Archive for ARC Tunnel

In the aftermath of yesterday’s GAO report criticizing the cancellation of the ARC Tunnel, the political air has been rife with acrimony. Christie, of course, has been defending his decision while his political opponents have renewed their attacks. A former New Jersey Governor accused Christie of playing the state for a short-term gain, but none of these reactions are unexpected.

If we step back and take a look at the larger picture, though, things are a bit gloomy. NJ Spotlight offers up a very thorough overview of the problems plaguing trans-Hudson rail access and the prospects for the future. Mark Magyar devotes quite a few inches in his piece to the goings-on involving Amtrak’s proposed Gateway Tunnel. Although it would provide only around 65 percent the capacity of ARC, it seems to have the best future. However, with no real funding in place, Thomas Wright of the RPA said, “2022 is probably too ambitious a target date.”

Without the 7 extension and without ARC, Gateway is indeed our best (and possibly last) hope for improved trans-Hudson rail access in this generation, and that fact is not lost on those paying attention. In an editorial today, The Star-Ledger urged Christie to provide “more than his moral support” for Gateway. That’s an exhortation that runs both ways. Both New York and New Jersey will have to put their support behind Gateway, and politicians in New Jersey who have spent a few years pointing fingers over ARC will have to work together. The future of our region may depend upon it.

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When New Jersey Gov. Chris Christie killed the flawed ARC Tunnel project in 2010, it came as a big surprise to people in the region and politicians in Washington, DC. With a major funding commitment from the feds, the project was among the largest public works in the nation, and despite its flaws, a trans-Hudson rail tunnel would have greatly improved access into and out of New York City.

Christie cut the cord over budget concerns. He claimed the project’s cost could double. He claimed New Jersey would have to foot the entire bill for overruns. Now, a new report issued by the Government Accountability Office [PDF] accuses Christie of exaggerating, if not outright lying, in his highly political battle over the ARC Tunnel. This was, alleges the GAO, all about politics and gas taxes.

Kate Zernicke of The Times has the scoop:

The report by the Government Accountability Office, to be released this week, found that while Mr. Christie said that state transportation officials had revised cost estimates for the tunnel to at least $11 billion and potentially more than $14 billion, the range of estimates had in fact remained unchanged in the two years before he announced in 2010 that he was shutting down the project. And state transportation officials, the report says, had said the cost would be no more than $10 billion.

Mr. Christie also misstated New Jersey’s share of the costs: he said the state would pay 70 percent of the project; the report found that New Jersey was paying 14.4 percent. And while the governor said that an agreement with the federal government would require the state to pay all cost overruns, the report found that there was no final agreement, and that the federal government had made several offers to share those costs.

Canceling the tunnel, then the largest public works project in the nation, helped shape Mr. Christie’s profile as a rising Republican star, an enforcer of fiscal discipline in a country drunk on debt. But the report is likely to revive criticism that his decision, which he said was about “hard choices” in tough economic times, was more about avoiding the need to raise the state’s gasoline tax, which would have violated a campaign promise. The governor subsequently steered $4 billion earmarked for the tunnel to the state’s near-bankrupt transportation trust fund, traditionally financed by the gasoline tax.

Somehow, Christie’s office claims that the GAO report backs up their position. After admitting that Christie fudged some numbers, spokesman Michael Drewniak defended the controversial decision. “The bottom line is that the GAO report simply bears out what we said in the fall of 2010 and say to this day: the ARC project was a very, very bad deal for New Jersey,” he said. It’s tough to make such a sweeping generalization when the final deal hadn’t been completed.

The Times has a bit more:

Mr. Christie further explained his decision by saying that the financing agreement with the federal government required him to declare that New Jersey would pay any costs above the $8.7 billion. That is the standard procedure for full-financing agreements, but the report found that there was no agreement when Mr. Christie canceled the project, and that the federal government, which was already paying 51 percent of the costs, had offered to help with any cost overruns, pledging additional money, low-interest railroad loans and public-private financing.

Before Mr. Christie declared the tunnel dead, his transportation advisers told state legislators that they had discussed taking money from the project to fill the transportation trust fund, which was almost empty. Since then, the governor has steered $4 billion in tunnel money to the trust fund, avoiding an increase in the state’s gasoline tax, the second lowest in the nation.

One of ARC’s earliest supporters, Martin Robins, now with the Alan M. Voorhees Transportation Center at Rutgers, slammed Christie. “In hindsight, it’s apparent that he had a highly important political objective: to cannibalize the project so he could find an alternate way of keeping the transportation trust fund program moving, and he went ahead and did it,” he said to The Times.

