Home Gateway Tunnel U.S., Amtrak to take on half of Gateway costs as feds, states reach agreement on moving forward

U.S., Amtrak to take on half of Gateway costs as feds, states reach agreement on moving forward

by Benjamin Kabak

Somewhat oddly, because why now and why not earlier, momentum on a new trans-Hudson tunnel continues to build. Construction may be a few years away (even though low interest rates would make lining up funding now a great idea), but the politics are falling into place. On Monday, we learned that the feds were considering a plan to create a new entity to oversee the project, and today, we find out that’s just exactly what’s going to happen, although the Port Authority will have more of a role in this than originally anticipated.

Additionally, following a September offer from New York Gov. Andrew Cuomo and New Jersey Gov. Chris Christie to have the two states pay 25 percent each and the feds pay 50, the funding scheme may be in place too, and it will look exactly as proposed. It’s not a bad deal for the states as they shift most of the funding to the feds, but it’s still not clear how much this project will cost or when it can begin.

The details of the partnership will be unveiled tomorrow, but Emma Fitzsimmons broke the news in The Times on Wednesday night. She writes:

Federal and state officials announced an agreement on Wednesday to create a corporation within the Port Authority of New York and New Jersey to oversee long-awaited plans to build a new rail tunnel under the Hudson River.

The entity, called the Gateway Development Corporation, will coordinate the project and assemble the billions of dollars needed to pay for it. It will be controlled by a four-member board with representatives from New York, New Jersey, Amtrak and the federal Transportation Department.

As part of the agreement, the federal government and Amtrak said they would be responsible for financing half of the project, which could cost as much as $20 billion. Govs. Chris Christie of New Jersey, a Republican, and Andrew M. Cuomo of New York, a Democrat, had pushed for the cost-splitting and said the two states would line up the money for the other half.

The announcement, from the governors and Senators Chuck Schumer of New York and Cory A. Booker of New Jersey, both Democrats, signaled the most significant progress yet on an effort federal officials have called one of the most important infrastructure proposals in the country. The century-old rail tunnel used by Amtrak and New Jersey Transit that runs under the river is deteriorating and needs repairs because of damage by Hurricane Sandy.

In comments to The Wall Street Journal, various stakeholders seemed optimistic Gateway would become a reality. “Our shovels are ready. Literally, if you don’t build this tunnel, you would greatly imperil train service,” Cuomo said, apparently channelling Chris Traeger. Amtrak Chair Anthony Coscia called the move “a real turning point.”

What the Gateway Development Corporation likely does not include is a cost-control mandate. Even if the new corporation can issue bonds, no one has mentioned spending reform or any effort to drive down the project costs. We may well get our tunnel yet, but at what cost?

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Alon Levy November 12, 2015 - 12:48 am

Guy Fawkes Night came a week late this year.

Chet November 12, 2015 - 6:34 am

The first step they should do is bring in the people who come up with the cost estimates for projects like this from a few other countries, where they would probably be doing all this for 1/3rd less the cost.

eo November 12, 2015 - 10:20 am

That would not help much given that they still have to hire workers here and procure materials here. That is not to say that attention should not be paid to what others are doing and importing best practices, but doing that will not solve our problem.

Say whatever you want about Cuomo (he is no angel when it comes to public transportation), I think he hit on something with the design-build contracting for the TappanZee bridge. On average designers of the infrastructure in the typical design, then bid, then build model have little incentive to cut out unnecessary portions of the projects. They also have little incentive to stand against demands to use the fanciest, newest, untested technology, component or idea. As a result we end up with a lot of things that are nice to have, but whose cost-benefit analysis would revel to be unjustified. This would also allow the design-build contractor to pursue cost effective means for accomplishing the same task — that makes a huge difference. Let me illustrate what I mean. This project is huge and some of its pieces are more important than others. Here is a possible split that I suspect is fairly workable:
1.Tunnel/tunnels under the river — from a point close to the NJ entrance of the existing tubes to the tunnel box under the West Side Yards.
2.Two additional tracks and supporting bridges, viaducts, causeways and land berms between the mouth of the new tunnels and Newark Penn.
3.Expanded Secaucus Junction/Secaucus Loop and whatever else they want to do there (probably yard).
4.Penn South.

Only 2 and 3 are somewhat tangled with each other. Each one can be executed and benefit train travel without the rest being completed (there is no question that some provide more benefits than others).

