2016 | News

Feds Announce $875 Million Loan for Purple Line Construction

Loan will come in addition to expected $900 million federal contribution for 16-mile light-rail line

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Purple Line rendering

Via Maryland Transit Administration

Updated at 9:25 p.m. – The U.S. Department of Transportation on Wednesday announced a $874.6 million loan to the team of companies that will design, build and operate the Purple Line light-rail project—money that will come in addition to the long expected $900 million federal contribution set to be finalized later this summer.

U.S. Transportation Secretary Anthony Foxx announced the Transportation Infrastructure Finance and Innovation Act (TIFIA) loan to Purple Line Transit Partners to help construct the 16-mile, 21-station system that will run from Bethesda to New Carrollton.

When completed, the Purple Line will connect residents in Montgomery and Prince George’s counties with “improved access to jobs, education, and medical care and, overall, will help improve the quality of life,” Foxx said, according to a press release.

The announcement came minutes before a hearing in U.S. District Court in Washington, D.C., concerning a lawsuit filed by a group of activists in Chevy Chase hoping to stop the project on environmental grounds and for a host of other reasons.

Maryland Department of Transportation (MDOT) spokesperson Erin Henson said the TIFIA loan will provide the bulk of the approximately $1 billion in construction financing expected out of the Purple Line Transit Partners, the group of companies MDOT selected as its private concessionaires for the project. She said the rest of the group's construction financing will come from private equity bonds.

The Purple Line is expected to cost more than $2 billion to build once construction starts later this year. The state will repay the private debt service of the Purple Line Transit Partners in pre-set annual payments that will average $150 million per year after the light-rail opens. Purple Line Transit Partners agreed to a contract that requires the team of companies to operate the system for its first 30 years.

MDOT and the Purple Line Transit Partners signed the 36-year, $5.6 billion contract in April. The team of companies is expected to finalize financial agreements and contracts with subcontractors and insurance firms on Friday, Henson said, marking the project's "financial close."

The next milestone for the project would be the completion of the full funding grant agreement with the Federal Transit Administration, which is slated to grant the state $900 million toward construction costs. The state and Montgomery and Prince George's counties will pay for the rest of the construction costs. Henson said MDOT expects the federal grant agreement to be finalized in late July or early August. 

In late May, officials from the Purple Line Transit Partners made their first public appearance at a community meeting to explain how the light-rail will run on Wayne Avenue in Silver Spring.

Other area projects relying on federal TIFIA loans include Metro, with a $600 million loan for its capital improvement program and a $1.8 billion loan for extending the system along the Dulles corridor in Virginia. There are 62 TIFIA loans totaling more than $23 billion for transit, highway and other transportation projects across the country, according to the U.S. Department of Transportation.

In order to qualify for a TIFIA loan, a project must have a dedicated revenue source and meet applicable federal requirements such as the National Environmental Policy Act.

Wednesday’s announcement of the TIFIA loan pegged March 2022 as the anticipated completion date for the Purple Line project.