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Maryland chooses private team to build, operate light-rail Purple Line Maryland chooses private team to build, operate light-rail Purple Line
(about 5 hours later)
Maryland Gov. Larry Hogan (R) announced Wednesday that the state has chosen a team of private companies to build, operate and maintain a light-rail Purple Line in the Washington suburbs for $3.3 billion over 36 years.Maryland Gov. Larry Hogan (R) announced Wednesday that the state has chosen a team of private companies to build, operate and maintain a light-rail Purple Line in the Washington suburbs for $3.3 billion over 36 years.
Under the chosen agreement — proposed by a team called Purple Line Transit Partners and led by construction giant Fluor Enterprises Inc. — construction would begin in late 2016, and the line would open to service in 2022. Under the winning bid — proposed by the team Purple Line Transit Partners and led by construction giant Fluor Enterprises Inc. — six years of construction would begin late this year, and the 16-mile line would open to service by spring 2022.
The state would pay $159.8 million in upfront construction costs — $8 million less than the $168 million limit that the governor had previously put on the state’s upfront contribution, Hogan said in a written release. If approved by the state’s Board of Public Works on April 6, the contract would allow the Maryland Transit Administration to secure about $900 million in recommended federal construction aid. That would put the final funding in place to build the region’s first suburb-to-suburb rail link. The Purple Line also would be the first rail line to connect spokes of the Metrorail system, which was designed to carry federal workers between suburbs and the city.
The state’s overall $3.3 billion cost of having the private companies build the line over about six years and then operate and maintain it for another 30 years would be $550 million below the state’s estimates, Hogan said. It would be only the second U.S. transit project to involve public financing; the other is in Denver.
The annual costs that the state would pay to operate and maintain the line, as well as pay off the private team’s financing costs, would be $149 million, below the state’s previous estimate of $167 million annually.
Hogan said the private companies would deliver “a cost-effective Purple Line” for Montgomery and Prince George’s counties.
Maryland Transportation Secretary Pete K. Rahn lauded the private team’s “construction know-how” and “superior transit expertise.”
[Read The Post’s latest coverage of the Purple Line plan][Read The Post’s latest coverage of the Purple Line plan]
The Maryland Transit Administration will send the negotiated agreement to the General Assembly’s budget committees. Under the state law for public-private partnerships, lawmakers may review the agreement, but they have no authority to make changes. The Maryland Board of Public Works — comprised of the governor, comptroller and state treasurer — must approve it. That vote is scheduled for April. The Purple Line would run two-car trains mostly along local streets between Bethesda in Montgomery County and New Carrollton in Prince George’s County, inside the Capital Beltway. The 21 stations would include Silver Spring, Langley Park, the University of Maryland’s flagship College Park campus and Riverdale..
The 16-mile Purple Line would run two-car trains mostly along local streets between Bethesda in Montgomery County and New Carrollton in Prince George’s County, inside the Capital Beltway. It would provide the first direct rail connection between Washington-area suburbs. It also would be the first rail link between spokes of the region’s subway system, which was designed to carry federal workers between suburbs and the city. Maryland Transportation Secretary Pete K. Rahn called the proposed contract “very aggressive” and said the state’s total cost of $3.3 billion was $550 million below previous estimates. The 36-year public-private partnership would amount to a $5.6 billion contract, Rahn said. However, the state would end up paying $3.3 billion because the rest would be covered by federal funding, county contributions, and the Purple Line’s fare revenue.
The Purple Line would have 21 stations, including in Bethesda, North Chevy Chase, Silver Spring, Langley Park, Riverdale and New Carrollton. Trains would run east-west to connect Metrorail’s Red, Green and Orange lines with neighorhoods, job centers, the University of Maryland’s flagship College Park campus, and Amtrak and MARC commuter rail stations. It would be owned and operated by the MTA, not Metrorail. “We’re very pleased with this contract,” Rahn said during a conference call with reporters. “The companies involved are all experienced — they’re generally the largest within their fields. We’re confident we have [a team] committed to delivering this project.”
