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Christie-Cuomo Endorsement Could Put Gateway Rail Tunnel Back on Track

Governors agree to split half of project’s $20 billion price tag, looking to feds to pick up rest of tab

Construction of an urgently needed rail tunnel under the Hudson River appears to have suddenly become much more likely after Gov. Chris Christie and New York Gov. Andrew Cuomo yesterday endorsed a plan for the two states and the Port Authority to cover half of the project’s expected $20 billion cost, with the federal government being asked to pay the other half.

The surprise announcement, made in a letter from the governors to President Barack Obama, brings new clarity to Amtrak’s proposed Gateway tunnel project, which has been in limbo with no lead sponsor or funding plan. The letter states that the Port Authority of New York and New Jersey, which is controlled by the governors, will “take the lead in the effort.”

“We are both committed to funding our fair share of the cost and, at our direction, the jointly operated Port Authority of New York and New Jersey is ready to help,” Cuomo and Christie wrote. “Our states are committed to doing our part and to contributing funding, personnel, and resources. We know how to build a tunnel.”

The letter apparently ends an impasse over whether and how to move the project forward, and was welcomed by transportation advocates and Senate Democrats who have been calling for quick action on the tunnel proposal.

“The Senate Democratic leadership has been pushing for months for the Port Authority of New York and New Jersey, the bistate agency responsible for trans-Hudson transportation, to take a lead role in the Gateway project,” said Sen. Bob Gordon (D-Bergen), chairman of the Senate oversight committee, which has been holding hearings on Port Authority projects. “We are pleased the governors are now making this project a Port Authority priority.”

“This is a remarkable day. Unexpectedly good,” said Martin Robins, a former NJ Transit executive who planned the ARC tunnel, the previous trans-Hudson tunnel project that Christie canceled five years ago. “A stroke of wonderful fortune.”

Though it may represent a major advance for Gateway, the governors’ letter still leaves significant questions to be answered, such as how the local and regional half of the financing will be structured, and how Congress will respond to a $10 billion funding request.

“It is now up to the federal government to act quickly to both match the local commitment and expedite the project,” Senate President Stephen Sweeney (D-Gloucester) said in a statement. “Until we do, commuters will continue to suffer delays and overcrowding. This project is critical to the regional economy and will provide benefits for generations to come.”

The Obama administration reportedly issued a brief statement, saying, “We are encouraged that all parties have come to the table committed to move the project forward. We look forward to continued cooperation on this project under [U.S. Transportation Secretary Anthony Foxx’s] guidance and leadership as Secretary Foxx and his team work with New Jersey and New York to identify how the federal government can best support progress on this project.”

Yesteday’s announcement represents a vote of confidence in the Port Authority, an independent agency with a $7.8 billion annual budget -- including a $3.6 billion capital plan -- but also a burden of recent political scandals and other massive infrastructure projects that remain unaddressed.

As recently as last month, when asked about Gateway, Cuomo proclaimed, “It’s not my tunnel!” and said New York should not have to cover any of the cost.

Christie, meanwhile, has largely ignored the project as he runs for the Republican presidential nomination, saying at one point he would convene a meeting of top officials to discuss the tunnel -- if he is elected to the White House. He also continued to defend his decision five years ago to cancel the planned ARC tunnel between the two states.

The tunnel “never let him go. It kept haunting him for the last five years,” Robins said. “It had to be done. It was something he couldn’t get away from.”

Most recently, electrical problems in the existing tunnel for several days in a row in July led to lengthy train delays and left angry commuters stranded on station platforms along Amtrak’s Northeast Corridor. Foxx called inaction on the tunnel “almost criminal” and asked for a meeting to discuss Gateway, which Christie attended but Cuomo skipped.

“What happened this summer, with just a few weeks disruption, gave everybody just a taste of how bad things could be,” said Tom Wright, president of the Regional Plan Association. “To realize it wasn't just a hypothetical, but a kind of inevitability that the system would break down if we don't invest in it, changed attitudes and perspectives on this a great deal. It's a pretty remarkable turn of events. They've come a long way in a short time.”

Amtrak has said the existing, 105-year-old tunnels will eventually need to be shut down for repairs, slashing peak-hour train capacity by three-quarters and potentially causing major economic repercussions in both New York and New Jersey. The tunnels were damaged by flooding sea water during Hurricane Sandy, accelerating their deterioration.

Even before this summer’s problems, the Obama administration had been pushing for New York and New Jersey to agree to take on Gateway, since Amtrak does not have the capacity to lead the project and Congress was unlikely to provide full funding. Such an agreement, once finalized, would allow engineering planning of the tunnel and a lengthy environmental review process to begin. Amtrak has already begun some initial work.

“There's a lot of moving parts and a lot of planning that is necessary. They've been moving, but it gets to a point where you need to have that funding mechanism in place in order for it to continue to move,” said Janna Chernetz, senior New Jersey policy analyst at the Tri-State Transportation Campaign. “From my understanding from speaking with Amtrak, we were getting to that critical juncture and by the end of the year we needed to have some kind of funding planning in place in order to continue to move Gateway forward.”

Last month Amtrak officials said they were pushing for an 80-20 funding split, with the federal government covering the larger portion. That drew an enthusiastic response from New Jersey Senate Democrats eager to see the project advance. Sweeney said at the time that the state could borrow $3 billion from the federal Railroad Rehabilitation and Improvement Financing program at a low interest rate and pay back $130 million a year for 35 years.

The proposed 50-50 split, though apparently less generous, might still represent a $3 billion obligation for New Jersey depending on how the $10 billion local responsibility is divided. The governors’ letter says only that the Port Authority and the states “will take responsibility for developing a fund plan for the other half, convening all relevant agencies, and utilizing the proposed federal low-interest loan, local funding sources, and other funding strategies necessary to complement the federal grant commitment.”

The governors have “really done a kind of public service in starting this specific conversation,” Wright said. “It was a kind of chicken-and-egg situation before, where everyone would talk about how important it was and how all the actors needed to come together, but the real question's always been, how much can the feds come up with in grants to get it started? They made a serious ask, but now we should be able to have a discussion and hopefully come to a good conclusion.”

In a press release, Gordon, Senate Majority Leader Loretta Weinberg (D-Bergen), and Sen. Paul Sarlo (D-Bergen) praised U.S. Sen. Cory Booker (D-NJ) for pushing to make RRIF loans available to cover the states’ share of the project. No RRIF loan has ever exceeded $1 billion, but the program has more than enough funding authorization to cover the regional responsibility for Gateway.

Booker also played a key role in arranging the meeting between Christie and Foxx, which was held in the senator’s Newark office.

The $20 billion price tag is higher than some earlier estimates, apparently because it includes construction of a new Penn Station South in Manhattan, which will be needed to accommodate the greater train traffic permitted by the added tunnel. The new tunnel could open by 2030.

Another open question is the exact structure of the entities that will plan, pull together the financing, and build the tunnel and related infrastructure. Cuomo and Christie said the Port Authority was prepared to act on a recent suggestion by Sen. Charles Schumer (D-NY) to “create a dedicated staff and an entity within the Port Authority to develop such a plan and to get the right agencies and parties involved.”

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