As the ARC turns: money for nothing

New Jersey and New York will have to address cross-Hudson rail capacity sooner rather than later. (Image via Infrastructurist.

When last we heard from the various parties involved in a dispute over the ARC Tunnel funding, the federal government had leaked word that Gov. Chris Christie knew he would have to return the federal money, and Christie was still going forward with plans to challenge the refund request. In an effort to reach an amicable solution with the great state of New Jersey, Secretary of Transportation Ray LaHood has promised to give New Jersey back around half of the $271 million it owes as long as it returns the money first.

There’s a catch though: Sen. Frank Lautenberg arranged this offer with the FTA, and Lautenberg and Christie are, on no uncertain terms, bitter enemies. Thus, while LaHood has extended the offer only to the state’s Senators so far, Christie hadn’t committed to it until he personally has his offer in hand. By the weekend, he had changed his tune. “The offer was a nice start,” he said.

The letter, obtained by NorthJersey.com and available here as a PDF, explains why the feds need the money back. Essentially, the Early Systems Work Agreement is a contract, and the money can go toward only the project under consideration. The state will have to return the money to the feds, and the feds will grant it back to the state under less onerous terms.

In his letter, LaHood dispelled many of Christie’s claims concerning the enforcement of the contractual ESWA refund provisions. He wrote:

In the history of the FTA’s New Starts program, there have only been five Early Systems Work Agreements (ESWAs) executed for projects like ARC. The New Jersey Transit ARC project is the first, and only one, of those five projects in which the sponsor abandoned the project after receiving an ESWA. All projects under the earlier ESWAs have been completed or are well along in construction. Specifically, the Seattle “LINK” light rail, the New Orleans Canal streetcar, and the Salt Lake City-Weber commuter rail project are in operation. The New York City Second Avenue Subway, Phase One, is now under construction.

The Federal Transit Administration (FTA) is required by Federal statute, 49 U.S.C. § 5309(g)(3)(B)(iv), to obtain repayment of Federal financial assistance expended under the ARC ESWA. Governor Christie was informed by the U.S. Department of Transportation officials that if the state of New Jersey failed to live up to its final commitments to the ARC project, as spelled out n the ESWA, New Jersey would have to repay the Federal funds awarded under the ESWA.

The FTA is being fair and equitable in its treatment of New Jersey (NJ) Transit. The FTA is not seeking repayment from NJ Transit of funds expended for Alternative Analysis, Preliminary Engineering, and environmental analysis totaling more than $22 million. The FTA is seeking repayment only of the funds expended under the ESWA.

However, should NJ Tranist fulfill its obligations under the law and repay the $271 million, DOT will transfer $128 million back into the State of New Jersey’s Congestion Mitigation Air Quality (CMAQ) account to replenish the CMAQ funds originally expended in this project for future use for other eligible projects.

And so the stage is set. The federal government has made it clear what Christie’s and New Jersey’s obligations are under the governing law, and the FTA has made a more than generous offer to a state that is effectively trying to hold it hostage. Christie should accept the grant, and the state should begin new efforts to identify a solution to its trans-Hudson rail travel woes.