Strength in Numbers: Can Transportation Alliance Get Gateway Project Going?

Meir Rinde | August 13, 2015 | Transportation
U.S. Sen. Schumer calls for Gateway Development Corp.; former ARC project director envisions coalition of transit agencies

Credit: U.S. Department of Transportation
New Jersey entrance to the two century-old tunnels that carry Amtrak and NJ Transit trains into New York City
As the governors of New Jersey and New York struggle to head off urgent calls to prevent an interruption of cross-Hudson rail travel, a U.S. senator and a prominent transit advocate are proposing that the region’s transportation organizations band together into a grand coalition that could build a new pair of train tunnels between northern New Jersey and Manhattan.

The proposals seek in different ways to answer a basic question that has bedeviled discussions of Amtrak’s planned Gateway tunnel project: Which agency, exactly, will finance and oversee the $15 billion, decade-long effort? Without a sponsor and a source of funding, the tunnels will not be built. When Amtrak eventually has to shut down one of the existing, 105-year-old rail tunnels for repairs, some time in the next 20 years, the number of daily trains will be reduced by three-quarters, crippling the commute and damaging the regional economy.

Amtrak is advocating hard for Gateway, and has spent $300 million to buy land and build a right-of-way the rail line will need in Manhattan, but agency officials have said they do not have the capacity or money to do the whole project on their own. Christie and New York Gov. Andrew Cuomo have taken hands-off stances, with Cuomo on Monday exclaiming, “It’s not my tunnel! Why don’t you pay for it?” The Port Authority of New York and New Jersey has only nodded vaguely toward taking a role in fixing trans-Hudson rail.

One of those stepping into the breach is Sen. Charles Schumer (D-NY), who on Tuesday proposed creating the Gateway Development Corp., a partnership of New York, New Jersey, the Port Authority, New York’s MTA, Amtrak, and the federal government. It would concentrate planning in one place and allow each organization to contribute funds not available to the others, he said during a policy speech at New York University’s Rudin Center for Transportation Policy and Management.

“Amtrak can’t access federal mass-transit funding. The Port Authority and regional Transit Agencies can’t access federal railroad dollars the way Amtrak can,” Schumer reportedly said. “We’ll only get Gateway done by adding up several pieces of financing, with an eye toward getting the maximum amount possible from the federal government.”

An Amtrak official said on Monday that the agency would lobby for an 80-20 federal-state funding split, a more favorable ratio than was offered for the now-defunct ARC tunnel project several years ago. That would likely require Congress to set aside billions of dollars for Gateway, which is far from assured, but New Jersey Democrats were quick to seize on the comments as a “game-changer” that should bring the governors to the negotiating table.

Schumer’s not the only one who thinks a super-entity of various interested parties is the only way to make Gateway happen. A similar proposal is being developed by former NJ Transit executives Martin Robins and D.C. Agrawal. Robins, the founding director of the Alan M. Voorhees Transportation Center at Rutgers, was the project director of ARC, the earlier trans-Hudson tunnel project that Christie canceled in 2010.

“We need to pool the resources of the various agencies so we can strengthen the effort on this one project, because this is of such incredible strategic importance,” Robins said yesterday.

Robins’ and Agrawal’s proposal is much broader than Schumer’s in that it would reorganize management of Amtrak’s entire Northeast Corridor line in the New York area, including Penn Station. Shared management would give NJ Transit and the Long Island Rail Road more authority, which makes sense because they are the station’s principal users, Robins said. The Port Authority would also join in to handle planning and engineering of the tunnel, and to figure out how to develop unused Amtrak properties to earn money for Gateway and other infrastructure projects.

Robins and Agrawal have worked on their plan for three months and yesterday had a “very constructive” discussion of their ideas with NJ Transit Executive Director Ronnie Hakim, Robins said. They’ve also communicated with Amtrak Chairman Anthony Coscia, who formerly headed the Port Authority board, and with current Port Authority leadership, he said.