The announcement of a winning bid for a public-private partnership means the Maryland Transit Administration can begin securing $900 million in recommended federal construction grants — the last major funding piece for a transit proposal that has been debated for more than 15 years. If approved by the state’s Board of Public Works, the Purple Line contract would be one of the largest ever awarded in Maryland. A spokeswoman for Purple Line Transit Partners referred questions to Maryland transportation officials.
The winning team includes a Spanish rail car manufacturer that also made some of Metro’s most problem-plagued rail cars. The company, CAF, provided Metro’s 5000-series rail cars in the early 2000s. The cars break down so frequently that Metro has deemed them among the least reliable in its fleet and plans to replace them 20 years early. The winning bid team includes a Spanish rail car manufacturer that made the rail cars that a Metro spokesman called among the fleet’s “least reliable.” The company, CAF, provided Metro’s 5000-series rail cars in the early 2000s. The cars break down so frequently that Metro plans to replace them 20 years early.
CAF’s rail cars also have come under scrutiny in Houston for being delivered late and 8,000 pounds overweight and in Kansas City, Mo. and Cincinnati for late deliveries. CAF’s rail cars also have come under scrutiny in Houston for being delivered late and 8,000 pounds overweight, and in Kansas City, Mo. and Cincinnati for late deliveries.
Purple Line Transit Partners is led by three companies: Fluor, Meridiam Infrastructure Purple Line LLC, and Star America Purple Line LLC. All three have pledged to invest money in the project and manage it long-term. Asked how confident he was in CAF’s ability to deliver high-quality Purple Line cars on time, Rahn said the contract includes financial penalties for the private consortium if the rail cars aren’t ready on schedule or don’t provide reliable service.
The three companies “are committed to being long-term investors in this project, ensuring that a long-term view is built into the project from the beginning,” the team’s website says. “The responsibility for the performance of the Purple Line is on Purple Line Transit Partners,” Rahn said. “They have substantial incentives to deliver on what they committed to by contract.”
Experts say such arrangements ensure that the private sector shares in the financial risks, giving the companies an incentive to build the rail line within budget and open it to revenue service on time. Public-private partnerships, if structured correctly, also encourage the private team to design and build a quality project that will be cost-efficient to operate and maintain long-term, experts say. State officials say a Purple Line would provide faster and more reliable transit service than buses and would attract redevelopment around stations in aging, inner-Beltway suburbs. The line would be owned and operated by the MTA. Critics say the project is too expensive, would destroy a popular wooded recreational trail between Bethesda and Silver Spring, and would disrupt neighborhoods and businesses along the route.
Fluor would be the most extensively involved, from investing money to overseeing design, construction, operations and maintenance. Fluor says it is the largest publicly traded engineering and construction company in the United States and helped develop transportation projects with public-private partnerships in Virginia, South Carolina, Colorado and Texas. Rahn repeatedly declined to say how much the line would cost to build compared to the previous $2.15 billion the state estimated. He said he focused on the state’s total net costs over 36 years — six years of construction and 30 years of operations — of $3.3 billion. The proposal chosen among four bids had the lowest overall cost and “the best technical scores by a substantial margin,” Rahn said.
The state would pay $159.8 million in upfront construction costs. The rest of the construction costs would be covered by about $900 million in federal aid and a combined $160 million pledged by Montgomery and Prince George’s counties. The counties also have pledged in-kind contributions, such as land.
After the line opens, the state would pay $149.4 million annually to cover the line’s operating and maintenance costs and pay off the private team’s construction debt. The state would pay the same amount regardless of how many people ride the line. Whatever annual costs aren’t covered by fare revenue would be paid out of the state’s transportation trust fund. The amount of those annual payments could be reduced if certain standards, such as clean stations and reliable service, aren’t met, state officials have said. The state would set fares.
Rahn said the state’s upfront construction costs would be $8 million lower than anticipated, and the annual payments would be $18 million less than predicted.
He said another $30 million in savings would come from design changes made to the Purple Line station at the Silver Spring Transit Center, though he didn’t cite specifics.
Purple Line Transit Partners is led by three companies: Fluor, Meridiam, and Star America. All three have pledged to invest money in the project and manage it long-term. Rahn said the private team would finance about $1 billion of the line’s construction costs.
