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| Maryland will use MARC fare revenue to pay Purple Line debt, officials say | Maryland will use MARC fare revenue to pay Purple Line debt, officials say |
| (about 1 hour later) | |
| Maryland transportation officials plan to use ticket revenue from the state’s MARC commuter rail system to help pay off debt required to build a light-rail Purple Line in the Washington suburbs, state officials told a Senate committee Monday. | Maryland transportation officials plan to use ticket revenue from the state’s MARC commuter rail system to help pay off debt required to build a light-rail Purple Line in the Washington suburbs, state officials told a Senate committee Monday. |
| Fare revenue from the Purple Line also would be used to cover those payments, the officials said, but the light-rail line isn’t expected to be able to cover all of those costs until trains have been running about 15 years. Until then, commuter rail revenue would make up the difference. | Fare revenue from the Purple Line also would be used to cover those payments, the officials said, but the light-rail line isn’t expected to be able to cover all of those costs until trains have been running about 15 years. Until then, commuter rail revenue would make up the difference. |
| While state officials have said for years that they planned to cover the private debt service with state transit revenue, this is the first time they have specified the MARC system, which carries passengers between the District, Baltimore, Frederick, West Virginia, and northeastern Maryland. | |
| David Fleming, chief financial officer for the Maryland Department of Transportation, said the bond-rating agencies wanted to see a reliable revenue stream that was related to the Purple Line. The Purple Line, Fleming said, would have stations connecting to all three MARC lines, meaning each line would bring more passengers to the other. | David Fleming, chief financial officer for the Maryland Department of Transportation, said the bond-rating agencies wanted to see a reliable revenue stream that was related to the Purple Line. The Purple Line, Fleming said, would have stations connecting to all three MARC lines, meaning each line would bring more passengers to the other. |
| “Is there any intent to pay back the MARC revenue?” asked Sen. Bill Ferguson (D-Baltimore). | “Is there any intent to pay back the MARC revenue?” asked Sen. Bill Ferguson (D-Baltimore). |
| Fleming said that MARC’s operations, maintenance and other costs could be covered with money from the state’s Transportation Trust Fund. | |
| “We’d continue to fund MARC’s operations and MARC’s capital costs as we need to,” Fleming said after the hearing. | “We’d continue to fund MARC’s operations and MARC’s capital costs as we need to,” Fleming said after the hearing. |
| [Determining if the Purple Line contract is a good deal isn’t easy] | [Determining if the Purple Line contract is a good deal isn’t easy] |
| The questions came as the Senate Budget and Taxation Committee reviewed a 36-year contract that MDOT has proposed as part of a public-private partnership valued at $5.6 billion, making it one of the most expensive government contracts ever in Maryland. The committee’s review was the only public vetting the contract is expected to receive before the state’s Board of Public Works — which comprises the governor, state treasurer and comptroller — is scheduled to vote on it Wednesday. | |
| Rafi Guroian, a 10-year member of the MARC Riders Advisory Council, said he questioned how MDOT could rely on MARC fare revenue for the Purple Line when MARC fares cover only about 40 percent of the commuter rail system’s costs. He said he’s concerned that needed expansion of the “bursting at the seams” MARC system, such as track improvements to add trains to the Brunswick and Camden lines, could suffer. | |
| “If they use a portion of the MARC revenues to fund the Purple Line, what money would make up the difference for MARC?” said Guroian, who said he was speaking as a MARC passenger and not for the council. “Presumably money would come from the (tax-supported) Transportation Trust Fund, so in a sense that fund is funding the Purple Line. It strikes me as a shell game to move money to the Purple Line.” | “If they use a portion of the MARC revenues to fund the Purple Line, what money would make up the difference for MARC?” said Guroian, who said he was speaking as a MARC passenger and not for the council. “Presumably money would come from the (tax-supported) Transportation Trust Fund, so in a sense that fund is funding the Purple Line. It strikes me as a shell game to move money to the Purple Line.” |
| Which source of money MDOT uses to pay off the Purple Line construction debt is key because MDOT has said that debt incurred as part of the public-private partnership would not count toward the state’s capital debt affordability limits, which could affect its overall bond ratings. | Which source of money MDOT uses to pay off the Purple Line construction debt is key because MDOT has said that debt incurred as part of the public-private partnership would not count toward the state’s capital debt affordability limits, which could affect its overall bond ratings. |
| The debt at stake would be taken on by a team of private companies calling themselves Purple Line Transit Partners. The team has said it would finance about $1 billion of the line’s construction, and the state plans to pay for the remaining $990 million with federal grants and money from Montgomery and Prince George’s counties. The state’s upfront contribution — about $159 million — would be used to pay for right of way, environmental mitigation and other Purple Line costs not related to debt, Fleming said. | The debt at stake would be taken on by a team of private companies calling themselves Purple Line Transit Partners. The team has said it would finance about $1 billion of the line’s construction, and the state plans to pay for the remaining $990 million with federal grants and money from Montgomery and Prince George’s counties. The state’s upfront contribution — about $159 million — would be used to pay for right of way, environmental mitigation and other Purple Line costs not related to debt, Fleming said. |
