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?
22 comments
Cue the “boondoggle” comments.
Man, what a boondoggle!
Well that settles that. I guess it’s the CT or Westchester ‘burbs when the kids get old enough. I never really wanted to say I lived in Jersey anyways. Thanks short-sighted, chip on the shoulder fatty!
That’s right, ’cause you were all set to move to NJ as soon as the tunnel was finished 10 years from now! And traveling to CT and W’chster is such a breeze now. Those Metro-North trains run practically empty 24/7. As Ben would say, that’s a strawman arguement for sure 🙂
You know, I’ve used the word “strawman” in comments a grand total of four times since I started this blog in 2006. It’s not some epidemic! 🙂
Yes, but three of them were in reply to comments I made. Hey, wait a minute…could I have possibly been wrong THREE times? You’betcha!
Seriously, your blog is great Ben, always look forward to reading it every morning. Keep it up.
why does stuff cost so much.
maybe that should be the question
I was just over at the ARC site, yep it’s still up, ;), and it occurred to me that a big cost item is not necessarily the construction itself which is of course expensive, but the eminent domain acquisitions that will need to be made. Even in this depressed real estate market, we are talking about some prime time real estate locations, even the dumpy ones, in Midtown.
This has very little to do with the subject at hand: the actual vs budgeted cost, and even less with whether the ARC design is any good. In my opinion the main driver is Chris Christie for President ’12 or ’16.
Well he always likes to say he’s going about things like a 1-term governor.
“Well that settles that. I guess it’s the CT or Westchester ‘burbs when the kids get old enough. I never really wanted to say I lived in Jersey anyways.”
And that’s a solution. You COULD also stay in NYC, athough decent schools remain a challenge.
New Jersey has been attracting a rising share of commuters to Manhattan, at the expense of Long Island and the northern suburbs. That’s why NJT is facing a crunch.
New York should inform those working in Manhattan that trans-Hudson capacity is full, and they should stay west of the river.
And New Jersey should inform businesses who want to hire New Jersey workers that they should move some operations to glass and cinderblock office buildings off I-287 exits in the exurbs, and let New Jerseyans work there.
Not as good as ARC, but not our choice. Let’s use that Port Authority money and whatever FTA money we can get to complete the SAS all the way to 125th by 2016 and get MetroNorth to Penn ready for the completion of East Side Access.
One note about schools in NYC– I know some public schools are bad, but NYC has twelve of the top 100 high schools in America, according to US News (http://www.usnews.com/articles.....stics.html):
New Comers HS (Queens, #6), The High School of American Studies at Lehman College (Bronx, 19), Stuyvesant High School (Manhattan, 31), Staten Island Technical High School (34), Baccalaureate School for Global Education (Queens, 35), Yonkers High School (41), High School for Dual Language and Asian Studies (Manhattan, 52), Bronx Science (58), Brooklyn Tech (63), New Explorations Science Tech and Math School (64), High School for Law and Public Service (Manhattan, 75), and Queens High School for the Sciences at York College (81).
And at the other end, there are quite a few decent elementary schools as well. Plus parental involvement is important too. I’m very satisfied with the school my first and fourth graders ended up in. One does not need to flee the city once the oldest rugrat turns 5…
So is the Portal Bridge replacement project canceled too? The existing bridge is one of the biggest impediments to running trains efficiently along the NEC. They don’t need to build both new bridges now, but there’s no word if the replacement for the existing bridge is still going forward.
Agreed. There has been raido silence on the implications for this project. But then, there’s been radio silence on Portal as a general matter.
No, the Portal Bridge project is not cancelled.
As currently conceived, the existing bridge would be replaced by TWO bridges, a 3-track fixed bridge north of the current site, and a 2-track lift bridge south of it.
If ARC is cancelled, then the south bridge becomes unnecessary.
What bothers me was that there was a public meeting to have taken place this past winter regarding a temporary and permanent taking of some park land for the project. That meeting was canceled and never rescheduled. So far as I know, NJT, etc. can’t do the project without the land, which is in an undeveloped section of Laurel Hill park in Secaucus.
I can’t say I’m too sad about this. Hopefully it will spur some rethinking about the way infrastructure projects are contracted and financed. The contracting side is a bit intractable, but it’s clear from international comparisons that something is going wrong here. We need better freedom either to select contracts that are most likely to deliver on time and price, even if not the lowest bid, or change the system so that the risk of overruns falls on the contractor.
On the financing side, it seems a lot simpler. We need projects that can finance themselves through fees and taxes on their direct beneficiaries. This project was described as producing much shorter commuting times and billions of dollars in property value increases. Why would it be financed through anything but fare increases and property assessments? For instance, one could identify areas that would see value increases under the plan and specify that at next sale of the property a $5/sq ft cash surtax would be imposed. Optionally, one could use those revenues to secure a bond; this may be more expensive on a cash basis, but would remove from future politicians the option to abuse the fungibility of money by diverting revenues from capital to operating purposes.
“I can’t say I’m too sad about this.”
Yuh huh… I’m sure you’re not GOVERNOR CHRISTIE! 😉
Maybe this could free up some ‘out of the box’ thinking on a more regional, multi-carrier scaled solution. Perhaps some other cities can be modeled such as the RER in Paris and the S-Bahn in Hamburg, that could connect let’s say Hempstead, Mineola, Stamford, White Plains, and yes, if NJ were to get on board, New Brunswick, Hackensack, Newark, Trenton and so on. Heck, we could even have a spur off the NEC to Staten Island’s North and West Shores! Oh, the possibilites…
Last Train to Bucketheadland
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