WASHINGTON – The Maryland Board of Public Works on Wednesday unanimously approved a $5.6 billion, 36-year contract with a consortium of companies to design, build, operate and maintain a 16.2 mile light rail line that will link two counties in Maryland as well as connect to Amtrak, MARC and local bus services.
At the meeting, Maryland Gov. Larry Hogan said the P3 agreement meets the conditions he set forth last year: additional support from local governments, reserved federal funding and aggressive pricing from the private partners.
The price tag of the contract for the light rail line has dropped from an estimated $6.2 billion last June. The counties raised their contributions, more federal funding was secured, and the private partners dropped the availability payments the state must make to them once operation of the Purple Line begins, Hogan said.
The Purple Line "will act as an economic development catalyst" for key areas of the state, he said.
Besides Hogan, other members of the state Board of Public Works are Maryland Treasurer Nancy Kopp and Comptroller Peter Franchot.
The construction of the rail line, which will link New Carrollton in Prince George's County with Bethesda in Montgomery County, is expected to begin later this year and is to take about six years. The line is expected to be put into service no later than the spring of 2022. It will have 21 stations.
Ridership on the line is projected to average 58,000 trips per day in the first few years of operation, rising to 70,000 riders per day by 2040.
The contract, which will run from April 7, 2016 to March 11, 2052, is between the Maryland Department of Transportation and the Maryland Transit Authority on one side and the Purple Line Transit Partners on the other.
The private concessionaire is made up of Fluor Enterprises, Inc., Meridiam Infrastructure Purple Line, and Star America Fund GP.
About $1 billion of funding will come from the private partners, including a low cost federal loan under the Transportation Infrastructure Finance and Innovation Act, as well as about $330 of private-activity bonds, and private equity.
The net cost to the state is $3.3 billion, with the rest of the $5.6 billion to come from federal, county and state funds, as well as fare revenues.
The state will directly contribute $159.8 million. Montgomery and Prince George's Counties are expected to contribute about $333 million -- $160 million in cash and $173 million in non-cash contributions. In addition, about $933 billion will come from federal funds -- $897 million of Federal Transit Administration capital investment (New Starts) grants and $36 million of formula funds.
During the meeting, Kopp said the contract will comply with the state's capital debt affordability requirements because it will not involve state-supported debt.
Kopp explained that the federal, state and local funds for the program, as well as fare revenues, will be put into a trust account held by a trustee that will be completely separate from any state accounts. The funds will go directly to the private concessionaire for the project.
"It will require monitoring" to make sure the funds aren't mixed with any state tax-supported funds, Kopp said that the meeting.
At a briefing of state lawmakers on Monday, Maryland DOT chief financial officer David Fleming said the Purple Line will draw from MARC commuter line revenues for about 10-15 years until it begins operating and generating its own revenues.
The private partners are to receive three kinds of payments: progress payments during the design phase; two sets of milestone payments, one when service starts, and the second set when the project is completed; and well as availability payments for the rest of the contract. The availability payments are expected to cost $150 million per year and they will cover the costs to operate the rail line, as well as the cost of repairing and replacing escalators, rail cares, rail and station fixtures.
Ownership of the Purple Line will remain with the Maryland DOT and MTA.
The P3 contract allows the state with withhold availability payments if the P3 private concessionaire does not deliver as expected or meet quality standards.
