New Jersey Transit formally rejected a $271 million repayment demand Tuesday from the Federal Transit Administration, which is seeking to recover funds allocated for a canceled $8.7 billion mass-transit tunnel.
New Jersey’s biggest public transportation provider claims the proposed commuter rail tunnel, which would have run under the Hudson River to connect northern New Jersey and Manhattan, could not be completed for reasons beyond the agency’s control.
Federal officials estimate the Access to the Region’s Core, or ARC tunnel, could have incurred cost overruns of $1.1 billion to $4 billion, with New Jersey on the hook for those potential expenditures.
Gov. Chris Christie terminated the ARC tunnel project in late October, saying the state could not afford the additional costs.
Following that announcement, the FTA asked NJTransit to pay back $271 million that the federal government spent on the project.
According to the FTA’s early systems work agreements, participants must repay FTA funds if an applicant “does not carry out the project for reasons within” its control.
NJTransit also maintains that only federal New Starts funds are subject to repayment under the agreements. The tunnel project received $51.5 million of New Starts funds, according to NJTransit. The other funds include $128 million of congestion mitigation and air quality funds and $91.5 million of federal stimulus funds from the American Recovery and Reinvestment Act.
“There is no legal basis to require NJTransit to repay any of the funds in question,” NJTransit said in its response. “The project was cancelled for reasons beyond NJTransit’s control. FTA’s re-estimate in the final stages of the New Starts process increased the cost of the project by as much as $5 billion, imposing a financial burden that NJTransit and its local funding partners could not afford.”
New Jersey’s obligation towards the project was $2.7 billion, along with $775 million for a new Portal Bridge South, part of the ARC project. The federal government and the Port Authority of New York and New Jersey also pledged $3 billion each.
“The FTA is currently reviewing NJTransit’s response and will make a decision that is in accordance with the law,” U.S. Department of Transportation spokeswoman Olivia Alair said in a statement.
