We have previously reported on Maryland’s efforts to modernize its public-private partnership (“P3”) law. Our own Jeff Gans has had considerable involvement with the new legislation, and, at the request of the Lt. Governor’s office, has testified before Maryland Senate and House committees considering the P3 legislation. The new law is about to be put to good use.
Last month, Maryland Governor Martin O’ Malley announced plans to utilize a P3 to build and operate a $2.2 billion public transportation project. The project is a light rail line – the “Purple Line” – which will run from Bethesda in Montgomery County to New Carrollton in Prince George’s County and tie into the existing Metrorail, MARC, and Amtrak train lines as well as bus routes.
Maryland will provide $400 million for construction of the 16-mile, 21-stop route, plus $280 million for right-of-way acquisition and finalizing design. The private partner is expected to contribute between $400-900 million, and additional funding for the project will come from the federal government.
The Maryland Department of Transportation (“MDOT”) predicts that use of a P3 will promote efficiency and reduce costs by transferring risk to the private partner. In addition, P3 proponents point to the incentives and quality-control that are created when the designer and builder of a project is also the entity responsible for the project’s ultimate operation and long-term maintenance.
The presolicitation report submitted in accordance with Maryland’s new law, which outlines MDOT’s vision for the Purple Line project, can be found at MDOT’s website. Maryland will begin the process of selecting a private partner later this year. Each prospective partner will submit a detailed bid which includes estimates for building the project, plus a 30-year estimate for operating and maintaining the Purple Line. The partner’s profits will increase if it can provide the services for under the budgeted amount, but Maryland does not bear the risk related to budget overruns.
Maryland will maintain ownership of the Purple Line, and, after 30 years, the private partner operating the line will return it to the State. At that time, Maryland has options – it can decide to operate the line on its own, or it can rebid the operating function, which could result in the same company continuing to operate the line or a transition to a new operator.
According to MDOT, construction of the Purple Line is to begin in 2015, with rail services starting in 2020. In addition to vastly improving travel between Montgomery and Prince George’s counties, the project is expected to create thousands of jobs. As a Maryland resident living along the Purple Line’s planned route, I’m looking forward to the future.