Posts about Purple Line
Six private consortia have expressed interest in building and operating the $2.2 billion Purple Line in partnership with the Maryland Transit Administration. They bring experience from similar deals around the world, including a successful project in Denver.
The Maryland Transit Administration (MTA) has received responses from six private consortia who want to bid on the planned light-rail line between Bethesda and New Carrollton in a public-private partnership (P3), which the state approved in August.
"The six responses, from local, national and worldwide firms, clearly demonstrate leaders in the P3 industry have strong interest in delivering this long-awaited project," said Maryland transportation secretary James Smith in a statement. The consortia include a who's-who of investors and operators active in the P3 space, including the investors in the only comparable transit concession in the United States, the Eagle P3 in Denver.
The interested teams are: M-PG Connect (Plenary Group and Bechtel Development), Maryland Purple Line Partners (Vinci Concession, Walsh Investors, InfraRed Capital Partners, Alstom and Keolis), Maryland Transit Connectors (John Laing Investments, Kiewit Development and Edgemoor Infrastructure & Real Estate), Purple Line Development Partners (CSCEC and United Labor Life Insurance), Purple Line Transit Partners (Meridiam Infrastructure, Fluor and Star America Fund) and Purple Plus Alliance (Macquarie Capital and Skanska Infrastructure Development).
Macquarie and Fluor's Denver Transit Partners was the winning bidder of the Eagle P3, the only design-build-finance-operate-maintain (DBFOM) transit concession that has successfully closed in the US. John Laing and Uberior bought Macquarie's stake in the project when its financing closed in August 2010.
Under a DBFOM concession, a private consortium takes responsibility for the design, construction, financing, operations and maintenance of a project within the parameters of the contract with the grantor, which in this case is the state of Maryland. The deal structure also places the majority of the design, construction and operational risks on the private sector.
The Eagle P3 is a good comparison for Maryland's Purple Line. In addition to being the country's only DBFOM transit concession, it also uses availability payments, which are guaranteed payments to the concessionaire from the grantor.
It also involves an isolated rail system that is separate from Denver's existing light rail. This separation is important in terms of measuring the operational performance since there aren't any other services to affect it. This allows the grantor to accurately reimburse the private concessionaire in the future.
The Purple Line light rail will stretch 16 miles from Bethesda to New Carrollton through Montgomery and Prince George's counties. Operationally separate from the MTA's other transit lines, the concession also includes a maintenance facility and rolling stock.
The Eagle P3 includes three commuter rail lines that will run more than 35 miles from Denver Union Station to Denver International Airport, the suburb of Westminster and the suburb of Wheat Ridge when they open in 2016. It also includes a commuter rail maintenance facility and Hyundai Rotem rolling stock.
Fluor, John Laing and Macquarie will undoubtedly be able to bring best practices to Maryland from their experience in Denver, some of which could help reduce costs and possibly speed up the construction schedule.
Other interested firms also have transit concession experience outside the US. Keolis and Plenary are investors in the eight-mile Gold Coast light rail concession in Australia, and Vinci is an investor in multiple light rail concessions in Europe.
Meridiam and Skanska bring experience from other DBFOM concessions in the US to the table. Meridian built a courthouse in Long Beach, California, while Skanska worked on the Midtown and Downtown Tunnels in Virginia's Hampton Roads area.
The next steps for Maryland include evaluating the responses that the six consortia submitted for the Purple Line P3 and selecting a shortlist of qualified teams who will move on to the actual bidding phase. Robert Smith, administrator of the MTA, says that they plan to shortlist up to four consortia.
The MTA plans to announce the shortlist in January 2014 with proposals due in the early summer, the agency says. It expects to pick a preferred bidder by either the end of 2014 or early 2015.
Construction on the Purple Line could begin as early as the second quarter of 2015, subject to approval of the concession contract by the Maryland Board of Public Works and funds from the federal government to help finance the project.
Maryland is seeking up to $1.05 billion in a New Starts grant from the US Federal Transit Administration and has submitted a letter of interest for a TIFIA loan from the US Department of Transportation. The state plans to contribute at least $711 million and expects between $400 million and $900 million in funds from the private sector.
While there aren't many transit projects built through P3s in the United States, if successful, the Purple Line could set an example for the rest of the country.
But you won't hate going out in the storm for any of this week's events!
Delightful discussion on DC education: Our friends at Greater Greater Education are hosting a forum with Councilmember David Catania tonight, Monday December 9, to discuss all things pertinent to public education in DC.
