Updated (2:00 p.m.): As I reported this morning, New Jersey Gov. Chris Christie has indeed killed the ARC Tunnel. His office sent out a statement on the decision to cancel the ARC Tunnel a few minutes ago. Captioned “Christie Administration enforces budget discipline and protects New Jersey taxpayer dollars,” the release says that “New Jersey can’t afford ARC project and shutdown continues.” It reads:
Today, Governor Chris Christie accepted the recommendation of NJ Transit Executive Director Jim Weinstein to continue the orderly and expeditious shutdown of the ARC Project. Despite intense negotiations with federal and state participants, no agreement was reached on terms that would assure New Jersey’s taxpayers would not pay more than $2.7 billion for a completed Trans Hudson Express ARC project.
Federal cost estimates range from $9.8 billion to $12.7 billion. In addition this range does not include $775 million that New Jersey would be required to spend to build the Portal Bridge South, an integral part the ARC project.
On October 8, 2010, Governor agreed to an additional two week review of the ARC project at the request of US DOT Secretary Ray LaHood.
A memorandum from the ARC Project Executive Committee is attached to this release.
The memo — embedded below — from James Weinstein, New Jersey Transit’s executive director explains the negotiations between the state and the feds and the final decision to cancel the project. “At a time when New Jersey’s economy is under extreme stress and the financial strength of the state is at a low point, the taxpayers are in no position to bear the open-ended cost for this project that would be required to obtain a Full Funding Grant Agreement from the FTA,” Weinstein wrote.
The document does highlight though how the feds tried to keep a handle on the costs, but it’s hard to say if New Jersey heard them out in good faith. Included among the proposals were plans to build the ARC Tunnel in phases to reduce the scope and lower the near-term costs; finance the program through Federal Railroad Rehabilitation & Improvement Financing loans; secure a public private partnership; or change the location of the terminal in Manhattan. “Simply,” Weinstein wrote, these proposals “would not hold New Jersey taxpayers harmless from cost increases and overruns that have already emerged and may continue to emerge as the project is constructed.”
In a statement, the Regional Plan Association criticized Christie’s move. “Unfortunately it does not appear as though the Governor gave responsible or serious consideration to any proposals to phase the project, reduce project costs, introduce private funding or accept additional funds from the federal government to help cover overruns, including options that would defer any additional cost to the state until after the project was generating substantial economic and tax benefits,” the organization said. “This lends lending credence to the argument that the State wants to divert already-committed ARC monies to other one-shot uses to plug the ailing Transportation Trust Fund, which runs out of funding in mid-2011.”
New Jersey Future offered up a similar take. “The ARC tunnel project is the best solution to the need for new capacity on New Jersey’s rail network under the Hudson River,” Executive Director Peter Kasabach said. “It was the result of 20 years of planning, designing and negotiations, and represented an unprecedented commitment of funds by the federal government. While fiscal prudence is imperative in these lean times, killing the tunnel is not prudent, fiscally or otherwise. The capacity constraints faced by New Jersey Transit are real and will need to be addressed – and when they are, New Jersey will likely pay a price far heavier than the ARC tunnel.”
This is an unfortunately short-sighted decision by Christie, who plans to use some of the money earmarked for ARC to replenish the state’s Transportation Trust Fund. The tunnel would have generated significant property value — and thus real estate tax — increases that could have been used to pay off the debt accrued by building the tunnel. Furthermore, the state is sacrificing $500 million already spent on the project and $6 billion in guaranteed funding from the Port Authority and the feds. Countless jobs won’t be created.
Still, New Jersey Transit vows to forge ahead with the state’s rail capacity crisis. It says it will “pursue alternate, affordable solutions to the trans-Hudson transportation challenge.” While Yonah Freemark at The Transport Politic already has some ideas for the Garden State, how long will we wait until the state can find a project that is well-designed, and cost-efficient while doubling capacity as the ARC did?