Archive for ARC Tunnel

The ARC Tunnel as she could have been.

It’s been a rough few weeks for New Jersey Transit and Garden State rail riders. Shortly after announcing yet another massive fare hike, the agency suffered through a week that saw rush hour delays pile up due to problems with Amtrak’s North Hudson tubes. After commuters suffered through problems on four of five days last week, the agency has already announced that it does not anticipate a problem-free Monday. Riders are being asked to find alternate ways into the city, and PATH, ferries and buses will cross-honor tickets.

It’s also been a rough few weeks for New Jersey Governor Chris Christie. With national polls placing him toward the bottom of the crowded field of GOP 2016 presidential hopefuls, Christie has engaged in something of a Hail Mary campaign to drum up any kind of enthusiasm for his run for the White House. At one point, he seemed like a clear front-runner before the Fort Lee traffic scandal and general voter anger toward his policy decisions grew louder and louder.

Faced with mounting frustration directed at him from his constituents over last week’s New Jersey Transit delays, Christie at first ducked the question before his aides helped him correctly level the blame at Amtrak. He then let loose a stunning display of political arrogance. He would, he claimed, build the ARC Tunnel if elected president. The Times’ Rick Rojas reported:

“If I am president of the United States, I call a meeting between the president, my secretary of transportation, the governor of New York and the governor of New Jersey and say, ‘Listen, if we are all in this even Steven, if we are all going to put in an equal share, then let’s go build these tunnels under the Hudson River,’ ” Mr. Christie said in an interview with the radio talk show host Larry Kudlow, which will be broadcast on Saturday on WABC-AM. “Then, everyone has an incentive to have the project run right, to run efficiently because everybody is on the hook.”

The governor’s comments — and his hypothetical phrasing — has attracted the attention of his critics, who say his statements emphasize how little he has done to help improve transportation. “This is not a hypothetical issue, this is a real issue, and he could be doing something about it,” said Martin Robins, the founding director of the Alan M. Voorhees Transportation Center at Rutgers University, who was the director of the tunnel project during the mid-1990s. “The question is, what has he done, what will he do in the next 18 months as the governor of New Jersey?”

In his interview comments, Christie reiterated his own long-held belief that, as he said, “New Jersey was going to be responsible for every nickel of cost overruns, which at the time was estimated to be three to five billion dollars.” He claims that he asked New York’s leaders for fiscal assistance and that they turned him down. He did not mention that the Feds had pegged the cost overruns at $1 billion; that both the feds and New York were willing to work out a deal; and that instead of reserving the money for a better-designed and fairly-funded rail tunnel, he instead sunk into a series of road projects throughout the state, leaving rail riders with nothing.

Time and again, Christie has tried to paint his ARC decision as something it wasn’t, and he even has supporters from the rail community who point to the design flaws in ARC as it was planned. The decision to send the tunnel to a dead end underneath Macy’s was the wrong one, but it wasn’t worth canceling the project and removing New Jersey’s money from a rail expansion project. Christie may have backed into a decision that was, in part, defensible, but he did it for none of the right reasons.

The Times’ editorial team wasn’t buying what Christie was selling. In a piece that unfortunately ran on Saturday and not during a more well-read day of the week, they laid the blame for trans-Hudson woes squarely on Christie’s shoulders. Their argument echoes mine:

Governor Christie originally said he stopped work on the new tunnel because it would cost his state too much money. Then, he got the Port Authority of New York and New Jersey to reroute $3 billion that had been allocated for the project. Instead of a tunnel to benefit the whole region, the money went to patch Mr. Christie’s roads and bridges.

Normally, state gasoline taxes provide much of the revenue for local transportation needs. But Mr. Christie, a Republican aiming for the White House, has not wanted to raise any taxes. This refusal and his use of the tunnel funds for other purposes have kept the chokehold on transit in the Northeast. And without sufficient tax revenue, New Jersey Transit has added debt and been forced to squeeze more money from its customers. This month, it announced fares would go up an average of 9 percent on Oct. 1.

