Home ARC Tunnel A private solution for ARC Tunnel funding woes?

A private solution for ARC Tunnel funding woes?

by Benjamin Kabak

Despite the fact that neither New Jersey nor the Feds have released an audited update of the ARC Tunnel cost overuns, Senator Frank Lautenberg, a Garden State Democrat, is trying to secure a private partnership to help get the tunnel back on track. As Bloomberg News reported, Lautenberg says he has reached to a “major New York City-based finance firm” in an effort save the ARC Tunnel. Lautenberg has also asked the feds to throw in more money for this vital rail infrastructure upgrade and has asked Port Authority to contribute more as well.

Meanwhile, New York’s own governor has finally broken his silence on New Jersey Gov. Chris Christie’s decision to scrape the ARC Tunnel. “I just cannot be critical of the governor of New Jersey if he can save nearly $3 billion that New Jersey would be putting into that one program and use it for other issues statewide. I cannot quarrel with his decision,” he said during a WOR-AM radio spot yesterday. Casting a skeptical eye on Lautenberg’s financing ideas, David Paterson said he believed that the costs are “too great for private financing.” If private investors couldn’t, he reasoned, save St. Vincent’s hospital, how can they fund a tunnel that could need between $2-$5 billion more than expected?

New York State, of course, stands to benefit from the ARC Tunnel but, outside of money giving through Port Authority, has yet to make a significant contribution to this project. The outgoing governor, though, said the Empire State could not lend a hand. “There’s going to have to be redress because the one thing that can save overcrowding right now is expansion of the railways,” he said. “If I had the resources to do it, I would say it would be valuable enough to invest in this project.”

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Scott E October 14, 2010 - 12:52 pm

What exactly does “privately funded” mean? When they speak of selling the NJ Turnpike, the private company pays for operating/maintenance costs, but collects tolls and (I believe) a subsidy from the state. The hope is that they can do it more efficiently and with less restrictions than the state.

Unless this private company will hold ownership of ongoing operations and maintenance of the tunnel, and will charge tolls for the trains that pass through it (quite unlikely), I fail to see how this could work. It doesn’t work under same model as the privately-funded Oyster Bay-Rye car/truck tunnel proposal.

Marc Shepherd October 14, 2010 - 1:12 pm

It is hard to imagine what would be in it for a private investor.

Gary October 14, 2010 - 1:27 pm

Not really. What’s hard to imagine is how it could be a good deal for the public.

Marc Shepherd October 14, 2010 - 1:58 pm

Well, what’s in it for the public is that the tunnel gets built, instead of getting cancelled.

But I think there is a reason why private enterprise has not built any such thing in the U.S. within our lifetimes.

Alon Levy October 14, 2010 - 2:43 pm

If the private investor owns stake in the companies consulting on or contracting for the project, then there are windfall revenues to be reaped from the public. Ideally the government would front 100% of the cost, but if that’s impossible, then 80% is almost as profitable.

Ariel October 14, 2010 - 10:39 pm

I don’t see how this project would benefit New York. What the tunnel would achieve is siphoning off high-paying Manhattan jobs to Jersey commuters who will take the wealth back to their state. It will also increase New Jersey’s property values.

Of course, the tunnel may bring more shoppers into the city, but probably not enough to offset all the wealth Jersey will gain.

New York would be better off investing any funds in East Side Access and the Second Avenue Subway, projects that more directly benefits its own residents.

Am I wrong about this? Are there any benefits New York can realistically gain from ARC that I don’t see?

Chris October 15, 2010 - 9:02 am

Well it offsets the risk that your story actually goes the other way. Who’s to say the high-paying jobs won’t just move to Jersey – or overseas? Jobs follow talent as much as talent follows jobs. It’s not as if New York City is gaining jobs on a net basis. Total employment today is roughly 3% higher than it was 20 years ago, and lower than 10 years ago. Worse, from one cyclical peak to the next employment grew less than 1%.

J B October 15, 2010 - 11:15 pm

It would also encourage people from New Jersey to take transit instead of driving, because of shorter commuting times.
It would widen the potential pool of employees for companies in New York (and presumably in Jersey as well), but I don’t think this means new Yorkers will lose jobs. With more employees to choose from, more companies will be able to set up shop. If you think improving transit between two locales will result in job stealing, then perhaps we should shut the subways between Manhattan and Brooklyn so Manhattan stops stealing Brooklyn jobs, and vice versa.

Tome April 23, 2024 - 7:12 am

Governor Christie took action on this ARC tunnel funding woes, he announced that he told reporters that he liked the idea of a tunnel, but not if he couldn’t pay for it.

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