This is ultimately a lesson in national politics and local elections. Christie the Candidate vowed support for the ARC Tunnel, but then Christie the Governor gained national prominence in a political party searching for leaders. He canceled the ARC Tunnel near the height of the Tea Party movement as a statement on spending and taxes. He played fast and loose with numbers, and he stretched the truth. The New York/New Jersey region is worse off for it, and it may yet be decades longer, and billions of dollars more, before we see the need for a new trans-Hudson tunnel realized.

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It’s been almost a year since New Jersey Gov. Chris Christie canceled the ARC Tunnel and made a move to keep the federal dollars explicitly earmarked for the project. After months of wrangling between the government and Christie’s high-dollar attorneys, the two sides have come to an agreement, U.S. Transportation Secretary Ray LaHood said this afternoon. In the final settlement, New Jersey will return $95 million to feds while spending a significant portion of the rest on DOT-approved projects.

Per the DOT press release, the federal government will recover all of the $51 million in New Starts money provided to New Jersey for the ARC Project, and those funds will be made available to other areas for transit projects. The other $44 million were provided to New Jersey via the American Recovery and Reinvestment Act, and it will be returned to the U.S. Treasury. Furthermore, New Jersey must spent around $128 million it has from the Congestion Mitigation and Air Quality project funds on transit-related projects that DOT approved and reviewed. I guess the remaining funds — approximately $48 million — will remain with the Garden State.

“We appreciate the support and encouragement of Senators Lautenberg and Menendez in reaching an agreement that is good for the taxpayers of New Jersey, but also helps to improve infrastructure in the state,” Secretary LaHood said. “I thank the governor and his legal team for reaching this agreement.” Now how about that Gateway tunnel or the 7 train to Secaucus?

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It was but a mere formality, but the New Jersey Turnpike Authority voted this Wednesday to redirect $1.25 billion originally slated for the ARC Tunnel to the state’s ailing Transportation Trust Fund. Instead of support rail expansion, the money will now go toward a turnpike widening project, various road maintenance plans and, if any is left over, New Jersey Transit’s capital plan.

As Mike Frassinelli from The Star-Ledger noted, “The move allows Gov. Chris Christie to boost the state’s Transportation Trust Fund that pays for road and bridge repairs and transit services, while at the same time keeping his pledge not to raise the state’s comparatively low gas tax.”

While the move had been announced by Christie some months ago, the state’s pro-rail contingent were none too pleased. “This toll revenue was supposed to be used to build a desperately needed trans-Hudson tunnel for New Jersey commuters,” Sen. Frank Lautenberg said in a statement. “Using this money as a slush fund for other transportation projects is a disservice to New Jersey residents facing congestion on our roads and seeking access to more jobs and more trains in and out of New York.” The trans-Hudson future — whether it be the Gateway Tunnel or an extension of the 7 to Secaucus — remains to be seen.

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A few days ago, UBS made headlines when it announced its interest in moving back to Manhattan. While the cynical among us wondered if this was just a ploy to gain more favorable tax breaks by playing Connecticut off of New York, company sources claimed the move is necessary in order to attract young talent. Stamford, after all, isn’t exactly a happening city for good minds right out of college.

In New Jersey, a different story is unfolding: Transit-oriented development has become all the rage. Dana Rubinstein reports in The Journal today:

As New Jersey slowly emerges from the economic downturn, its office market is beginning to transform into one concentrated around train stations. Businesses have been leasing space in areas served by train stations at a higher rate than those only accessible by car, according to real-estate firms. The trend reflects demographic shifts and higher gasoline prices as well as changes in worker priorities.

For example, businesses are beginning to recognize that many employees care less about living in sprawling estates and more about living in diverse areas with restaurants and entertainment within walking distance, notes Robert Puentes, a senior fellow at the Brookings Institution Metropolitan Policy Program. “All these things are starting to add up and companies are very attuned to it,” he says…

The average vacancy rate in so-called transit hubs in New Jersey was 14.7% in the first quarter of this year, compared with 29.7% in areas not considered transit hubs, according to real-estate brokerage Jones Lang LaSalle. The report defines transit hubs as the 40 million square feet comprising office space in Newark, Elizabeth, Jersey City, Hoboken, Paterson, East Orange, New Brunswick, Trenton and Camden, Morristown and Metropark, all cities with rail service.

At the same time, asking rents in transit hubs were higher, averaging $27.43 compared with the rest of the suburban market’s $23.51, according to the Jones Lang LaSalle report. Since 2009, more than 20% of all leasing has occurred in the transit hubs, compared with 15 percent before 2009. Further, of the 52 leases larger than 100,000 square feet signed in New Jersey since 2008, 22 of them were in transit hubs.

