Floating a $600 Million Bond Issue to Build New Portal Bridge

Plan could go long way to convincing Trump administration to pony up its contribution to bridge project, a key element for speeding rail traffic along Northeast Corridor

Artist's rendering of new Portal North Bridge
Gov. Phil Murphy’s administration is preparing to provide a major financial boost to a long-planned replacement of the Portal Bridge, a key north Jersey rail crossing that is a frequent source of Northeast Corridor commuting headaches.

An outline of the administration’s plan to raise $600 million in funds to cover New Jersey Transit’s share of the cost of replacing the span was revealed in documents posted online earlier this month by the Department of Treasury. It’s seeking proposals from firms that could help arrange the financing either later this year or early in 2019.

The state Economic Development Authority will also be involved in the project’s financing. The EDA board voted yesterday to approve a preliminary bond resolution and funding agreement with NJ Transit, whose board is holding its own meeting today.

At $600 million, Murphy appears to be significantly increasing the state’s prior commitment to the bridge replacement, which could cost an estimated $1.5 billion in all, with funding also coming from the Port Authority and the federal government. A beefed-up state contribution could go a long way toward convincing the Trump administration to provide full matching funds, since it has previously questioned the state’s commitment to the bridge project, along with other elements of what’s known as the Gateway infrastructure program.

“This is a very important commitment by our local partner to ensure the next step in this vital bridge, which is part of Gateway, becoming a reality for the hundreds of thousands of riders who need it,” said Stephen Sigmund, chief spokesman for the Gateway Program Development Corp.

Murphy’s press secretary did not respond to a request for comment yesterday, but Tim Sullivan, the EDA’s chief executive, issued a statement that said his agency is looking forward to moving “this important project forward.”

“Gov. Murphy has made clear that investments in infrastructure and mass transit are critical to New Jersey’s ability to create a vibrant economy and fully leverage one of the state’s greatest assets — our location,” Sullivan said.

The Portal Bridge in profile

Opened in 1910 for the Pennsylvania Railroad, the Portal Bridge spans the Hackensack River at a key location along the Northeast Corridor near Secaucus Junction. Now owned by the federal government, the span is used by both Amtrak and NJ Transit, carrying an estimated 166,000 passengers across the river in each direction on daily trips to and from Penn Station in New York City.

The current Portal Bridge when open
Though federal officials have offered assurances that the bridge is still safe, it is often a source of major delays since the span sits close enough to the river that it must be swung open to allow for maritime traffic to pass. It is also prone to mechanical problems, including getting stuck in the open position, that can bring the region’s rail traffic to a halt.

The $1.5 billion bridge-replacement project calls for the construction of the “Portal North Bridge,” which would be a high-level, fixed-span bridge that would move the two-track crossing more than 50-feet above the river, obviating the need for it to open. Federal and state officials have said the replacement would increase capacity by an estimated 10 percent, and also allow trains to get across the river faster and more reliably.

Last year, state and federal officials celebrated the launch of the initial construction work at the site, including building a retaining wall and setting up a pier. But despite that groundbreaking, concerns have lingered about how the financing for the new bridge itself would come together beyond commitments already made by the Port Authority and Amtrak, which cover about a quarter of the total cost. New Jersey had previously committed to providing some $300 million, with the federal government expected to pick up the balance.

Murphy to put more money in

According to Treasury’s request for proposals, the Murphy administration appears to be preparing to increase the state’s commitment significantly.

“The goal of the Proposed Transaction is to provide approximately $600 million in bond financing for NJ Transit’s share of the total cost of the Portal North Bridge Project,” the RFP said.

The document also indicates the bonds would be issued for NJ Transit by the Economic Development Authority, and investors would be paid back using revenue generated from the state Transportation Trust Fund. Those funds would also be “subject to annual appropriation by the State Legislature,” the RFP said. Firms interested in handling the transaction have until Friday to submit a proposal.

Murphy, a first-term Democrat, has stressed the need to improve New Jersey’s mass-transit operations as part of a broader plan to reinvigorate a state economy that he says has been underperforming in the wake of the Great Recession. In fact, his budget plan for the 2019 fiscal year, which begins July 1, would also boost aid for NJ Transit out of the general fund by $242 million, in part to hire new workers and implement service enhancements. The governor is currently negotiating directly with legislative leaders on the budget, but a deal has yet to be announced.

Criticizing Christie

On the capital-spending side, Murphy has also criticized decisions made by his predecessor, Republican Chris Christie, including the 2010 cancellation of a long-planned trans-Hudson rail tunnel known as Access to the Region’s Core, or ARC. He’s also thrown his support behind the Gateway program, which includes a plan to dig a new tunnel, in addition to the Portal Bridge replacement.

It remains to be seen whether the Trump administration will live up to a funding commitment to the Gateway program that was made by former President Barack Obama. That framework called for 50 percent of the overall $30 billion cost of the proposed Gateway work to be covered by the federal government, with the remaining 50 percent paid for by New Jersey, New York, and the Port Authority.

Federal transportation officials have also questioned recently whether the states are putting enough “skin in the game,” and earlier this year downgraded the priority rating of the Portal Bridge replacement in a move that threatened to jeopardize the awarding of any significant federal dollars.

A statement issued by NJ Transit yesterday indicated the agency is “fully committed to advancing the Portal North Bridge Project.”

“The NJ EDA’s board action to approve a preliminary bond issuance resolution, and the execution and delivery of a funding agreement, emphasizes that the local funding is firmly committed for this vital transportation infrastructure project,” the statement said.