[related]“We see a large role for the Port Authority in the engineering, project management, and the real estate side. All of this is just being floated around now, but Sen. Schumer has opened the door to discussing this,” Robins said. “The institutional structure is very shaky as we start the Gateway project, and it really could be greatly improved for decades and decades to come if we can come up with some good solutions here.”

One difference between the two proposals is that Robins’ and Agrawal’s plan deals principally with organizational structure and leaves the financing details to be worked out by the participating agencies. Schumer, on the other hand, offered specific ways to raise money for the project along the lines of measures that Congressional Democrats have supported for years.

For one, the senator wants to reserve revenues from Amtrak’s lucrative Northeast Corridor for upgrades to the trans-Hudson portion and other parts of the line. The funds currently subsidize 15 unprofitable Amtrak lines around the country. A funding bill co-sponsored by Sen. Cory Booker (D-NJ) that would make that change won committee approval in June.

Schumer also wants more federal New Starts grants for mass transit agencies, which the MTA and NJ Transit could apply for, and inclusion of capital funding for Amtrak in the oft-delayed federal transportation bill. That money would come from taxing cash that U.S. companies return from overseas.

Additional funds could be loaned by the federal Railroad Rehabilitation and Improvement Financing Program or RRIF. That program’s largest loan to date has been only $967 million, which was approved this year for MTA train-safety systems, but the RRIF has more than $30 billion remaining and theoretically could loan out billions at a time.

It was not immediately clear how the Gateway Development Corp. would generate enough revenue to pay back the loan, given that NJ Transit, the main user of the proposed tunnel, recently had to hike fares 9 percent just to cover current operating expenses.

After Amtrak vice president Stephen Gardner mentioned RRIF during a New Jersey legislative committee hearing on Monday, Senate President Stephen Sweeney (D-Gloucester) said a 35-year, $3 billion loan to New Jersey would cost the state about $130 million a year. A higher state gas tax, which Sweeney supports and Christie has so far opposed, could help cover those payments.

Cuomo and Christie issued statements after Schumer made his proposal, but they did not address the idea of a new development corporation. Christie’s office defended his cancellation of the ARC project and reiterated his demand that the federal government and New York contribute equally to Gateway. Cuomo alluded to his previous remarks that the federal government should pay for new tunnels.

Schumer did not specify how his proposed corporation would be structured. Robins said it made sense for the project’s engineering and environmental-review process to be headed by the Port Authority or perhaps an authority subsidiary created for that purpose. The bistate agency already manages an extensive real estate portfolio, and could also take the lead in developing Amtrak properties to raise money for Gateway and other projects. (The Port Authority has said that replacing its overtaxed Manhattan bus terminal could cost another $10 billion.)

Robins said Amtrak assets that could be developed include Penn Station, which could see the departure of Madison Square Garden in 2023; the neighboring Farley Post Office, which has space for further development beyond the current Moynihan Station construction; and Amtrak’s Sunnyside Yards in Queens, a large rail yard that could be covered with a platform, much as Hudson Yards is being covered in Manhattan.

Regarding Penn Station, Robins said it does not make sense for Amtrak to manage the station alone because it runs relatively few trains there compared to NJ Transit and LIRR. And while Amtrak has developed a decent working relationship with LIRR, “that is not necessarily the institutional history between NJ Transit and Amtrak,” he said. “It’s been a very contentious and difficult relationship, as evidenced by those letters and reactions you got in July.”

He was referring to angry letters that Christie and Hakim sent Amtrak after electrical problems on the trans-Hudson line suspended service and caused lengthy delays for several days in a row last month, outraging commuters and further spurring federal efforts to advance Gateway. U.S. Transportation Secretary Anthony Foxx subsequently asked Christie and Cuomo for a meeting to discuss the tunnel project. Christie and U.S. Sens. Booker and Menendez (D-NJ) will meet with Foxx on Tuesday, while a meeting with Cuomo has not yet been set.