Panasonic recently made headlines when it decided to move from Secaucus to Newark. While the decision has been driven, in part, by a generous tax credit, company officials say accessibility played a role in the move as well. “We have literally 1,000 people driving cars every day,” Peter Fannon, a company VP, said. “The key element for us, which really brought the focus back to Newark, were the environmental benefits, specifically the ability to be in an urban center where there are housing, restaurants, hotels, and most importantly, mass transit facilities, all within a three- or four-block radius of our new location.”

With these trends emerging and with policies in place to encourage hub-based growth and transit-oriented development, it would be an ideal time for New Jersey to move forward with a plan that will greatly improve trans-Hudson commuter rail access while cutting down travel time. Unfortunately, private businesses and state leaders aren’t seeing eye-to-eye. As development policies and economic realities push TOD, the ARC Tunnel plans, which will look more and more necessary as time passes, remain dearly departed.

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The fight for ARC dollars has long outlasted the project.

It’s been nearly nine months since the ARC Tunnel met its untimely demise, and still New Jersey and the Feds are fighting over the money. Gov. Chris Christie wants to keep the earmarked dollars and apply them to the state’s other underfunded transportation projects while the Feds, unhappy that the Garden State unilaterally pulled the plug on the largest public works project in the country, just want the dollars back.

The legal fight, which isn’t over yet, is starting to cost the state, and while the numbers are ticking ever upward, there is a rationale behind the battle. In a fairly nuanced piece from The Star-Ledger, Salvador Rizzo looks at the economics behind the legal challenges. Of the costs, he writes:

Gov. Chris Christie’s fight with the federal government over abandoning a train tunnel under the Hudson has already cost New Jerseyans more than $1 million in legal fees and interest, records show.

For a month, Christie has been vowing to appeal a decision from the Obama administration ordering the state to repay $271 million for abruptly pulling out of what was the largest public works project in the country.

In the meantime, interest on New Jersey’s debt is adding up at the rate of $225,000 a month. In addition, bills from Patton Boggs, the Washington law firm hired by Christie in December to fight his battle, have averaged another $300,000 a month, invoices obtained by The Star-Ledger show. The interest on the $271 million, which began accruing on April 29, could be frozen by a federal judge once an appeal is filed, but neither the governor nor Patton Boggs has said when the case will be brought to court.

New Jersey’s transit advocates aren’t quite sure what to say about the expenses and mounting interest. “Christie is not arguing about dollars and cents. He’s saying they don’t owe anything, and he’s on unsound ground,” ARC advocate Martin Robins said. “I suggest we should be talking in terms of collaboration and reduction in the debt that he owes and that he caused by the stomping of this project.”

Yet, even if there’s a small chance — say ten percent — that New Jersey could keep the money, it’s a fight worth pursuing for some time. As with the MTA’s dispute over the TWU raises, if New Jersey believes it has a fighting chance, it could spend dollars on lawyers up to the point of recovery. So if there’s a 10 percent chance of keeping the entire $271 million, legal economics would dictate expenses of $27.1 million.

In fact, some advocates think the state may be able to keep some of the money. As the former head of the Tri-State Transportation Campaign said to The Star-Ledger, attorneys from Patton Boggs are making “some persuasive arguments.” Some — but not all — of the stimulus money going into the tunnel project had been awarded before the ARC-specific grants were signed, and Christie might be able to keep those funds.

Ultimately, though, this still feels like wrangling over a missed opportunity, and as one former Port Authority official said, Christie was awfully quick to cut bait. “Only the governor felt that the entire burden would have fallen on the state of New Jersey,” David Widawsky, the PA’s one-time lead on the ARC Tunnel, said. “Over the course of the many years of construction ahead, these kinds of things could have been worked out.”

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A schematic of the ARC Tunnel's Manhattan terminal. (Click to enlarge)

In a 52-page decision released on Friday, the Federal Transit Administration has determined that New Jersey must repay all of the $271 million the state had spent on the ARC Tunnel project before Gov. Chris Christie canceled the project this fall. Furthermore, if the state fails to pay the money soon, the FTA will begin to charge interest on amounts due at a steep rate. To fight this ruling, Gov. Christie, who has already spent close to $1 million on legal fees, could appeal the ruling in federal court.