Even Mr. Christie’s commissioner of transportation, Jamie Fox, has begun working hard to get a dedicated tax to fix the state’s roads, bridges and mass transit. The governor, perhaps recognizing that he has a transportation crisis on his hands, has simply said that when it comes to revenue, “everything is on the table.” If everything really is on the table, Mr. Christie should help legislators come up with a gas tax that starts to dig the state out of its transportation mess. At the same time, he should support Amtrak and others as they start over with new plans for a tunnel under the Hudson.

When he canceled ARC, Christie did it with an eye on the national stage. Ending an expensive government project bound to benefit the more liberal northeast played well with the Tea Party at a time when they were ascendant. But now aging infrastructure is in the news, and New Jerseyans know where to point their fingers over the current failures and future problems that await on the horizon. Instead of a rail tunnel in progress with a design that could have been improved five years ago, the region has nothing but problems — which is identical to Christie’s presidential hopes. It’s no coincidence that these two issues are going hand in hand, and if Christie the governor is serious about helping solve the trans-Hudson problems, he’s not out of office yet.

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As long-time readers of Second Ave. Sagas know, I’m not exactly a fan of the GOP presidential aspirant who occasionally visits New Jersey these days to remind that he is indeed still the governor. Outside of any red-and-blue ideological concerns or the way he chooses to face down those who disagree with him, his support of transit has been abysmal. From canceling the ARC Tunnel to moving the money for transit to various road-widening and repair initiatives to his games with the Port Authority, I’m eagerly looking forward to someone sitting in Trenton who has a better mind for the way PATH and NJ Transit feed the symbiotic relationship between New Jersey and New York.

But despite my dislike of the Governor, I am impressed with his grasp of political machinations and press malleability. Throughout his years as Governor, Christie has made some decisions that should, by any stretch, thoroughly anger his constituents, and sometimes, they do. But the real political impact of his actions are often ignored for the sideshow of the better story. Weather the temporary storm to escape permanent damage.

Let’s take this PATH Train issue. It’s a shared problem with Gov. Cuomo, but Gov. Cuomo’s contempt for anyone who doesn’t drive one of his muscle cars has been out in the open for decades. It’s my strong belief that the hullabaloo over the Governor-endorsed report that mentions cutting overnight PATH service as a last resort is nothing but a smokescreen. In essence, reporters are barking up the wrong story because no one every planned or plans to cut overnight PATH service. But by leading with this one line in a 90-page report, the fact that Christie and Cuomo vetoed strong reform legislation for a report of recommendations is conveniently ignored.

It’s now been nearly two weeks since the Christmas Saturday Veto and still New Jersey commentators are struggling with the PATH move. Steve Strunsky for NJ Advance Media penned a long piece analyzing the “real reason” he feels Port Authority may target PATH. He explored political in-fighting between the Democratic mayors of New Jersey’s waterfront PATH communities and Christie; he pondered leverage over the unions; he opined on privatization or a transfer of PATH to NJ Transit (or maybe, as I think would make sense, the MTA). He didn’t mention PATH as a cover for a veto even though Port Authority commissioners have all but said as much. They won’t cut PATH service, but the media loves this story.

In a way, this is an echo of Christie’s most costly move for the long-term mobility of the region: the decision to axe the ARC Tunnel. Christie established his conservative bona fides by canceling the project despite the fact that his cost overrun projections were based on spurious data and that New Jersey likely could have worked out a deal with the feds and even New York to split overruns. But while Christie faced some criticism for the move, it was muted especially from New Jersey transit advocates who never supported the deep cavern alignment for the tunnel and wanted the Alt G version instead. So while Christie sometimes faces irate commuters on Twitter, he gets a pass, and editorial writers who try to tell the full story face a Sisyphean task.

Ironically — or perhaps intentionally — the Port Authority reform report that Christie signed endorsed a new Hudson River crossing which allowed for another round of hand-wringing over Christie’s duplicity. Again, though, the focus has been on the inconsistency of these statements rather than on the affect of Christie and Cuomo’s veto of the reform measures. Pay no attention to the man behind the curtain.

Finally, as a Giants fan, I’d be remiss not to mention the New Jersey governor’s love of the Cowboys. I don’t begrudge anyone their sports fandom; I went to high school with Upper West Siders who were Braves fans in the early 1990s and know a bunch of people who subject themselves to Mets and Knicks games on a regular basis. Christie happens to be a Cowboys fan, but so what? While the press focuses on how that may play in Pennsylvania or anywhere during an election cycle, news breaks that Christie may have accepted gifts in violation of New Jersey ethics laws and may have funneled work to companies associated with Cowboys owner Jerry Jones. It doesn’t get nearly the same press because the fandom has dominated the conversation. Yet again, the wrong story for the wrong reasons takes away from the problem.

