Friday, December 15, 2017

New York, New Jersey commit to funding local share of Gateway Project

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A new Hudson River Tunnel will be built so the existing North River Tunnel (shown) can undergo repair work, which is expected to occur in 2026. A new Hudson River Tunnel will be built so the existing North River Tunnel (shown) can undergo repair work, which is expected to occur in 2026. Amtrak

New York and New Jersey have reached a deal to fund 100 percent the local share of the Gateway Hudson Tunnel Project originally laid out in a 2015 framework agreement, which calls on the federal government to fund 50 percent of the project.

The $12.7-billion rail project has been called the nation's most urgent, critical major infrastructure project and is along an essential portion of the Northeast Corridor connecting New York and New Jersey. The commitment to fund the local share represents $5.55 billion of the total cost and consists of $1.9 billion by New Jersey Transit, $1.75 billion by the state of New York and $1.9 billion committed by the Port Authority of New York and New Jersey (PANYNJ) in its 10-year capital program approved in February 2017.

PANYNJ's approved 10-year capital program commits $2.4 billion to the Gateway program, which will net $1.9 billion toward construction of the project after U.S. Department of Transportation fees and accrued interest during construction. PANYNJ's Gateway Program commitment also includes $300 million for the Portal North Bridge Project, which began early construction in mid-October and is another critical element of the program.

New York and New Jersey plan on accessing federal loans to pay for their program commitments. New York will appropriate funds annually for the next 35 years to pay for its $1.75 billion commitment while New Jersey plans to repay the loan by levying a per passenger trip charge for NJ Transit rail passengers crossing the Hudson River. The charge will be $.90 beginning in 2020 and increase to $1.70 in 2028 and $2.20 in 2038.

Phase 1 of the Gateway Program includes three elements, the Portal North Bridge Project, the new two-track Hudson River Tunnel and Hudson Yards Concrete Casing, which each represent single points-of-failure that would cripple the Northeast Corridor.

New York Gov. Andrew Cuomo called on the federal government to make good on the 2015 agreement, which was made under the Obama Administration.
"New York state is stepping up to fund its share of the financial commitment as we rebuild our infrastructure all across the state. Now the federal government must fulfill its commitment to fund the other half and make this urgent, long-overdue project a reality," said Gov. Cuomo.

Elected officials from New York and New Jersey met with President Trump in September to make the case for the Gateway Program and called the meeting productive, but inconclusive.

Securing a financial commitment from the federal government for the Gateway Program has also been used as a bargaining chip in the delayed confirmation of Ronald Batory as the Federal Railroad Administrator.

A caveat to the funding agreement between New York and New Jersey should be noted: The new agreement funds the local share of the construction of a new tunnel and the Hudson Yards Concrete Casing, which total $11.1 billion of the $12.7 billion construction cost. The remaining $1.6 billion is the estimated cost to rehabilitate the existing tunnels of which the local share is an additional $800 million. Rehabilitation work on the existing tunnels is not expected to begin until 2026.