Experts say such arrangements ensure that the private sector shares in the financial risks because the companies have an incentive to build the rail line within budget and open it to revenue service on time. Public-private partnerships, if structured correctly, also encourage the private team to design and build a quality project that will be cost-efficient to operate and maintain long-term, experts say.
Fluor would be the most extensively involved, from investing money to overseeing design, construction, operations and maintenance. Fluor says it is the largest publicly traded engineering and construction company in the United States.
Fluor designed and built 14 miles of Express toll lanes on Virginia’s portion of the Capital Beltway and 29 miles of Express toll lanes on I-95 between Stafford County and the Beltway. Both are public-private partnerships in which Fluor and its private partner, Transurban, covered most of the construction costs in exchange for lengthy contracts —78 years on the Beltway lanes and 73 years on I-95. Transurban operates the lanes and keeps the toll revenue. Fluor exited both projects after completing construction.Fluor designed and built 14 miles of Express toll lanes on Virginia’s portion of the Capital Beltway and 29 miles of Express toll lanes on I-95 between Stafford County and the Beltway. Both are public-private partnerships in which Fluor and its private partner, Transurban, covered most of the construction costs in exchange for lengthy contracts —78 years on the Beltway lanes and 73 years on I-95. Transurban operates the lanes and keeps the toll revenue. Fluor exited both projects after completing construction.
“We found them to work very well on both projects — in the quality of their work, and they were on time and on budget, which are two key factors,” said Dusty Holcombe, deputy director of Virginia’s public private partnership office.“We found them to work very well on both projects — in the quality of their work, and they were on time and on budget, which are two key factors,” said Dusty Holcombe, deputy director of Virginia’s public private partnership office.
Fluor, headquartered in Irving, Tex., also is managing partner on a 34-year public-private partnership being used to build and operate a 36-mile commuter rail system in Denver. The first segment is scheduled to open in April. The Denver Eagle project, budgeted to cost $2.2 billion, was the first public-private partnership on a U.S. rail project and the only U.S. transit project that, like the Purple Line would, involve private financing. Fluor, headquartered in Irving, Tex., also is managing partner on a 34-year public-private partnership being used to build and operate a 36-mile commuter rail system in Denver. The first segment is scheduled to open in April. The Denver Eagle project, budgeted to cost $2.2 billion, was the first public-private partnership on a U.S. rail project.
Dave Genova, interim general manager for Denver’s Regional Transportation District, described Fluor as a “good collaborative partner.”Dave Genova, interim general manager for Denver’s Regional Transportation District, described Fluor as a “good collaborative partner.”
“They have people who can lead a project of this scope and magnitude,” Genova said, “and they have the expertise for the design and engineering and overseeing construction.”“They have people who can lead a project of this scope and magnitude,” Genova said, “and they have the expertise for the design and engineering and overseeing construction.”
Meridiam, a French investment firm, makes long-term investments for pension funds and life insurance companies in public infrastructure projects, according to its website. Meridiam has 25-year funds invested in $3.5 billion worth of international public projects, including rail projects, the site said. Meridiam, a French investment firm, would provide 70 percent of the private team’s equity, according to a Meridiam news release. Meridiam makes long-term investments for pension funds and life insurance companies in public infrastructure projects, according to its website.
Star America, based in Roslyn Heights, N.Y., also invests in public infrastructure projects and has “advised” on more than 25 public-private partnerships, with most of those in the transportation sector, according to the company’s website. Star America, based in Roslyn Heights, N.Y., would provide 15 percent of the private equity, Meridiam said. Star America also invests in public infrastructure projects, according to its website.
Supporters say a Purple Line would provide faster and more reliable transit service than buses and would rejuvenate aging, inner-Beltway suburbs, particularly in Prince George’s, by attracting new development around stations. Critics say the project is too expensive, would destroy a popular wooded recreational trail between Bethesda and Silver Spring, and would disrupt neighborhoods and businesses along the route. Fluor would provide the other 15 percent of the private equity, Meridiam said.
State officials estimate that the line would draw an average of 58,800 trips daily — not including University of Maryland students and special events — in its opening year.
The project still faces a federal lawsuit filed by two Chevy Chase residents and a trail advocacy group who allege that part of the rail alignment along a wooded trail between Bethesda and Silver Spring would violate federal environmental laws.