Come by the Hill Center, located at 921 Pennsylvania Avenue SE, tonight at 6:30pm to ask a question or to listen to a good discussion. You can register here. Head over to GGE for more information about this event.
After the jump: Streetsblog hosts a happy hour, Maryland's candidates for governor talk about transportation, and see a film about how to design cities for people.
We've many places to go!: Purple Line NOW! is hosting a transportation forum with Maryland's gubernatorial candidates. All three Democratic nominees, Lieutenant Governor Anthony Brown, Delegate Heather Mizeur, and Delegate Jolene Ivey speaking on behalf of Attorney General Doug Gansler, will attend, as well as Republican candidate Delegate Ron George.
The forum is tomorrow, Tuesday, December 10, from 7 to 9:30pm at the Montgomery College Cultural Arts Center, located at 7995 Georgia Avenue in Silver Spring. Reserve your seat(s) here.
All the way home you'll be warm: Join Streetsblog DC readers tonight, December 9, for a happy hour at the Passenger, DC's transportation-themed bar. The happy hour starts at 5:30 at 1021 7th Street NW. You can RSVP here.
As long as you love transportation so: Also tonight, DC's Transportation Plan Advisory Committee (TPAC) meets from 6 to 8pm. TPAC is comprised of DC residents who advise moveDC, the District Department of Transportation's effort to plan the city's future transportation network.
This public meeting is at the Frank D. Reeves Municipal Center, located at 2000 14th Street NW, in the second floor public meeting room. Please bring your state-issued ID to enter the building.
The lights are turned way down low: On Thursday, the Inter-American Development Bank hosts a screening of the film "The Human Scale - Bringing Cities to Life," about Danish architect and urban planner Jan Gehl. Afterwards, there will be a panel discussion with Jeff Risom, partner at Gehl Architects in Copenhagen. who will talk about designing cities for people.
The screening is on December 11 from 6:30 to 8:30 pm at the bank's Enrique Iglesias Auditorium, located at 1330 New York Avenue NW. For more info, check out the event description.
It may be a few years until the Purple Line arrives in Silver Spring, but this past Saturday the Action Committee for Transit offered a fun preview by dressing up as a light-rail train in the Montgomery County Thanksgiving Parade.
ACT members and supporters marched in the 16th annual parade wearing Purple Line train costumes and blowing train whistles. Barbara Ditzler of Silver Spring designed a six-person Purple Line train costume, complete with Styrofoam plate wheels. And a fifth-grader at Clearspring Elementary School in Damascus made a train costume for her and her family out of painted cardboard boxes.
The group already has big plans for next year's parade, including even more train costumes and possibly a dance routine. If you have a costume or song in mind, feel free to visit ACT's website and get in touch with us. We have only 12 months to prepare for the 2014 parade!
Maryland officials say that letting a private company build and run the Purple Line will avoid many of the inefficiencies of government. But the private sector has inefficiencies of its own.
By using a public-private partnership, or P3, to operate the light rail line, officials at the Maryland Department of Transportation hope for better service at lower cost. The private sector is better able to manage risk, they argue, and it saves money through greater flexibility and tighter oversight. Motivated by incentives, not a rulebook, a private operator or "concessionaire" would use its creativity to run the railroad better.
How well this will work depends on what the incentives are. The ideal concessionaire would be a 30-year-old railroad engineer who invests her life savings of $180 million. She runs the light rail line herself and keeps it impeccably maintained. She thinks about the steady income she will need when medical school tuition bills come due for her 1-year-old son.
Unfortunately, such bidders will be rare. In all likelihood, two groups of intermediaries, railroad managers and money managers, will stand between the source of money and the trains. They will face incentives of their own, which are not necessarily the same as those of riders and investors.
Money managers, in particular, tend to concern themselves with the next quarterly bonus. They earn large fees when the deal first goes through, whether or not it is a good one. During the housing bubble, Wall Street bankers issued bad loans with abandon and joked about the "toxic waste" they were passing on to clients.
What will happen if the cost of running the light rail line exceeds the budget? Managers, worrying about salary reviews and bonuses, will be tempted to maintain profitability by skimping on maintenance.
In the P3 structure, it is the job of investors and lenders to look out for the long term. But they may not do this well. We learned in the crash of 2008 that large financial institutions can do a poor job of oversight. And the Purple Line's equity investors, who expect a return of 11% per year, may not care that much about the long term. If the business pays dividends for 15 or 20 years and then goes bust, they will have already pocketed a substantial profit.