| State Treasurer Nancy K. Kopp told the committee that MDOT’s plans to pay off the private team’s financing costs by using only federal and local money or state transit revenue, such as MARC fares, would indeed prevent the state’s payments for the private debt from counting against the state’s capital debt affordability limits. | State Treasurer Nancy K. Kopp told the committee that MDOT’s plans to pay off the private team’s financing costs by using only federal and local money or state transit revenue, such as MARC fares, would indeed prevent the state’s payments for the private debt from counting against the state’s capital debt affordability limits. |
| Kopp said MDOT assured her office that the federal and local money, as well as the Purple Line and MARC revenue, would be paid directly into a special trust account that would then pay off the private debt service. That would allow MDOT to prove that it was covering that debt without using any tax-supported revenue, Kopp said. | Kopp said MDOT assured her office that the federal and local money, as well as the Purple Line and MARC revenue, would be paid directly into a special trust account that would then pay off the private debt service. That would allow MDOT to prove that it was covering that debt without using any tax-supported revenue, Kopp said. |
| The private financing costs are expected to comprise about $55 million of the average $150 million annual payment that the state would pay to the private team to operate and maintain the line. The rest of the state’s annual payment could be covered out of the Transportation Trust Fund, Kopp said after the hearing. | The private financing costs are expected to comprise about $55 million of the average $150 million annual payment that the state would pay to the private team to operate and maintain the line. The rest of the state’s annual payment could be covered out of the Transportation Trust Fund, Kopp said after the hearing. |
| Koop cautioned the committee that the bond-rating agencies still could consider the private debt payments as part of the state’s “long-term obligations.” | Koop cautioned the committee that the bond-rating agencies still could consider the private debt payments as part of the state’s “long-term obligations.” |
| The Purple Line is attracting national attention because it would become only the second U.S. transit project to include private financing. The 16-mile line would run single light-rail vehicles mostly along local streets between Bethesda in Montgomery County and New Carrollton in Prince George’s County. State transit planners say the line would offer faster and more reliable public transportation than buses and would attract development around its 21 stations, particularly in Prince George’s. | The Purple Line is attracting national attention because it would become only the second U.S. transit project to include private financing. The 16-mile line would run single light-rail vehicles mostly along local streets between Bethesda in Montgomery County and New Carrollton in Prince George’s County. State transit planners say the line would offer faster and more reliable public transportation than buses and would attract development around its 21 stations, particularly in Prince George’s. |
| Critics have questioned the project’s cost, its impact on communities along the route, and its environmental impacts on a popular wooded recreational trail between Bethesda and Silver Spring. | Critics have questioned the project’s cost, its impact on communities along the route, and its environmental impacts on a popular wooded recreational trail between Bethesda and Silver Spring. |
| Sen. Richard S. Madaleno Jr. (D-Montgomery), the committee’s vice chairman, asked why MDOT assumed all of the risks in the contract for the amount of fare revenue the Purple Line would collect. The state must make its monthly payment to the private companies at the locked-in price that would average $150 million annually regardless of how many people ride the Purple Line. | Sen. Richard S. Madaleno Jr. (D-Montgomery), the committee’s vice chairman, asked why MDOT assumed all of the risks in the contract for the amount of fare revenue the Purple Line would collect. The state must make its monthly payment to the private companies at the locked-in price that would average $150 million annually regardless of how many people ride the Purple Line. |
| “It doesn’t matter if anyone rides,” Madaleno said. “It doesn’t matter if 100,000 people ride it or no one rides it, right?” | “It doesn’t matter if anyone rides,” Madaleno said. “It doesn’t matter if 100,000 people ride it or no one rides it, right?” |
| Jeff Ensor, of the Maryland Transit Administration, said the state took on that ridership risk because it allowed the state to get a contract of “better value” and to maintain control over setting the Purple Line fares. State officials have said those fares would start at $2. | Jeff Ensor, of the Maryland Transit Administration, said the state took on that ridership risk because it allowed the state to get a contract of “better value” and to maintain control over setting the Purple Line fares. State officials have said those fares would start at $2. |
| MDOT officials also have told Montgomery County leaders that the state would pick up about $4 million of the additional $13.8 million in costs that the contract includes for county projects related to the Purple Line. Those unexpected expenses would now cost Montgomery closer to $10 million, a county staffer said. So far, the county has budgeted $205 million for Purple Line related work, such as building an elevator connection between the street-level light-rail line and the underground Metro Red Line station in Bethesda. | MDOT officials also have told Montgomery County leaders that the state would pick up about $4 million of the additional $13.8 million in costs that the contract includes for county projects related to the Purple Line. Those unexpected expenses would now cost Montgomery closer to $10 million, a county staffer said. So far, the county has budgeted $205 million for Purple Line related work, such as building an elevator connection between the street-level light-rail line and the underground Metro Red Line station in Bethesda. |