Both The Record and The Times reported on the ruling this past weekend, and I’ve embedded the document along with a letter from Ray LaHood, the Secretary of Transportation, below. The ruling explores why New Jersey is legally obligated to return the funds and is appealable. The federal courts would have jurisdiction over the matter. Essentially, though, this move raises the stakes in the fight over what was to be the country’s largest public works project.

Patrick McGeehan from The Times had more:

In a letter to New Jersey’s senators and representatives in Congress, Ray LaHood, the transportation secretary, warned that his department had “many tools under the Debt Collection Act to recoup the lost federal taxpayer funds, including withholding future state funding from a wide variety of sources.” But “in consideration of the current economic challenges burdening New Jersey,” Mr. LaHood added, he hoped to “develop a workable payment schedule” and avoid having to resort to those collection methods.

Mr. LaHood should not expect to find a check in the mail any time soon. Mr. Christie, who was in Massachusetts on Friday to speak at Harvard University, declared in January that “we are not paying the money back.” Kevin Roberts, a spokesman for Mr. Christie, said the governor’s staff would “review the decision before determining next steps moving forward.” One option is to sue the department to try to stop it from seeking to collect, but Mr. Roberts would not say if a lawsuit was being considered.

In the meantime, interest on the debt will pile up quickly. The federal government currently charges interest at a rate of 1 percent a year, which in this case amounts to more than $50,000 a week.

According to LaHood’s letter to Senator Frank Lautenberg, the crux of the matter concerns Christie’s representations to the FTA in previous years. Despite rising cost estimates in early 2010, the Governor pledged full support for the ARC Tunnel in meetings with LaHood in February, March and April of last year. Six months later, the project was off, and LaHood could not convince Christie to change his mind, and LaHood took a hard line against Christie in the letter.

“Any notion that the potential for cost growth constituted new and emergent information when the Governor made his decision is simply not accurate,” he wrote.

For now, the FTA is still willing to work with New Jersey to make the repayment process as painless as possible, but Washington’s patience is limited. “In consideration of the current economic challenges burdening New Jersey and all other states, I am not pursuing these collection methods at this time in the hope that we and the state of New Jersey can develop a workable payment schedule,” the secretary said.

Despite taking a hard line, LaHood bemoaned the fate of the ARC Tunnel, and right now, its legacy is one of a legal fight that isn’t over yet. “The purpose of my efforts,” LaHood said of his meetings this past fall, “was to avoid the very circumstances in which we now find ourselves: no jobs, no congestion relief, and an enduring debt whereby New Jersey must return $271 million to the Nation’s taxpayers.”

After the jump, read the letter and FTA decision. Read More→

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When New Jersey Gov. Chris Christie killed the ARC Tunnel project, he did so in the name of fiscal responsibility. Cost overruns for the project, based on FTA estimates, could have ranged from $1-$5 billion, and while the FTA noted that better project oversight would have kept those costs within a reasonable range, Christie, to gain a name for himself, torpedoed a project that would have brought $4 billion in federal money to the state and provided for 44,000 jobs as well as faster rides for nearly every city-bound Jersey commuter. It was, needless to say, a big blow to the area’s transit progress.

Yesterday, we learned just how far the limits of Christie’s fiscal “responsibility” stretch. With a Super Bowl on tap for the Meadowlands in 2014 and an ugly hulk of colorful panels known as Xanadu sitting on the turnpike, unfinished and broke, Christie’s administration has promised $400 million in subsidies and tax breaks to Triple Five, the Mall of America owners, if they finish the project. The group will have to spend up to $2 billion to do so, will give the ugly structure a new outside and will call it American Dream@Meadowlands.

Transit advocates in New Jersey are feeling the sting. As TM Brown at Radials notes, Christie has made what is essentially a political decision to fund private development over a public works project. While the ARC Tunnel commitment could have been more substantial, it also promised more federal dollars and greater economic benefits for the state. “It seems,” he writes, “almost inappropriate in a time of forced and severe austerity for millions of Americans that Gov. Christie has decided to fund what amounts to a temple to profound consumption and, just a year before, defunded a project that would have improved life and finances for millions. Though if people are happy with the defunding of the ARC tunnel, they can always go skiing in Xanadu.”

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As Gov. Chris Christie fights with the federal government for the right to keep $271 million earmarked for the ARC Tunnel, the state’s legal bill is beginning to mount. After just one month on the job, D.C. firm Patton Boggs had billed New Jersey Transit $330,000 for the effort. “NJ Transit’s budget contains funds for legal and other such expenses and this will come out of that,” Paul Wyckoff, agency spokesman, said. “There are hundreds of millions of dollars at stake here. This is certainly, we feel, worth the best legal effort we can produce. Patton Boggs is a highly regarded, highly professional firm that is working to save state taxpayers money as efficiently as possible.”