Under the contract, the state will cut the concessionaire's "availability payments" if the performance of the Purple Line does not meet targets. But these targets will be hard to set. How do you write specs in 2013 for running a state-of-the-art railroad in 2048?
The penalties for bad work, moreover, are unlikely to be all that severe. MDOT cannot replace the concessionaire until 2050. And the concessionaire's investors will put up only 7% of the construction cost. The availability payments will go mostly to repay lenders, whose main goal is to keep their money safe. They will hesitate to make loans unless the penalties are kept small and their bonds are not at risk.
In an ideal world, a privatized transit line would be run by a deep-pocketed young version of Jackson Graham, the engineer who built Metro. He might well outperform a government agency led by Pericles and George Washington.
But that is not the choice we face. Large organizations, both public and private, are made up of human beings. They are inevitably imperfect. Decisions about how to run public services must be based on things as they are, or as they realistically might be made to be.
To pay for the Purple Line, Maryland wants to use a form of "public-private partnership," or P3. Accomplishing this will require some complex accounting.
This form of financing is more expensive than bonds issued by the state, but it may allow the state to borrow money that doesn't count against its debt limit and free up funds for other transportation projects. Under a P3, a private operator would get those funds from equity investors and lenders.
Maryland has committed $900 million towards the $2.2 billion Purple Line, including $680 million from this year's gas tax increase. The federal government may contribute an estimated $900 million, and Montgomery and Prince George's counties will contribute as well. This leaves the state somewhere between $200 and $400 million short.
The state's debt limit applies to all debt that will be repaid from tax revenue. But the Purple Line will run at a loss, and thus tax funds must ultimately pay for construction. So the Maryland Department of Transportation devised a complex financing structure to get out from under the limit.
Fares from riders on the Purple Line will go not to the private company that builds and operates it, but into a special state fund. Meanwhile, the Transportation Trust Fund will pay the operator for the cost of running and maintaining the light rail line.
The operator will get a second payment, a so-called "availability payment," from the fare fund. Its amount will depend on how well the light rail line performs. This money will go to repay the lenders and investors who put up money for construction.
It's not clear whether this arrangement will pass muster, and MDOT has yet to work out all the details. On September 12, the agency requested guidance from the state's Capital Debt Affordability Committee on "parameters for structuring the availability payments to avoid classification as tax-supported debt that would impact the State's debt affordability analysis."
One issue is whether it's proper to separate operating costs from fare revenue. There can't be fare revenue without the state's ongoing expenditure of tax money to run the Purple Line.
Tax money supports the Metro much as it will support the Purple Line, but Metro does its accounting differently. WMATA subtracts revenues from operating costs and calls the difference its "operating subsidy." State and federal aid derived from taxes pays for new construction. If the P3 did its accounting like WMATA, MDOT would pay its construction debt with tax money.
A second question involves 'equity' investors. About $180 million of the Purple Line's construction costs is supposed to come from this source. These investors will get compensation from a share of the availability payments, plus operating profits and minus losses.
What will happen if the operations of the Purple Line are not up to snuff, and MDOT cuts its availability payments to the operator? The investors are likely to be large institutions whose managers get bonuses based on each quarter's returns. They might well push for a cutback on maintenance to generate operating profits in the short term.
That would surely be bad for riders. And would it not divert tax money meant for rail maintenance into repayment of construction debt?
Whether or not it avoids the debt limit, P3 financing will be more expensive than direct state borrowing. A private entity set up to run the light rail line will not have Maryland's AAA credit rating. The Maryland Department of Transportation also asserts that a P3 would manage the rail line better, resulting in lower construction and operation costs, but it does not promise any net savings. Indirect borrowing for the Purple Line is only wise if the other transportation projects it pays for are worth the money.
The federal government is still closed, but this week you can still talk about how climate change affects your health, get updates on the Purple Line, explore the changing character of Brookland, and help to make Florida Avenue safer at events across the region.
Update on the Purple Line: Tomorrow, the Action Committee for Transit hosts Mike Madden of the Maryland Transit Administration for the latest news on the Purple Line at its monthly meeting. Governor Martin O'Malley recently announced that the state will seek a public-private partnership to build and operate the line, which could start construction as early as 2015 if it gets federal approval this fall.
