A lifeline has been tossed. The question is will the Purple Line Transit Partners (PLTP) grab it? The bank representing the bondholders on the Purple Line project announced it would delay enforcement action until the end of November. That means the PLTP has at least one more chance to reconsider and renegotiate with the state of Maryland.
If a deal can be reached, it would be a relief for the Maryland Department of Transportation. Officials have been vague about a project reset, and the move by the PLTP lenders would wipe away the need to find another partner in the $5.6 billion public-private partnership or the task of taking on the job itself. If a deal cannot be struck, Maryland is on the hook for $1 billion in construction costs, maybe more if you factor in further delays. The Maryland DOT also might have to assist PLTP in paying off $313 million in bonds. The state and PLTP have filed lawsuits against each other.
Money is scarce, as Maryland recently announced $3 billion needed to be cut from a six-year capital transportation plan due to COVID-19.
Last week, PLTP notified bondholders that the concessionaire and U.S. Bank, which is the bondholders’ trustee, agreed to take no action for another month. In the agreement, U.S. Bank said it would not take any enforceable action, and PLTP said it would not seek any of the remaining bond proceeds. If PLTP and Maryland can get back to the table and hammer out an agreement, investors who brought the project’s $313 million worth of private activity bonds would be protected. If the Maryland DOT and the concessionaire do not patch the partnership, a court could find the state responsible for paying PLTP 80 cents on the dollar.
According to the Maryland DOT, there is still a chance the two sides can come together and the Purple Line project could proceed.