The Maryland Transit Administration will put the “P3″ concept before the state’s Board of Public Works on Nov. 6 before issuing a request for qualifications from private concessionaires. The winning concessionaire would essentially fund portions of the project during the peak construction years in exchange for payments from the state for meeting benchmarks.
Members of the Council’s Transportation Committee asked about the particulars of the partnership, including what it would mean for customer complaints and how it would impact the county’s contribution to the estimated $2.2 billion project.
Jodie Misiak, who helped develop state P3 legislation that passed earlier this year, said it’s not “necessarily common,” to do such a public process before the requirements of the agreement have been laid out.
Misiak said the state wants to spell out exactly how the deal would work to avoid “changing the rules mid-game” for a prospective private company.
Henry Kay, MTA’s executive director for transit development, said the scope of the P3 isn’t that different from Denver’s Eagle P3 rail project or other P3s in Canada.
“We will always be present in managing this contract. Our name is on that train. Our logo is on that train,” Kay said. “It’s all written out, but it’s going to be up to us enforce. We are always going to have to be there to monitor.”
Unlike the Beltway HOT lanes in Virginia, the private concessionaire in the Purple Line project will not be paid through fares or system revenue. The state will issue a series of benchmark and milestone payments during construction and then “availability payments” through the course of the 30-year contract for operating the system.
The availability payments refer to the availability of all services to be outlined in the P3 agreement.
But there were still important questions, such as what would happen if the concessionaire decided to cut certain aspects of service to save money. Council staff member Glen Orlin asked what would happen if the concessionaire decided to cut off-peak service time from every 10 minutes to every 15 minutes to make more money than would be made from the availability payments.
“The reduction of the payment has to be large enough,” Kay said. “That is the kind of choice that they do not get to make.”
Kay said any cost savings not specifically outlined in the agreement would come from “behind-the-scenes” management strategies — such as how the company employs maintenance crews — that would not affect passengers.
The state is hoping for about $900 million in federal funding. The concessionaire would be expected to kick in anywhere from $400 million to $900 million during construction.
Kay said the working assumption is that Montgomery and Prince George’s Counties will kick in $110 million each, though that final contribution is uncertain. Councilmember Nancy Floreen (D-At large) questioned how the commitments the county has already made — such as buying up the Georgetown Branch Trail right-of-way and building the Bethesda Metro South Entrance — would factor in that final number.
“We would have had to buy the right-of-way. We would have had to construct the Bethesda Station Entrance,” Kay said. “At some point, it starts to become a statement that we make to the rest of the state. Calvert County benefits less from the Purple Line than Prince George’s County.”
Floreen agreed with Kay that the cost of rebuilding the Georgetown Branch Trail should be assumed by the county because the MTA likely wouldn’t have included it otherwise.