Now I’m sure some of you will accuse me of focusing on Christie’s negatives. From where I sit concerned with regional mobility, he hasn’t done much good, but except for the unfolding stories with Jones, these aren’t even scandals I’ve mentioned. They’re simply news stories covered from angles pushed subtly by the Governor that miss the big long-term picture. I ultimately have to tip my hat to the way he runs the conversation and pits allies against allies while burying bad news behind smokescreens. That’s a political force to be reckoned with, and his counterpart in New York has done the same thing a few times as well. Again, though, I’ll say it: The PATH train cuts aren’t the issue; the veto is. The ARC alignment wasn’t the issue; the argument for the cancellation was. Dig deeper.

Categories : ARC Tunnel, PANYNJ
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Right now, a new tunnel is nothing but a line on a map.

It’s hard to believe that it’s been over three and a half years since New Jersey Gov. Chris Christie unilaterally canceled the ARC Tunnel. Yet, it’s a decision that keeps coming back to haunt the entire region. Amtrak has proposed picking up the slack with their Gateway Tunnel, but that’s decades off. Now, questions have emerged concerning the region’s ability to cope with aging infrastructure and no replacement plans in place.

The latest comes to us from Amtrak. As the two Hudson River tunnels creep up there in years, the national rail agency has warned that age will become a major issue sooner rather than later. Amtrak’s chief put their life expectancy at “less than 20 years” and urged everyone involved to start funding — and then building — Gateway.

Dana Rubinstein had more:

The end may be near for the New York region’s cross-harbor rail tunnels, with no good alternative in sight. “I’m being told we got something less than 20 years before we have to shut one or two down,” said Amtrak C.E.O. Joseph Boardman at the Regional Plan Association’s conference last week at the Waldorf Astoria. “Something less than 20. I don’t know if that something less than 20 is seven, or some other number. But to build two new ones, you’re talking seven to nine years to deliver, if we all decided today that we could do it.”

Tom Wright, the Regional Plan Association’s executive director, described Boardman’s remarks as “a big shock.” “I’ve been hearing abstractly people at Amtrak and other people at New Jersey Transit say for years the tunnels are over 100 years old and we have to be worried about them,” he said. “To actually have Joe put something concrete on the table, less than 20 years … Within my office, there was a level of, ‘Wow, this is really serious.’”

In addition to age, as Rubinstein notes, Sandy damage is going to play a big role in this tale. The Amtrak tunnels, by some accounts, suffered approximately half a billion dollars in damage during the storm surge, but unlike, say, the Montague St. Tunnel, Amtrak can’t just take one of their cross-Hudson out of service for a few months to make repairs. That would reduce capacity from 24 trains per hour to just six, and as Amtrak owns them, the people who would suffer the most from single-tracking would be New Jersey Transit riders. Thus, it all comes back to ARC as without ARC, New Jersey Transit is beholden to Amtrak’s whims.

An Amtrak spokesman later tried to walk back Boardman’s comments. “As you know the Hudson River Tunnels are more than 100 years old and were filled with salt water during Super Storm Sandy, which can be very corrosive,” Craig Schultz said. “Amtrak is working with an expert to assess the condition of the tunnel structures since the storm, and that work is ongoing. I think the point Mr. Boardman was making in his comments at the RPA Assembly is that damage from Sandy accelerated what was already an urgent need for additional tunnel capacity between New York and New Jersey. We expect that the tunnels are going to need major rehabilitation, which can only happen with prolonged service outages permitted by a new tunnel.”

So where do we go from here? As with all of these major infrastructure projects, Gateway needs a champion, and right now, it doesn’t have one. It needs money, and right now, it doesn’t have it. Will we wait to fund it until it’s too late or will someone come to their senses before we have to live in an era when six trains per hour can cross the Hudson River? The clock is ticking.

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.

Categories : ARC Tunnel, Asides
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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.

Categories : ARC Tunnel, Asides
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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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