Officials are hoping that this week’s announcement of $680 million in state funding — along with a further commitment to find a private partner in a “P3” arrangement — for the Purple Line will give that project the shot in the arm it needs to finally move toward reality.
In a presolicitation report delivered this month to Maryland Senate and House committees, the state Department of Transportation estimated that private funding of between “$400 million to $900 million” would be needed to help with the $2.2 billion in capital costs for the Purple Line. Transportation officials “will determine a narrower range of required private investment in the Purple Line before release of any final solicitation documents,” the report says.
The proposed 16-mile light rail line from Bethesda to New Carrollton has been on the Montgomery County master plan for more than two decades.
The Purple Line will be the first transit project in Maryland used as a P3 and the first following a law passed by the legislature this year, Lt. Gov. Anthony Brown (D) said this week during the funding announcement in Bethesda. He hinted it would not be the last.
“I look forward to exploring the possibility of more public-private partnerships in the future,” Brown said.
P3’s are being used for rail transit projects in Denver and Canada, according to the Maryland DOT. The Purple Line is a “great candidate” for a P3 because “it is large and complex enough to have a potential for cost savings, but not too large to deter private interest,” officials said in a fact sheet on the project.
By having a private contractor be responsible for long-term operations and maintenance, the contractor has a greater incentive to manage risks and design a project that is well operated, officials said. The state will pay the contractor annual payments through a 30- to 40-year contract period in return for operating the project and financing part of it.
Maryland has used private companies’ investments to help expand the Port of Baltimore and redevelop some travel plazas on Interstate 95.
But public-private partnerships are “often complicated contracts that differ significantly from project to project and from place to place,” wrote Emilia Istrate and Robert Puentes in a Brookings Institution report. “In the United States, many states lack the technical capacity and expertise to consider such deals and fully protect the public interest.”
To address this problem, states should form dedicated partnership units to make sure the public is protected and make the procurement process more transparent, Istrate and Puentes said.