Reply to Does the situation with state and local revenue mean the end of the Purple Line?

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote]Yes, it's over.[/quote]

Just be aware that the state and counties (MoCo and PGC) will be on the hook for a lot of money either way.

Either they are going to have to pay for the cost overruns and possibly higher costs for a new contractor (if they don't negotiate with the departing contractor) or they are going to have to reimburse the federal government for the money that the federal government invested in the project.  With federal transportation grants, the states are responsible for reimbursing the federal government if they do not complete projects.   It will cost the state and counties a LOT more not to finish the project than to finish it.

To give you an idea, the project is about $300M over current projections.  The original contractor offered the state that they would continue the project with no profit margin for the initial four contractors if the state would pay the overruns.  Not sure they'll still take that deal, but it was the starting point.  The estimate for getting a new contractor will probably cost around $500M (the $300M for the full project funding, costs to restart with the contractors, e.g. additional overhead, plus a profit margin for the new contractors).  The government committed $900M to the project and the state and counties will be responsible for repaying the federal government the $900M if they do not complete the project.[/quote]

There was a good article in the Post about this but I think a lot of people would be shocked if they don't work it out - it will reflect really badly on both the contractor and the State if they allow this to fall apart though the entire PPP that they set up is looking stupider by the day. With no stimulus bill on the horizon big construction projects are going to be few and far between in the near future so the contractor should be happy with any deal that just covers their costs with a small profit going forward at this point.

This article did a pretty good job of covering all different interests:

https://www.washingtonpost.com/local/trafficandcommuting/maryland-likely-to-be-on-the-hook-for-millions-if-it-wants-to-save-the-purple-line-project-analysts-say/2020/06/12/29b40dda-ab39-11ea-a9d9-a81c1a491c52_story.html

[/quote]

I'm the PP you responded to.  Good article.  I see that the cost overruns have escalated and it's now up to $755M in overruns.  If the state drags its heels much longer, it may be right to pay the federal government back the $900M and abandon the project.  Hopefully Montgomery County will be responsible for paying most of that.[/quote]

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