Wed 08/18/2021 17:00 PM
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Relevant Documents:
Notice of Second Amendment to Settlement Agreement (Aug. 17)
Construction Progress Report (Aug. 3)
Notice of First Amendment to Settlement Agreement (May 4)
Forbearance and Settlement Agreement (Dec. 18, 2020)
Notice of Intent to Market PPP Agreement (Oct. 9, 2020)
Notice of Forbearance Agreement (Oct. 1, 2020)
Notice of Election to Terminate PPP Agreement (June 23, 2020)
Official Statement
Issuer Homepage

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The Maryland Department of Transportation, or MDOT, and the Maryland Transit Administration, or MTA, have agreed with Purple Line Transit Partners LLC, or PLTP - the borrower on $313 million of green bonds tied to the Purple Line light rail project in Maryland - to further extend the due date for negotiating a replacement design-build contractor agreement by one month, according to a notice posted to EMMA today. The borrower is currently under forbearance with its bond trustee while a new contractor is chosen to replace Purple Line Transit Constructors LLC, the current contractor, which notified the MDOT and MTA that it was terminating its contract after alleging that they caused various construction delays.

The proposed Purple Line is a 16.2-mile, 21-station, east-west, light rail transitway with a western terminus in Bethesda and an eastern terminus in New Carrollton. The Purple Line is supposed to provide transfer capability with Washington, D.C.’s Metrorail, Maryland’s MARC commuter rail and Amtrak’s northeast corridor service, according to the official statement for the bonds.

The Maryland Economic Development Corp., an instrumentality of the state of Maryland, issued the $313 million of Series 2016 Purple Line light rail project private activity revenue bonds in four series, which differ in amount and sources of repayment, as follows:

  • $100 million of Series 2016A bonds will be repaid from sources including a $100 million payment made by the MDOT and MTA to PLTP following the issuance of an independent engineer’s certificate of “Revenue Service Availability”;

  • $23.3 million of Series 2016B bonds will be repaid from sources including a $30 million payment to be made by MDOT and MTA to PLTP following the achievement of “Final Completion”;

  • $27.5 million of Series 2016C bonds will be repaid from sources including a portion of “Availability Payments” - which are to be made by the MDOT and MTA to PLTP during the operating period based on the Purple Line being open and available for public transit - designated as “Special Lifecycle Payments”; and

  • $162.2 million of Series 2016D bonds repaid from sources including the remaining availability payments.


Interest payments on all of the bonds, but not principal, are allowed to be paid by the $860 million of “Progress Payments,” which the MDOT and MTA agreed to make during the design-build period based on certain progress milestones.

The project has been riddled with litigation, which began even before the bonds were issued. In 2014, individual plaintiffs and an environmental group sued several federal agencies over the Purple Line, arguing that the project’s construction and operation would have a severe adverse impact on wildlife, the environment and the aesthetic enjoyment of a nearby park and walking trail. The district court initially granted partial summary judgment for the plaintiffs, in August 2016, ordering a temporary halt to construction so that the federal agencies could prepare a supplemental environmental impact statement consistent with the requirements of the National Environmental Policy Act. However, the U.S. Court of Appeals for the District of Columbia Circuit reinstated the agency’s prior decision, reversing the decision of the district court, about a year later, in July 2017.

According to a settlement agreement that they later entered into, PLTP, MTA and MDOT all agree that the district court’s decision caused a delay in the construction of the Purple Line, but PLTP disagrees with the agencies about the length of delay and whether PLTP’s own actions also caused delay. PLTP initiated a claim under the applicable dispute resolution procedures of its public-private partnership agreement seeking compensation for the time delay and financing costs caused by the litigation, according to disclosures with the Municipal Securities Rulemaking Board.

PLTP also alleged that the MTA and MDOT owe it compensation for other actions that delayed construction of the Purple Line, according to EMMA postings. For one, PLTP contended that the MTA failed to acquire necessary rights-of-way in a timely manner for design work, and then initiated a separate claim seeking compensation related to those purported delays. PLTP also argued that the MTA added new design criteria, which delayed procurement and construction on the project, and that the Maryland Department of Environment’s “new and changing requirements, guidance and criteria” required PLTP to go through lengthy design and approval processes, which also delayed procurement and construction on the project.

PLTP provided a notice terminating the public-private partnership agreement between the Maryland DOT and the Maryland Transit Administration in June 2020, claiming that the MDOT and MTA caused extensive delays to the project and were unwilling to compensate PLTP for those delays. The MDOT and MTA then filed a complaint in Baltimore City circuit court in August 2020, obtaining a temporary restraining order enjoining PLTP from abandoning the project, until a month later, when the court denied the MDOT and MTA’s request for a preliminary injunction and let the TRO expire.

On Sept. 30, 2020, the issuer on the bonds, Maryland Economic Development Corp., entered into a forbearance agreement with bond trustee U.S. Bank, pursuant to which U.S. Bank agreed not to declare a default or take any enforcement action and the members of PLTP agreed to make capital contributions of $7.8 million to fund the interest payment due on the bonds.

The MDOT and MTA informed PLTP on Oct. 9, 2020, that they intended to market the public-private partnership agreement to find a new design-build contractor, notwithstanding that they still disagreed with PLTP’s termination of the agreement.

On Dec. 17, 2020, PLTP and U.S. Bank entered into another forbearance agreement, and PLTP and the MTA and MDOT entered into a settlement agreement, resolving certain of their disputes. Among other things, the agreements allowed PLTP to initiate, in coordination with the MTA and MDOT, a solicitation process for a replacement design-build contractor for the Purple Line project. Also, PLTP withdrew its termination of the PPP agreement, and MTA and MDOT agreed to pay PLTP $250 million to resolve PLTP’s claims for compensation.

The settlement agreement contemplated a process for short-listing design-build contractor candidates, who would then undertake a due diligence process on the project. Under the agreement, PLTP agreed to draft a replacement design-build contract, modified based on reasonable requests by the MTA and MDOT, including a lump-sum fixed price for completion, within six months - by mid-June 2020.

The deadline for negotiating the replacement design-build contract has since been extended, twice. First on May 4, the parties extended the deadline to mid-August, and then again, on Aug. 17, the parties extended the deadline to mid-September.

On Aug. 3, the technical advisor to the lenders, Turner & Townsend, posted a construction progress report to EMMA. The report says that the solicitation process for a replacement contractor began in January and that a short list of three teams was identified in March. The three teams are: Halmar International; Maryland Transit Solutions (composed of Dragados USA Inc. and OHL USA Inc.); and Tutor-Perini / Lunda, a joint venture. According to the progress report, in December 2020, when the forbearance agreement was signed, the total costs paid were $1.1 billion, with $923 million remaining based on the original contracted amount. The cost to complete the project will be finalized once the replacement contractor has been selected, according to the report.
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