N.J. Increases Cost Estimate of Rail Tunnel Under Hudson River

At the request of the Federal Transit Administration, New Jersey officials increased the estimated cost of a new passenger-rail tunnel that will run between Newark and Manhattan to $8.7 billion, a $1.1 billion boost from the project's earlier cost estimate.

The adjustment will give the new tunnel - called the Access to the Region's Core, or ARC tunnel - additional room for potential increases in construction costs and interest rates as the project progresses over the next decade.

The North Jersey Transportation Planning Authority, which weighs in on all transportation projects in northern New Jersey supported by federal funds, yesterday approved the revised cost of the new tunnel. Officials expect to begin construction on the tunnel by the fall of 2009 and passenger trains could be running through the tunnel by 2017.

"The $8.7 billion cost includes aggressive contingency costs that the FTA has required as part of the process," said New Jersey Transportation Commissioner Kris Kolluri. "So, in many ways that's good because it's a hedge against escalation of material costs and interest costs numbers."

Current plans call for the New Jersey Transit Authority, which oversees the new tunnel project, to contribute $1.25 billion towards the tunnel. The state's Department of Transportation will allocate another $1.5 billion from federal highway dollars that it receives and the Port Authority of New York and New Jersey will contribute $3 billion towards the project.

New Jersey officials are hoping the FTA will supply the remaining funds, nearly $3 billion, for the tunnel, and could hear as soon as this year or early 2009 whether or not those funds will be forthcoming, Kolluri said.

Gov. Jon Corzine yesterday announced that the FTA approved the tunnel's final environmental impact statement, a necessary step before obtaining federal funding.

How the state will pull together NJTransit's $1.25 billion contribution is a bone of contention between the Corzine administration and Republican lawmakers. Corzine, a Democrat, prefers using toll revenue generated from recently approved toll increases on the New Jersey Turnpike and the Garden State Parkway to help fund the $1.25 billion contribution. Administration officials believe the ARC tunnel will help relieve congestion on the turnpike as more commuters will use mass-transit instead of driving.

Meanwhile, GOP legislators claim that using toll revenue for non-highway projects violates the enabling statute of the New Jersey Turnpike Authority, which oversees the turnpike and the parkway. Senate Minority Leader Tom Kean, R-Essex, who believes the ARC tunnel will benefit New Jersey, has said that he is exploring a potential lawsuit to challenge using toll revenue for the tunnel. In addition, the senator said that as the costs for the project increase, the administration should give more details on those costs.

Kean said the state could pay for the tunnel, in part, with funds from the operating budget if Corzine were to implement cuts in the general fund that Republican lawmakers proposed earlier this year.

"I support the tunnel," Kean said. "I think the tunnel is an important project for the future of the region, but the question is, even as it's an important project, it needs to be funded appropriately."

 

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