Negotiating an Amended P3 Agreement and Resoliciting a Replacement Design-Build Contractor for Maryland’s First Transit P3 Project
We advised the Maryland Department of Transportation and Maryland Transit Administration (MDOT MTA) on the negotiation of an amended P3 agreement and resolicitation of a replacement design-build contractor to complete Maryland’s first transit public-private partnership (P3) project.
The Purple Line Light Rail Project is a $3.4 billion (capital cost) P3 project involving the design, construction, financing, operation and maintenance of a 16.2-mile light rail line, including 21 stations, from Bethesda in Montgomery County to New Carrollton in Prince George’s County. Once completed, the Purple Line will facilitate mobility between the Maryland suburbs and Washington, D.C. and provide a direct connection to the Metrorail Red, Green and Orange Lines as well as MARC, Amtrak and local bus services.
The original procurement for the project, which we also advised on, reached commercial close in April 2016 and financial close in June 2016. However, the original contractor left the project in the fall of 2020 after years of disputes with MDOT MTA over claims for increased costs and delays. Pursuant to the terms of a settlement agreement, MDOT MTA and the concessionaire negotiated amendments to the P3 agreement and resolicited a replacement design-build contractor to complete the project. Maryland Transit Solutions, a joint venture between Dragados USA and OHL USA, was selected in November 2021, and financial close for the amended P3 agreement was reached in April 2022. Financing for the amended project includes a $1.76 billion TIFIA loan (replacing and restructuring the original TIFIA loan), $643 million in private activity bonds and $293 million in total equity financing. The remaining equity members in the concessionaire are Meridiam and Star America.
Full-scale construction on major project elements like stations, overpasses, tunnels and track installation is scheduled to resume this summer and finish by fall of 2026.
Our services included advising on complex legal, commercial, technical and financial issues, contract drafting, and negotiations with the concessionaire and key project parties. We continue to advise MDOT MTA on the implementation of the amended P3 agreement.
- Utilizing an overhead catenary system (OCS) powered by an electric traction power substation (TPSS), the Purple Line will not release air emissions into the immediate environment.
- It is estimated the Purple Line will take 17,000 cars off the road daily, saving 1 million gallons of gas within 20 years.
- While supporting community revitalization and social inclusion, the project also has a goal of $390 million in design and construction undertaken by Disadvantaged Business Entities (DBEs).