New Jersey politicians who have fought with Christie over the ARC cancellation since Day One again lobbed grenades toward the governor. “I’m not suggesting the state shouldn’t have counsel. I hope the state wins,” John Wisniewski, chairman of the state assembly’s Transportation Committee, said. “But $333,281 — there are lots of good lawyers in New Jersey that don’t charge $485 an hour.”

If New Jersey thinks it has a valid case to make for those federal dollars, the state has every right to employ outside counsel to do so, and Wisniewski has every right to complain about the fees. Ultimately, though, if they get to keep any of the $271 million, the $330,000 a month will be but a drop in the bucket. Still, the attempts to keep the money seem to be garnering more attention than the efforts to build a new cross-Hudson rail tunnel, and that’s not helping anyone in the region.

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More one-seat rides means a more crowded tunnel.

In addition to increased cross-Hudson capacity, one of the primary benefits New Jersey commuters would have derived from the ARC Tunnel concerned travel speeds. As New Jersey Transit, its equipment and its lone Hudson river crossing are configured, riders along the Raritan Valley and North Jersey Coast Lines do not enjoy one-seat rides into New York City. Through a combination of equipment upgrades and capacity increases, commute times would have dropped and property values would have increased.

With ARC off the table and its replacement years or even decades away, New Jersey Transit officials are trying to deliver on that one-seat promise without a new tunnel. Earlier this week, NJ Transit Executive Director James Weinstein pledged that he would work to make the one-seat ride a reality along the Raritan Valley and North Jersey Coast Lines. Larry Higgs from the Asbury Park Press offers up a little bit more:

In both cases, NJ Transit officials will go forward with equipment purchases that were part of the Access to the Region’s Core (ARC) tunnel project, canceled by Gov. Chris Christie in October over concerns about cost overruns the state would have had to absorb. “One of the issues is acquisition of more bilevels,” Weinstein said. “There are 100 on order and we’ll go forward with that.”

The first of 36 dual-mode electric and diesel-powered locomotives, which will be essential to providing one-seat ride service on rail lines now served by diesel locomotives, is scheduled to be delivered to the U.S. Department of Transportation’s testing facility in Colorado, Weinstein said.

“I don’t think anything precludes a one-seat ride,” he said. “We’re going forward with the dual-mode locomotives. There are issues we have to work out at some point to provide a one-seat ride.”

Beyond Higgs’ story, news reports don’t add much to this revelation, and I’m curious as to where it will go from here. The main problem is that the Hudson River tunnels cannot handle increased traffic, and if New Jersey Transit is promising new one-seat rides along certain routes, it will likely have to take away some river crossings from other routes. That’s not going to be too popular among commuters.

Meanwhile, an alternative to Amtrak’s Gateway alternative is making the rounds. As Higgs also reported earlier this week, New Jersey rail advocates have proposed yet another plan to build a tunnel. He reports:

The plan, outlined by Joseph Clift, a member of the Regional Rail Working Group and a past Long Island Railroad planning director, would put off building some of the more potentially expensive parts of the Gateway project to a second phase. As a first phase, the group proposed building a new two-tube tunnel, a new bridge next to the existing Portal Bridge and a second set of tracks on the Northeast Corridor line from Kearny to the Hudson River to relieve bottlenecks.

Gateway’s plans to build a “Penn Station South,” consisting of seven tracks and four platforms under Manhattan’s 31st Street between Seventh and Eighth avenues, would be deferred to a second phase under the group’s plan. That phase would include Gateway’s proposal to construct two new sets of tracks between the Passaic River and west of Secaucus Junction, a second set of platforms at that station and some new bridges.

“It is a much more accomplishable project,” Clift said. “You would have a project that is more affordable (to start) because all the Manhattan property cost (for Penn Station South) goes away.”

Funding would come from a variety of sources. New Jersey would reapply for the $3 billion in federal funds it sacrificed when Gov. Chris Christie canceled ARC while the Port Authority would contribute its billions as well. New Jersey and Amtrak would contribute money as well.

With all this talk though of replacement plans and one-seat rides, I have to wonder if too many cooks are stirring the cross-Hudson soup. New York is working on formulating a plan for the 7 line extension with New Jersey while Amtrak is requesting $50 million to start planning on NEPA work on their Gateway Tunnel. This third proposal throws yet another variable in the mix and could garner support from state officials in New Jersey. At some point, the region will need a concerted, unified and funded effort if cross-Hudson rail expansion is to be realized any time soon.