DALLAS -- The Federal Transit Administration has joined Maryland in a court battle seeking to overturn a federal judge’s order that halted work on the $5.6 billion Purple Line light rail project being financed as a public-private partnership.

Maryland stands to lose $800 million if a court-ordered delay in the project results in cancellation of the Purple Line light rail P3.
Maryland stands to lose $800 million if a court-ordered delay in the project results in cancellation of the Purple Line light rail P3.
Purple Line Transit Partners

The FTA filed documents on Friday with the U.S. Court of Appeals for the District of Columbia Circuit to join the state’s case as it fights District Judge Richard Leon’s decision in August 2016 to vacate the project’s federal environmental clearance.

Maryland was only five days away from signing an acceptance agreement with the FTA for a $900 million New Starts grant when Leon’s order cut off funding for the Purple Line until a final decision in a lawsuit over environmental issues that was filed in 2014.

Leon vacated the environmental clearance that Maryland had received from the FTA for the Purple Line and ordered a stop to any more federal funding until new ridership estimates were developed for the proposed line.

In late May, Leon ordered a new supplemental environmental review of the project He agreed with the plaintiffs in the lawsuit seeking to stop the Purple Line that Maryland and the FTA had failed to adequately reexamine the impact of ridership declines and maintenance problems on Washington Area Mass Transit Authority’s Metro system.

The FTA contends in its July 14 filing that the National Environmental Policy Act does not requires it to re-do the project’s environmental study over the disputed ridership estimate as Leon ordered, and questions whether the judge had the authority to vacate the project’s federal environmental clearance.

The state asked the federal appeals court in June for an emergency stay of Leon’s ruling by Aug. 1.

“If not stayed or reversed, that order could cause the state to cancel the project, resulting in a financial loss to the state of approximately $800 million,” Maryland Attorney General Brian Frosh said in the June 22 motion.

Frosh filed a motion on July 3 with the appeals court seeking an expedited hearing schedule for the stay request that would begin by July 20 and end no later than Aug. 24.

Maryland Transportation Secretary Pete Rahn was forced to halt preliminary work June 1 on the light rail line because the state couldn’t afford to continue without the federal money.

The Trump administration's budget proposal for fiscal 2018 would eliminate New Starts grants for projects without an existing funding agreement with FTA.

The House transportation appropriations panel on July 12 approved a spending plan for 2018 that includes $1 billion of grants for New Starts projects with a signed funding agreement and $45.7 million for transit projects that sign a full funding agreement during the year.

The omnibus budget measure adopted by Congress in May would provide $125 million to the Purple Line in fiscal 2017 if a full funding agreement is signed before the end of the federal fiscal year on Sept. 30.

Maryland signed a 36-year concession agreement in April 2016 with Purple Line Transit Partners LLC to build the 16-mile rail system over six years and then operate it for another 30 years.

The consortium partners – Fluor Enterprises, Meridiam Infrastructure Purple Line, and Star America Fund – agreed to provide half of the project’s $2 billion construction costs and operate it in exchange for monthly availability payments expected to total $150 million per year.

The private partners are financing their share of the project with an $875 million low-interest Transportation Infrastructure Finance and Innovation Act loan and $323 million of tax-exempt private activity bonds issued in 2016 by the Maryland Economic Development Corp.

The TIFIA loan has a 2.41% interest rate. Final pricing for the PABs resulted in all-in true interests costs ranging from 2.39% to 3.88%, according to Fitch Ratings. The PABs and the TIFIA loan received BBB-plus ratings from S&P Global Ratings and Fitch.

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