The Giant Purple Credit Card, Part II: Thank You, Baltimore!


Mike Madden, the Project Manager for the Purple Line, was once again kind enough to answer questions on the topic. I appreciate his willingness to take the time. Today, I publish some of my questions and Mike Madden’s answers along with comments.

Show Me the Money

Seventh State Question: My understanding is that the service payments will come from fare costs. Is this correct (and, if not, where do they come from)? How does MDOT estimate the takings in fares as it hasn’t set the fares or negotiated a transfer agreement with WMATA for Metro yet? It is not correct that the payments come from farebox revenues.

Mike Madden: The annual payments will come from the Maryland Transportation Trust Fund, as does all the state investment and support for transportation projects and services. Farebox revenues go into the Transportation Trust Funds as do the other sources of revenue for transportation purposes. Again, the Pre-Solicitation Report provides further information on this topic.

Seventh State Comment: I followed Mike’s suggestion and looked at the report, which states that:

[T]he forecasted fare revenues generated by the Purple Line are estimated to be on average greater than the concessionaire’s debt service. Therefore, even though MTA would collect and account for the Purple Line fare revenues, the MTA revenues generated by the project are sufficient to cover the borrowed capital repayment share of the availability payment. (Source: “Presolicitation Report to the Maryland General Assembly, August 2013, pp. 17-18).

So in essence, MTA is claiming that the revenues from the Purple Line will be enough to pay back the cost of building it. There are major, serious problems with this claim. MTA has no idea what the fares will be at this point if only because they have no agreement negotiated with WMATA about how transfers between the Purple Line and Metro will be handled. As a result, we have no idea how the revenue from transfer trips–a significant number of trips including the PL–will be divided. Heck, MTA doesn’t even know how they will collect the fares on the open (i.e. no fare gate) system yet or how much it will have to spend on enforcement of it.

Next, if ridership has been overestimated, and Randall O’Toole explains why it almost certainly has been, MTA will either collect less money and or have to reduce fares in order to attract more ridership. MTA and Parsons-Brinckerhoff’s record along with their complete unwillingness to explain how they calculated ridership does not inspire confidence.

Operating Costs

Finally, notice that there is no mention of the operating cost, which will also be factored into the bids and for which the State will also have to pay. The sources of payment for this cost remain shrouded in mystery. My inquiry to Mike Madden didn’t reveal more:

7S Question: As fares usually do not even cover operating costs, where will the funds to operate the Purple Line come from?

MM: The payment for operating costs are included in the annual payments, which will come from the Maryland Transportation Trust Funds, as does all the state investment and support for transportation projects and services.

7S Comment: I imagine that the funds to fill the Transportation Trust Fund are expected to come from the planned gas tax increases–the same one our incoming Governor has vowed to stop and to repeal.

Thank You, Baltimore!

7S Question: Is it correct that the State’s ability to pay the concessionaire is backed by its income from public transit in Baltimore?

MM: No. The farebox revenues from transit services in the Baltimore region go into the Transportation Trust Funds.

7S Comment: Despite the flat denial, since the fares from the Baltimore region go into the Transportation Trust Funds, they are obviously going to be used to help guarantee that the State can pay for the Purple Line. It seems obfuscatory to pretend otherwise, especially as MTA has explained this to legislators.

More to Come in Part III