A photo op will not find $29 billion for the Gateway Tunnel Project

The Gateway Tunnel project is reminiscent of the ongoing Metropolitan Transportation Authority Long Island Rail Road Eastside Access to Grand Central Terminal project.
Sen. Charles Schumer (D-NY) speaks at a news conference at the Hudson Yards site in Manhattan on May 30, 2013. (Getty Images)

The recent meeting between President Trump, Governors Chris Christie of New Jersey, Andrew Cuomo of New York along with Senators Chuck Schumer, Kirsten Gillibrand and Corey Booker to discuss the $29 billion Gateway Tunnel project was a great photo op but little else. The Gateway Tunnel would provide additional tracks for both Amtrak and New Jersey Transit connecting New Jersey to Penn Station. The proposed Gateway tunnel funding of $900 million in the 2018 federal budget is really just a small down payment for finding the balance of $29 billion down the road to fully fund the proposed Gateway Tunnel project. Financing of this project with real money is the bigger issue which elected officials need to resolve. The Federal Rail Road Administration draft Environmental Impact Statement for the Gateway Tunnel confirmed increases in total project cost. Two years ago, the estimated cost grew by $3.9 billion from $20 billion to $23.9 billion, This summer, the new cost estimate has grown another $5.2 billion from $23.9 billion to $29.1 billion. This most recent increase is based on the estimated cost for both the new tunnel and rehabilitated old tunnel portions of the overall project which has grown from $8.7 billion to $12.9 billion. 

 

All the federal Department of Transportation has provided to the Gateway Development Corporation was approving permission to enter the Project Development Phase of the Federal Transit Administration New Starts Program in June 2016. This is just the first step of a long multi year process.

 

The Gateway Development Corporation looking for private developers to help pay for the $29.1 billion new Hudson River Gateway Tunnel as part of a joint public/private partnership is no surprise. It suggests that the proposed three way federal/ New Jersey/New York $29.1 billion funding package is primarily verbal commitments and wishful thinking. Two years later it is still not real. The Port Authority of New York & New Jersey allocation of $2.7 billion within the approved $32 billion 2017 - 2026 ten year capital plan to help finance the Gateway Tunnel is just initial seed money. These dollars will be used toward debt service payments against a possible future federal Railroad Rehabilitation and Improvement Financing loan to the Gateway Development Corporation for this project. It has yet to be approved and will have to be paid back. Without real financial resources from not only Washington ($14.6 billion), but also New York ($7.3 billion) and New Jersey ($7.3 billion), how will the Gateway Tunnel be paid for? A project can't be financed by just borrowing alone. Governors Cuomo and Christie believing that the Port Authority will provide most of their contributions is wishful thinking. The Port Authority allocation of $2.7 billion within the approved $32 billion 2017 - 2026 ten year capital plan to help finance the Gateway Tunnel is just initial seed money. These dollars will be used toward debt service payments against a possible future federal Railroad Rehabilitation and Improvement Financing loan to the Gateway Development Corporation for this project. It has yet to be approved and will have to be paid back. This same Port Authority plan only only provided $3 of the $10 billion needed for a new 42nd Street Bus Terminal and $0 toward the $10 billion 30 year old proposed Cross Harbor Freight Tunnel. Both projects would be competing against the Gateway Tunnel project for funding in the next Port Authority 2027 - 2036 Capital Plan. Just how many dollars do Cuomo & Christie believe the Port Authority should increase the existing EZ Pass off peak $10.50, peak $12.50 or cash $15 toll over coming years to come up with their respective $7.3 billion shares of the Gateway Tunnel project? Will they double to $23.00 off peak, $25.00 peak or $30 cash by 2028?

 

The lack of real funding is so bad that all three parties between them are unable to come up with $440 million needed this year. These dollars would pay for the third 550 foot long concrete casement beneath Hudson Yards. This work has to be completed before the Hudson Yards developers begin construction of their final project phase at the same location. The concrete casement preserves the Gateway tunnel route access from New Jersey to Penn Station.

 

The Gateway Tunnel project is reminiscent of the ongoing Metropolitan Transportation Authority Long Island Rail Road Eastside Access to Grand Central Terminal project. In 2001. the initial estimated cost was $3.5 billion with a completion date of 2011. In 2017, sixteen years later (based upon the 2016 MTA Federal Transit Administration amended Full Funding Grant Agreement) currently at $10.8 billion, could grow up to $12 billion with completion in 2023. Will Gateway do the same and become our New York version of the infamous Boston "Big Dig" end up costing $40, $50 or even $60 billion and completed by 2038?

The Gateway Development Corporation reminds me of the character Wimpy who famously said "I'll gladly pay you Tuesday for a hamburger today." Tuesday may never come for commuters and taxpayers who use NJT and Amtrak and need a new Hudson River Tunnel to be completed within their lifetime. 

Larry Penner is a transportation historian and advocate who previously worked 31 years for the US Department of Transportation Federal Transit Administration Region 2 NY Office.

 
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