selected Purple Line contract would increase construction costs to $3.4 billion

The board — composed of Gov. Larry Hogan (R), Franchot and Treasurer Dereck E. Davis (D) — also approved an additional $3.444 billion for a longer-term financial agreement with the private consortium managing the project over four decades. That amount includes the higher construction and financing costs.

However, the broader agreement will grow from its original $5.6 billion to $9.3 billion — a total of $3.7 billion — because it also includes a $250 million legal settlement the state previously paid to the consortium after its original contractor quit.

The financial agreement is between the state and the private consortium, known as Purple Line Transit Partners and led by infrastructure investor Meridiam. The new construction contract is between the consortium and a team led by the U.S. subsidiaries of Spanish construction firms Dragados and OHL.

New Purple Line contractor selected to resume full construction this spring

State officials told the board that the new construction team, a joint venture known as Maryland Transit Solutions, had the stronger technical proposal and lower price of the two bidders. The Dragados-led team will replace the original team led by Texas-based Fluor.

Maryland officials said the concessionaire will cover the additional construction costs by contributing more of its own equity and taking on more debt. The state will then repay those costs over 30 years after the line opens — part of regular payments to the concessionaire as it operates and maintains the line long-term.

Because of the higher construction and financing costs, the state’s payments are expected to grow from an average of $154 million per year to an average of $240 million annually. Maryland transit officials have committed federal funding and fare revenue from all state transit systems, including MARC commuter rail, to pay off the private debt and equity. Funding for those systems will then be backfilled with other state fees and tax revenue, officials have said.

Purple line delays, cost overruns reveal long-brewing problems

The board also approved $15 million for a state consultant to oversee the construction’s technical details and another $15.4 million for five contracts to complete work the state began managing after the previous contractor left. That includes moving utility lines and building storm water drainage systems. That work will be done outside the new construction contract and was not included in the $3.4 billion, state officials said.

The higher construction costs will not affect the price of Purple Line fares, which haven’t been set but will be similar to other Washington-area transit systems, such as Metro, said Maryland Transit Administrator Holly Arnold.

State officials attributed much of the cost increase to changes in the project’s “risk profile” and the pandemic’s effects on insurance rates, labor shortages and the supply chain. The state will assume more financial risk under the new contract, including for “any unknown defects” in work done by the original construction team and any additional pandemic-related problems.

Meet the Maryland transit official responsible for getting the Purple Line built

The Purple Line will run single-vehicle “trains” along local roads, mostly in their own lanes, and a recreational trail between Bethesda and Silver Spring. The line is designed to provide faster, more reliable suburb-to-suburb mass transit service than buses, without passengers having to ride Metro into and out of downtown Washington. The Purple Line will connect with MARC commuter rail, Amtrak and four Metro stations — Bethesda, Silver Spring, College Park-University of Maryland and New Carrollton — but will be operated separately by the concessionaire.

Officials also are eyeing the line’s 21 stations to attract and focus economic development in auto-dependent inner suburbs while providing better access to jobs from communities between Metro stations.

The Purple Line’s construction started in mid-2017, about a year behind schedule, after a surprise ruling in a federal lawsuit filed by project opponents on environmental grounds. The original contractor said more delays followed because of changes in design requirements and the state falling behind in providing right of way and necessary environmental permits. The state rejected those claims, saying the problems were the contractor’s responsibility.

Matthew Pollack, the Maryland Transit Administration’s executive director on the Purple Line project, told the board Wednesday the court case had a “snowballing” effect on subsequent delays.

Along the Purple Line, worries that new transit will bring higher rents

Hogan blamed what he called a “frivolous lawsuit” and complimented state transit leaders for overcoming “incredible obstacles” to keep construction moving.

“It was primarily people opposed to this project that have us in this situation we’re in today,” Hogan said.

The new public-private partnership agreement covers the line’s operations through April 2056.

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