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Md. won’t rule out taking over $2.9B Purple Line project from contractor

‘The only option we are not considering is not completing the project,’ says Maryland Transportation Secretary Greg Slater. (The Daily Record/File Photo)

‘The only option we are not considering is not completing the project,’ says Maryland Transportation Secretary Greg Slater. (The Daily Record/File Photo)

State transportation officials say they are considering options that include taking over the Purple Line project should the current public-private partnership to build the $2.9 billion rail project fall apart.

The Maryland Department of Transportation and Purple Line Transit Partners are scheduled to take their dispute over more than a half billion dollars in cost overruns to Baltimore City Circuit Court next week. State Transportation Secretary Greg Slater told a joint hearing of the House Appropriations and Senate Budget and Taxation Committees Thursday that his agency hopes for a settlement with the consortium building the project but is considering what happens if the deal falls apart.

“The only option we are not considering is not completing the project,” said Slater. “We have to get this project done and we are very focused on that and what that includes.”

Slater told lawmakers he is concerned “with the serious harm” that could come if Purple Line Transit Partners is allowed to abandon the project before its completion.

“I think there is serious harm to the project,” said Slater. “In many ways, harm that is hard to reverse and that is why we are trying to push back and keep the project going and working through the dispute resolution process and reach a fair settlement.”

Slater said he is not concerned that the light-rail line will sit in an incomplete stage.

“What I’m most concerned about is finishing the project and getting out of there in a really, really timely manner, because the people who live along these corridors don’t deserve to look at a construction site,” said Slater.

The state transportation department could take over the project if Purple Line Transit Partners is allowed to withdraw. Still, the agency would likely have to reach an agreement with lenders to do so and would also need to secure federal transportation loans.

Under the terms of the partnership, the Purple Line Transit Partners consortium was to build and maintain the 16-mile light-rail line that would connect New Carrollton in Prince George’s County to Bethesda in Montgomery County. The state would make annual payments to the consortium, which is comprised of Meridiam, Fluor and Star America, over the length of the agreement.

A representative for Purple Line Transit Partners was not present at the online meeting.

The $2.9 billion project is the largest public-private partnership in the nation. The 36-year contract requires that the consortium build the project over a six-year period and then operate and maintain it for 30 years. Maryland would pay the vendor from revenues from the transportation project.

The vendor would then turn over the light-rail line to the state after 30 years.

Delays and cost overruns have mounted. In May Purple Line Transit Partners notified the state that it would withdraw from the partnership in 60 days.

The consortium claims it has suffered more than $519 million in increased costs due to 976 days of delays in the project.

Included in those delays are litigation by opponents; allegations that rights of way were not secured in a timely manner; changes related to nearby CSX lines; andchanges in state environmental permitting.

The state filed for and received a temporary court order preventing the consortium from abandoning the project. That order is set to expire on Sept. 14. A hearing is set in Baltimore City Circuit Court on Sept. 8 and 10.

“My focus is really just trying to get the project done,” said Slater. “The legal process is kind of working their way.”

Should the deal fall apart, the state could be on the hook for hundreds of millions in bonds that have already been issued in addition to termination costs. Slater said the exact amount is not known and would likely be subject to a lawsuit.

The state would also have to find a way to pay for the project moving forward. Slater said his agency could issue bonds backed by state transportation revenues.

“It’s not going to back a whole lot of bonds,” said Del. Trent Kittleman, R-Howard County.

The state would have about $150 million in transit revenue, according to department officials.

“It’s not a huge amount of money but it does help us get to the Purple Line without impacting our debt limit,” said Slater, who added that payments that would have otherwise gone to Purple Line Transit Partners over the 30-year operating contract would be shifted to payback bonds.

 


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