Tag Archives: Purple Line Transit Partnership

The World’s Longest Bad Breakup: MD & the Purple Line Transit Partnership

by David Lublin (with a little help and inspiration from a friend)

This is like the world’s longest bad break-up. Will they get back together, or won’t they? And if so, will it last? And if not, looks like they’re gonna put themselves back out there on Match.com (P3 edition) and hope for the best.

It’s like the State is the boyfriend not getting the message when told “It’s not you, it’s me.” In this case, it may really be the “me” because my understanding is that companies like Fluor in the Purple Line Transit Partnership no longer want to be in this sort of business. Put another way, they just aren’t that into us anymore.

The problem for the State is that the breakup comes with a payout of $367 million — a little more than the usual foregone when you made the wise decision not to request that VHS tape or DVD back. Where is the State supposed to find this money? Is the new concessionaire supposed to pay it as part of taking over the contract?

Then there is still the little matter of the extra $1 billion and rising in costs. I have no idea how much Fluor and the other companies are willing to pay to make the State go away. I’d observe, however, that (1) the State needs this finished way more desperately (it’s a political imperative, if nothing else) than they do, and (2) you can hire an awful lot of lawyers for just a fraction of that to fight over that big a chunk of change.

In short, it looks likely we’ll be on the hook for it. The State has the fantasy that this somehow won’t reduce the State’s borrowing capacity because the new concessionaire (P3 partner) will borrow the money. But we’ll have to pay it back over time and the bond rating agencies have made clear that they will unsurprisingly regard this government financial obligation as such in evaluating our AAA bond rating.

The financial distress resulting from this project is just getting started. It could hardly come at a worse time.