State, Purple Line Builders Sign Financing Agreements
The private team tasked with building and operating the light-rail line has lined up more than $1.3 billion for the project
Purple Line rendering
Maryland Transit Administration
With money in hand, the private team tasked with building the Purple Line is expected to keep to its schedule to start construction this fall.
On Friday, Purple Line Transit Partners and the Maryland Transit Administration (MTA) announced they have signed financing agreements for the $5.6 billion, 36-year contract to construct the 16.2 light-rail line that will connect Bethesda with Prince George’s County.
Purple Line Transit Partners, which is comprised of the construction firm Fluor Enterprises and the financial firms Meridiam and Star America, announced it had secured about $1.3 billion in funding. Most of that amount—$875 million—came from a federal transportation loan, while another $367 million was provided through a “Green Bond” underwritten by JP Morgan and RBC Capital Markets, according to Meridiam. An additional $138 million was provided by the three firms that make up the private partnership.
In a press release, Meridiam said the bonds were sold “at the lowest rates ever achieved” in the U.S. public-private-partnership (P3) market.
“Projects like the Purple Line are extremely encouraging markers in the evolution of the U.S. P3 market,” Thierry Deau, Meridiam’s CEO and founder, said in the release. “Our U.S. team looks forward to the opportunity of delivering a best practice example of light-rail transit to the full spectrum of Maryland Purple Line stakeholders, beginning with the communities served by the project.”
“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,” Transportation Secretary Pete Rahn said.
All that is left to secure in terms of financing is a $900 million grant from the Federal Transit Administration, which is scheduled to be transferred to the project in late July or early August after the federal grant agreement is finalized, according to MTA.
That grant will give the construction team about $2.2 billion to work with as it constructs the rail line over the next five years. The project is estimated to cost about $2 billion to construct, according to the MTA.
The loans will be repaid by Purple Line Transit Partners using the state’s monthly $150 million installments, which will be provided over the life of the 36-year contract. Those monthly payments will also be used by Purple Line Transit Partners to operate and maintain the light-rail line until it’s turned over to the Maryland Transit Administration at the end of the contract.
What’s not yet known is whether a federal lawsuit brought by Chevy Chase residents will impact the construction timeline of the project and in turn the loans provided to build it. On Thursday a federal judge considered possibly delaying the project to allow an investigation into whether well-documented recent problems with the Metro system could negatively impact ridership of the Purple Line. A lawyer for the state told U.S. District Court Judge Richard Leon a delay could allow investors to pull out from the project. Leon gave both sides two more weeks to provide additional statements about the case.