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Md. settles dispute with Purple Line contractors for $250M

An image of a Purple Line Train from a 2015 Maryland Transit Administration brochure. (Maryland Transit Administration)

An image of a Purple Line Train from a 2015 Maryland Transit Administration brochure. (Maryland Transit Administration)

The state of Maryland and its partners on the Purple Line announced Tuesday that they have reached a $250 million settlement in their legal dispute over cost overruns that have stalled the $2.9 billion project.

Maryland — along with Meridiam, Star America and Fluor — said the agreement resolves all financial claims and litigation surrounding cost overruns on the project.

As part of the agreement, Purple Line Transit Partners will proceed with just Meridiam and Star America as developers and equity partners. A formal settlement agreement will go before the Board of Public Works in December for review and approval.

The parties have agreed to put all claims and litigation on hold pending BPW review of the settlement agreement, according to a statement from the Maryland Department of Transportation. 

“This agreement is a major step toward completing the Purple Line, a transformative project for our state and the region,” said Gov. Larry Hogan. “I would like to thank (Transportation Secretary) Greg Slater and our partners at Meridiam and Star America for coming together to find a path forward that will lead to a new contractor. We continue to make progress on all of the highest priority transportation projects across Maryland.”

Delays caused by the dispute over who should bear cost overruns essentially has stalled the project. The prime contractors on the $2.9 billion public-private partnership announced their intentions to withdrawal from the effort because of hundreds of millions in cost overruns, leaving the state potentially to find another partner or finish the line itself.

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 over the length of the agreement.

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 ridership revenues.

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

Delays and cost overruns have mounted. The consortium claimed it suffered more than $519 million in increased costs due to 976 days of delays in the project.

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

If the settlement announced Tuesday is approved by the BPW, Meridiam and Star America would initiate a solicitation for a new design-build contractor in coordination with the Maryland Department of Transportation  and Maryland Transit Administration, the state said. In the interim period, MDOT and MTA would retain oversight of hundreds of contracts and purchase orders to continue delivery of the Purple Line.

Some Purple Line work is currently underway, including light-rail car manufacturing, bridge work, stormwater drainage, paving, utility and pump station construction.