What does Maryland's Purple Line project team breakup mean for P3s?

Then Denver International Airport (DIA) officials terminated the $1.8 billion public-private partnership (P3) terminal expansion deal with Great Hall Partners last year, industry watchers wondered if they would be able to get the project back on track and finish it close to its projected completion date. At the very least, the turn certainly knocked some of the polish off the notion that P3s were the answer for every public project.

Since then, DIA has revamped its delivery strategy and decided a P3 was not the right approach. Now an even higher-profile, costlier partnership could be on its way to taking a similar hit — the $2 billion, 16-mile Purple Line light-rail project in Washington D.C.'s Maryland suburbs. The Purple Line has attracted national attention because it is being financed and built via a $5.6 billion public-private partnership, one of the most far-reaching of any U.S. transit project, according to The Washington Post.

But in this new scenario, the public agency — in this case, the Maryland DOT and the Maryland Transit Administration — is not scuttling the P3. In an announcement earlier this month, the design-build arm of the P3, Purple Line Transit Constructors (PLTC) said it would exit the project.

PLTC is a design-build joint venture between Fluor, The Lane Construction Corp. and Traylor Bros. Inc. Fluor is also a member of the development and equity investment team called Purple Line Transit Partners, which includes Meridiam and Star America.

In the press release announcing the decision, PLTC sad that it has not been able to successfully negotiate time extensions for schedule delays and for the extra costs it has incurred during the last three years on the project.

“PLTC still firmly believes in the goals and mission of the Purple Line Project and the important benefits it will deliver to Maryland,” said Scott Risley, PLTC’s project director. “Unfortunately, due to circumstances outside of PLTC’s control, there were multiple delays on the project and PLTC was unable to obtain the time and cost relief to which it is entitled from MDOT/MTA. Regretfully, PLTC simply cannot complete the project under these circumstances.”

PLTC said it would work with the transit partners and the state to ensure a smooth transition.

Delays and lawsuits - A significant problem that the Purple Line faced early on is activist pushback against the decision to build the light-rail line in a corridor that had become a popular recreation area and that was close to homes. 

In fact, right about the same time that the project was scheduled to receive almost $1 billion in Federal Transit Administration funds, opponents were successful in persuading a federal judge to vacate both state and federal approvals for the project based on what they argued were incorrect ridership numbers in the project’s environmental study.

It was almost a year before an appeals court decision allowed construction to move forward.

In addition to that initial legal battle, the Friends of the Capital Crescent Trail have brought additional court actions, the last of which was dismissed only last month. The project team announced last year that it had accumulated $300 million in cost overruns, pushing the budget of the P3 closer to $6 billion.

 

Source: Constructiondive