The meeting will be at 7:30pm on Tuesday, October 8 at the Silver Spring Civic Building, located at the corner of Ellsworth Drive and Fenton Street, just a few blocks from the Silver Spring Metro. For more info, visit ACT's website.
Brookland: Old and New Again: Join CSG for a walking tour to learn about the changes happening around DC's Brookland neighborhood this Saturday, October 12th, starting at 10am outside the Brookland-CUA Metro station. Learn about the impact that new construction and renovation of vacant buildings is having on residents and visitors, and what other changes are coming soon. To stretch your legs and learn more about this evolving neighborhood, RSVP for the tour here.
It's finally Florida Avenue's time: The District Department of Transportation will hold the second of three meetings on the Florida Avenue Multimodal Transportation Study next Thursday from 7 to 9pm at the Jordan Student Academic Center at Gallaudet University, 800 Florida Avenue NE. The purpose of the study and plan is to ensure the corridor is safe for all users including people who walk, bicycle, drive, and use transit. For more information, visit DDOT's website.
Climate change and your health: Join award-winning science and health journalist Linda Marsa and Bob Deans, Director of Communications at the Natural Resources Defense Council, for a conversation about the public health implications of climate change. Marsa will discuss her new book, Fevered: Why a Hotter Planet Will Hurt Our Health - And How We Can Save Ourselves, along with topics including green infrastructure and setting limits on pollution.
The event will take place at 6:30pm tonight at Busboys and Poets, 1025 5th Street NW in Mount Vernon Square. For more information, visit the event's website.
The federal government may be closed, but this week you can still
talk about the future of Franklin Park, celebrate walkable urbanism with the Coalition for Smarter Growth and author Jeff Speck, and explore Bus Rapid Transit on Rockville Pike at events across the region.
Join us for happy hour: Tonight, join GGW contributors and readers for the latest installment of our regular happy hour series in Arlington. From 6 to 9pm, we'll be at Fire Works Pizza at 2350 Clarendon Boulevard, just two blocks from the Court House Metro station. As our commenters duly noted, they're running happy hour specials until 6:30pm.
Party with CSG: Tomorrow night, the Coalition for Smarter Growth hosts Jeff Speck, author of Walkable City, at its annual social and fundraiser. The event will feature refreshments and runs from 6:30 to 8:30pm at Eastern Market. Tickets are only $25 and proceeds will help CSG continue their work to strengthen walkable and inclusive communities in our region. To learn more or RSVP, visit their website.
Franklin Park's new future: [Note: Due to the shutdown, this event has been postponed until further notice.] Also tomorrow, the DC Office of Planning and its Franklin Park partners will hold a kick-off public presentation and open house about how to turn Franklin Park into one of the country's premier urban parks. Come share your ideas for how to improve and enhance the visitor experience of the park. Attendees will hear a project overview and an initial site analysis and conditions report. The project team also will hold a visioning and programming workshop to gain a deeper understanding of desired park uses and current issues.
The meeting will be from 6 to 8pm at the Four Points by Sheraton at 1201 K Street NW. You can RSVP at the project's website.
Talk about BRT on 355: Do you live, work, or travel along Route 355, also known as Wisconsin Avenue and Rockville Pike? Join CSG, Communities for Transit, and other local organizations hosting an educational event for residents and business owners along 355 between Friendship Heights and Clarksburg. Speakers will include Montgomery County Planning Board member Casey Anderson, county planner Larry Cole, and Chuck Lattuca, BRT system manager at the Montgomery County Department of Transportation.
With 44,000 projected riders by 2040, a BRT line along 355 is likely to move forward early on in the development of Montgomery's rapid transit network. The event will take place on Thursday, October 3 from 6 to 9pm in the cafeteria of the Executive Office Building at 101 Monroe Street in Rockville. Click here to RSVP or for more information.
Update on the Purple Line: Next week, the Action Committee for Transit hosts Mike Madden of the Maryland Transit Administration for the latest news on the Purple Line at its monthly meeting. Governor Martin O'Malley recently announced that the state will seek a public-private partnership to build and operate the line, which could start construction as early as 2015 if it gets federal approval this fall.
The meeting will be at 7:30pm on Tuesday, October 8 at the Silver Spring Civic Building, located at the corner of Ellsworth Drive and Fenton Street, just a few blocks from the Silver Spring Metro. For more info, visit ACT's website.
