Thursday, November 12, 2015

Agreement reached to fund Hudson River Tunnels; establishes management entity

New York and New Jersey leaders have reached an agreement on funding commitments and a governance structure that will allow the Gateway Tunnel Project to move forward.


The agreement moves forward the effort to build a new trans-Hudson river tunnel that is an essential portion of Amtrak's eight-state Northeast Corridor that connects the states of New York and New Jersey.

"I am pleased to announce that the hard work of many people is bearing fruit and that for New Jersey commuters there is finally light at the end of the tunnel," said U.S. Sen. Cory Booker (D-NJ). "Since the meeting I convened in my Newark office on August 18, this group has put forward tremendous effort to find an equitable funding and governance structure for the Gateway development corporation. This agreement is a significant step forward for the Gateway project, which because of the current tunnel's deteriorating condition and growing demand is among our nation's most important infrastructure projects."

"This agreement marks the first inning of a long game," said U.S. Sen. Charles Schumer (D-NY), "but it's a big change that has the federal and state players on the field on the same team, instead of in opposing dugouts."

"The century-old rail tunnels under the Hudson River are antiquated and this agreement is an important step towards averting a potentially disastrous situation for millions of commuters and our entire region's economy," said U.S. Sen. Kirsten Gillibrand (D-NY). "The Gateway tunnel is a long overdue solution to our ailing infrastructure and this agreement moves us closer to ensuring our long term economic growth and relieving mounting congestion along the Northeast Corridor‎."

The framework agreement includes a first-ever federal funding commitment that Sens. Schumer and Booker secured from the U.S. Department of Transportation and Amtrak to cover no less than 50 percent of the project costs via grants and other federal funding. The 50 percent federal funding commitment comes in response to New York Gov. Cuomo's and New Jersey Gov. Chris Christie's letter of September 15, 2015, in which they announced that the two states would take responsibility for developing a funding plan to cover the other half of the project costs if the federal government committed to provide half of the funding.

The agreement sates that in order to develop a financing plan for the Gateway Project, the newly established Gateway Development Corporation will identify and maximize federal grant opportunities in conjunction with USDOT and will pursue a low interest loan from the Railroad Rehabilitation & Improvement Financing ("RRIF"), and the Transportation Infrastructure Finance and Innovation Act ("TIFIA") that will allow all project partners to access capital as inexpensively as possible. Due to the extraordinary circumstances involved in building one of the largest infrastructure projects in the nation, the Sens. and Governors intend to work together to ensure that payment of debt service is deferred to the time when the Gateway Project is placed into service to the nation.

Sens. Schumer and Booker worked closely with U.S. Transportation Secretary Anthony Foxx and Amtrak and secured a commitment from both that respective agencies would cover half of the total project costs. The federal share of funding for the project is likely to come from a combination of New Starts Grant dollars, Amtrak Northeast Corridor profits, Amtrak capital funds, annual appropriations and other similar federal sources. In addition, the federal partners may utilize a low interest federal loan to lower the cost of capital for their share, for which Amtrak and/or their federal partners or federal designees take responsibility for debt service payments.

In addition, the federal and state partners agreed, due to the nature of this project and to make it a reality in a timely manner, to work together to expedite all environmental and planning approvals needed to bring this project online as soon as possible.