New Jersey has spent nearly $600 million on a new $8.7 billion passenger-rail tunnel called the Access to the Region’s Core, but Gov. Chris Christie may terminate the project due to escalating costs.
The new ARC tunnel will run from the New Jersey township of North Bergen, under the Hudson River to midtown Manhattan, and double New Jersey Transit’s rail capacity. Christie has said that federal officials estimate the project could cost $2 billion to $5 billion more than the current $8.7 billion price tag and New Jersey cannot afford the extra expense.
The Republican governor last month suspended new construction on the tunnel — one of the nation’s largest mass transit projects — for 30 days to enable officials to review cost estimates. That hiatus ends Friday. Christie is expected to announce his decision ending the project this week, according to public radio station WNYC.
Christie spokesman Michael Drewniak would not comment on the ARC tunnel or reports that the governor will terminate the commuter-rail project. “That’s speculative and we have no announcements to make today,” he said.
The ARC tunnel has been under construction for 16 months and has been progressing from concept to reality for at least five years. NJTransit also declined comment on the project Wednesday.
“If the price is significantly higher than $8.7 billion, I’m going to have no choice but not to move forward,” Christie said during a UBS Securities LLC conference on public finance on Sept. 30. “We’ll just have to wait and see. I’m not going to prejudge it. I want to see the numbers.”
The federal government and the Port Authority of New York and New Jersey are responsible for contributing $3 billion each, with the Garden State shouldering $2.7 billion. To cover the state’s share, the New Jersey Turnpike Authority is scheduled to begin raising tolls along the 148-mile turnpike beginning in fiscal 2012.
New Jersey Treasury spokesman Andrew Pratt said the state has spent nearly $600 million on the ARC tunnel. Construction began June 8, 2009, during the administration of former Gov. Jon Corzine, a Democrat. Corzine championed the project at a time of surging unemployment, along with New Jersey’s U.S. senators, Frank Lautenberg and Robert Menendez, both also Democrats.
The ARC tunnel is expected to create 6,000 construction jobs and add $660 million in new gross regional product annually during construction.
From fiscal 2008 through f 2011, NJTransit allocated $586.8 million from its annual capital budgets to the ARC, including $158.2 million this year, $193 million in fiscal 2010, $137 million in fiscal 2009, and $98.6 million in fiscal 2008, budget documents said.
NJTransit’s capital budget is financed with New Jersey Transportation Trust Fund Authority borrowing and federal funds. Officials anticipate completing the project in 2018.
Lautenberg sent a letter to the Port Authority on Tuesday urging it to add to its $3 billion pledge. He cited a March 2009 project work agreement between the Port Authority and NJTransit that reads: “Should the tunnel project’s cost exceed $8.7 billion or should the parties secure less than $3 billion in [federal funds], both parties agree to work together in good faith to secure additional funding.”
Authority spokesman Ron Marsico declined to comment on the letter. The recent uncertainty over the ARC tunnel follows the announcement last week that Christie is replacing Anthony Coscia as chairman of the Port Authority of New York and New Jersey with former state Attorney General David Samson, a Republican.
It is unclear exactly how much money the Port Authority has spent on the project to date. Marsico declined to provide spending information.
Since 2006, the authority has budgeted $929 million for the tunnel project. The 2006 budget included $85 million for preliminary planning and site acquisition. The 2009 and 2010 budgets included $340 million and $504 million, respectively.
In December 2007, the authority approved the aggregate expenditure of up to $100 million through 2008 for property acquisition, administrative costs, planning, design, engineering, and construction.
In 2008, the authority board authorized bonds for project costs. In July 2009, the authority authorized an additional $500 million for those costs through mid-year 2010. The authority attributed operating losses of $884,000 in 2009 to the project.
During its development, the ARC tunnel will also generate a combined $390 million of personal income per year in New Jersey and New York. The Region Plan Association projects the value of New Jersey homes located close to NTransit stops will increase more than $18 billion over eight years. The RPA is an independent urban research and advocacy group.
RPA spokeswoman Neysa Pranger said that while the rumors that Christie will end the project are just rumors, terminating the development would hinder those seeking employment in New York City since NJTransit’s capacity into Manhattan has already reached its maximum of nearly 300,000 commuters. “There’s no doubt that it would affect the region and it would hit New Jersey residents the hardest,” Pranger said of a cancellation. “There’s currently a hard cap on the number of New Jerseyans that can get into the city to tap the lucrative job market in Manhattan.”
NJTransit trains currently travel to Manhattan through a single two-rail tunnel, which they share with Amtrak trains.
Kathryn Wylde, president and chief executive officer of the Partnership for New York City, a business organization, said the ARC tunnel is a must for the region in the long term and not a discretionary project.
“The idea that accessibility would be dependent on the obsolete tunnels that exist today is frankly unthinkable,” Wylde said.