Cost-Effective Purple Line Succeeds in Securing Private-Sector Financing
Maryland Department of Transportation
Final Financial Documents Signed Today on $5.6 Billion, 36-Year Contract
HANOVER, MD (June 17, 2016) – Maryland Transportation Secretary Pete K. Rahn announced that the Maryland Department of Transportation (MDOT), MDOT’s Maryland Transit Administration (MTA), and the Purple Line Transit Partners, LLC, today signed the final financial documents on the $5.6 billion Purple Line Public-Private Partnership (P3) contract. By completing the financial close milestone, all public and private sector partners have cleared the way for the Purple Line Transit Partners to proceed to design, build, operate, finance and maintain the 16-mile light rail system from Bethesda to New Carrollton. The Purple Line Transit Partners secured all its financing for the project this week, including: an $875 million Transportation Infrastructure Finance Innovation Act loan from the U.S. Department of Transportation; $313 million in Private Activity Bonds issued by the Maryland Economic Development Corporation; and $138 million from the partners’ own private equity.
“Bond investors’ strong interest and our partners’ private equity investments are a testament to the value and future success of the Purple Line,” said Transportation Secretary Rahn. “Today’s financial close keeps us on schedule with a fall construction start on the Purple Line that will connect Metro rail and bus, MARC, Amtrak and local buses into a true transportation network for Maryland residents.”
This financing secures the savings MDOT anticipated by delivering a cost-effective project that reduced the original cost estimate over the life of the project from $6.2 billion to $5.6 billion. With future fare revenues and local and federal contributions, the project will cost the state less than $3.3 billion over the 36-year life of the agreement while delivering the first P3 light rail project in the nation.
“The parties that formed Purple Line Transit Partners have a strong record of constructing large projects and vast experience operating and maintaining light rail,” said MTA Administrator Paul Comfort. “This contract will deliver this vital rail project that will strengthen Maryland’s transportation network and will move people more efficiently.”
Construction is on schedule to start late this year with service starting in spring 2022. The Purple Line will run east-west inside the Capital Beltway, with 21 stations connecting to: Metrorail’s Orange, Green, and Red lines; the MARC Brunswick, Camden and Penn lines; and Amtrak at New Carrollton. Daily ridership is estimated to reach more than 74,000 by 2040. The total construction cost in the P3 contract to design and build the Purple Line is $2 billion.
"Purple Line Transit Partners is pleased to reach financial close on this important project,” said Herb Morgan, CEO, Purple Line Transit Partners. “This milestone, plus the recent Board of Public Works action approving the P3 contract, solidifies Maryland’s leadership in protecting and enhancing the state's fiscal integrity by advancing a public-private partnership project that will transfer construction, operation, maintenance and performance risks to the private partners all while ensuring riders and stakeholders receive improved mobility, environmental compliance and safety. Our team is looking forward to working with Maryland communities to start construction later this year and deliver this innovative project at a fixed-price and on schedule."
Purple Line Transit Partners is led by three experienced and successful P3 developers and equity investors. Meridiam Infrastructure Purple Line, LLC (Meridiam), Fluor Enterprises Inc. (Fluor) and Star America Purple Line, LLC (Star America), all Equity Members of Purple Line Transit Partners have provided the required equity investment for the Purple Line Project. The Purple Line Transit Partners headquarters are located in Riverdale, Maryland, in Prince George’s County.
The federal government has reserved $900 million for the Purple Line in the New Starts Program. MTA is continuing to work with the U.S. Department of Transportation’s Federal Transit Administration on a Full Funding Grant Agreement with the hope of finalizing the agreement this summer.
The Purple Line Transit Partners will manage a team of primarily local workers and contractors to ensure successful, creative and efficient delivery of the project. MTA will own the Purple Line and continue to set fares and collect fare revenue. More information on the project can be found at purplelinemd.com.
MDOT Public Affairs
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