To power the Purple Line, Maryland will have to build power-converting substations along the 16-mile route. Transit planners plan to help the structures blend into existing neighborhoods by disguising them as single-family homes.
"Houses" like this one in Toronto could appear along the Purple Line. Photo from MTA.
According to a recent Washington Post article, the Purple Line will require multiple support structures and buildings, including 14 signal bungalows, or small buildings with radio and signal equipment, and a nine-story ventilation tower in Bethesda. There will also be 18 of what the Maryland Transit Administration calls traction power substations, which would feed power to the electrified rails.
Spaced at one mile intervals, these facilities house equipment to convert alternating current carried along high voltage transmission lines to the direct current used by trains. The buildings would be about 50 feet long and 14 feet wide.
Recently, people living along Wayne Avenue in Silver Spring got their first glimpses of the substations. Because they have the potential to introduce visual and noise impacts into quiet residential areas, some neighbors are concerned. In an interview with the Post, resident Anne Edwards described one substation proposed for the corner of Wayne and Cloverfield Road as an "industrial monstrosity."
Because the Purple Line is a federally-funded transportation project, MTA was required to prepare an environmental impact statement. According to the document, which is open for comments until October 21, the line's preferred alternative along Wayne Avenue is a highly sensitive visual corridor. The proposed substations would be visually intrusive, according to the MTA analysis, and the equipment housed in each is expected to emit "transformer hum" sounds.
MTA plans to mitigate the substations' visual and noise impacts with insulation to prevent equipment noise from leaking out and by camouflaging the buildings to make them appear like single-family residences. According an MTA flyer on the substations posted at the Purple Line website, "The substations can be screened with fencing, landscaping and, as appropriate, the MTA will identify further measures to minimize their presence or make them blend in with the environment."
Typical light rail substations are basic windowless boxes. They have all the architectural appeal of a cargo container or a construction trailer. That's why the MTA will make Purple Line substations look like single-family homes instead.
In an April email to a Silver Spring resident that was posted on various community listservs, Purple Line project manager Mike Madden noted that these substations can be found in residential neighborhoods around the US and the world. The MTA can design the buildings to "be more square in shape," making them look more like houses, and give them landscaping and lawns in front, just like a normal house.
The substation designs MTA distributed include a brick veneered building that looks a lot like the ranch houses or ramblers common in Montgomery County neighborhoods developed after World War II. Utilities and transportation companies around the world have used tricks like this for more than a century to minimize the visual impacts of unsightly infrastructure.
Photographers love engineering simulacra like the proposed Purple Line substations. Historic building facades conceal massive substations built to power New York City's subways. Some of these were captured in Christopher Payne's 2002 book, New York's Forgotten Substations.
In 1987, Canadian photographer Robin Collyer began documenting transformer houses, also called "bungalow-style substations," throughout Toronto. Each one was built "in a manner that mimics the style and character of the different neighborhoods," Collyer wrote in 2006.
Closer to home, Pepco built transformer houses in residential neighborhoods in the Colonial Revival style popular at the time as early as the 1930's. According to a 1954 Washington Post article on Pepco's program, the company identified neighborhoods with increasing electricity demands and then went to work designing the faux homes. Pepco employees photographed existing homes surrounding the proposed sites, then a company architect designed compatible substation buildings.
Efforts to conceal infrastructure in the Washington metropolitan area weren't limited to power substations. Today, telecommunications facilities disguised as pine trees, dubbed "monopines," or as flagpoles and building bulkheads are found throughout the area and the nation. There's even a monopine at Mount Vernon.
One of the earliest examples of concealed telecommunications infrastructure in Washington is the 1947 Western Union Telegraph Company microwave terminal in Tenleytown. Architects and engineers went through several designs to minimize the tower's visual impact to the established neighborhood.
One design that included a clock mounted in the fašade was discarded and the plain limestone clad tower that still looks out over 41st Street NW was completed with no apparent complaints from neighbors. The former Western Union tower was designated a District of Columbia historic landmark in 2003.
The Western Union Telegraph Company building in 2002. Photo by the author.
It's far too soon to know whether the Purple Line's faux home substations will inspire future generations of photographers or if at some point they may be considered historic. It is fair to say that once they are completed, they may be better neighbors than occupied "real" homes.
MTA will mow the lawns and keep the exteriors neat. Neighbors can rest assured that there won't be any wild parties or competition for street parking. And it's not likely that the new neighbor will be coming over asking to borrow a chainsaw or generator the next time a storm rolls through.
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