Then offer a design-build contract for each one of them. For example, number 1, the Tunnel/Tunnels can be done as follows: design and build tunnels or a tunnel providing two parallel tracks from the tunnel box to close of the mouth of the existing tunnels in NJ with slope to not exceed X.YZ% and able to fit plate X (how large a piece of rail equipment is) under 25kV catenary. Then let the contractors figure it out and decide themselves whether one two track tunnel is cheaper to build than two one track tunnels. Let them decide whether they want to use TBMs, road-headers or shovels to dig it. Let them decide if they want to pour the concrete in place or make the tunnel out of precast rings. Let them decide if the rings are metal (cast iron) or concrete or whatever else. Let them decide if the tunnels should have one or two benchwalls (if one is enough why have space for two and build the second one?). We need to stop telling the contractors how to build these things. We should provide the functional requirements for them, make sure that they follow safety regulations and probably that they do not decide on an untested construction method with which they have little or no experience, but other than that we should give them the freedom to choose how to do as many things as possible which the design-build paradigm allows for.

The contractors will still compete on cost. The one that offers the lowest total cost will get to do the job (again provided they are not trying to use really novel and untested construction methods). What is gained here is that it is not necessary the contractor with the lowest execution costs (e.g. the one with the lowest wages to the workers) to win — they compete on the design too. The design is where the big savings are to be made — in selecting what to build and which building technology to use. This is in sharp contrast with the usual design-bid-build contracting because by the time the bids are sought 98% of the costs are already locked in. The contractors compete only on who can pay their workers less and cut more corners to come up with the lowest bid in order to win the contract.

I know that many will say that design-build will not solve our cost problems, and they will be right, but it will be a huge step in the right direction. It is a step that has few if any political barriers. It is a step that can bring benefits now, not 20 or 30 years form now after political wrangling with unions, pensions, regulations and all the rest.

For the TappanZee bridge the design-build is allowing the contractor to construct the type of bridge that that they determined to be the most cost effective for them to build (and that won on cost over other alternative designs and construction methods from other contractors; I think it is called “cable stayed”). On the opposite side, we would never know if we really needed as big of a launch box for the Second Avenue subway as we did get. Maybe someone knew how to dig those tunnels starting from a much smaller (and cheaper) box, but we would never know that because when we asked for bids we told them that the box had to be such and such. Maybe someone knew how to build a station on 11th Ave and 34th Street that is capable of handling the same number of people as the current one without resorting to inclined elevators and huge mezzanines, but we never asked for that. We asked for bids that specified that the inclined elevators and the mezzanines had to be build. The designers were never asked to build the thing, so they were not necessarily looking for cost effective ways to achieve the same functionality. Think even about the flapping bird downtown — it the firm of the guy who designed it had to build it it would have never come out of the drawing board.

Design-build can improve our costs now and there are few if any political barriers to it other than institutional resistance. We should demand it now.

Spuds November 12, 2015 - 12:00 pm

DB has its place but using the TZII as an example may not be best one. Only 1.7 Billion is available and that is a loan from the Feds, the other 2.2 Billion plus other costs is still a mystery, as is the new toll once it is completed. I just hope the Feds, NJ and NY have the money up front for the new tunnel.

eo November 12, 2015 - 1:57 pm

You are right that the money for the TZ bridge is not there, but that is no fault of the design-build process. I am no fan of the TZ bridge (functionally without transit, only vague promises to not preclude future additions of transit) as they put it out for bids, but I believe that the design-build process is definitely going to end up costing less overall than the design-bid-build contracting approach. It is hard to know how much less, but even if it is 15% less, that is real money equivalent to a few hundred million dollars not wasted. The fact that Cuomo has no guts to tell the people that if they want the bridge they have to pay for it in tolls or something else is completely separate than the design-build.

Spuds November 12, 2015 - 2:18 pm

Agreed and you made some good points on your previous statement. If you do go with DB, you should have at least 75% of the money in hand of what you think it might cost. The original TZ project was a soup to nuts one that intended to carry the problems of the day but it was 6 tomes the cost that Andy claims this new new bridge is supposed to cost. DB by no means is a panacea as som3 pols would like some to think.

mister November 12, 2015 - 2:29 pm

What Design-Build does is transfer risk. It makes the DB firm take on all the risks of cost overruns, which is something that is going to drive up your initial investment costs.

I think a P3 setup could help control costs and generate funding with any new facilities that have to be built in NYC. Whether that materializes is another story.

Eric November 12, 2015 - 3:42 pm

It transfers risk to a private company which has incentives to efficiently manage risk.

Dan November 12, 2015 - 7:46 am

Is a 4-member board really a great idea? What happens when there is deadlock?

Eric F November 12, 2015 - 1:57 pm

In real life, they likely don’t take any action other than based on a unanimous decision. This is likely doubly the case where there are four separate paymasters in the background. I doubt you’d ever see a 3-1 decision, let alone a 2-2 deadlock, at least if the project was actually progressing anywhere.

Douglas John Bowen November 12, 2015 - 9:00 am

So: Half a decade, give or take a few months, before a worthy successor to the flawed ARC project is put into play.

Still a long way to go, unquestionably. But five years (or so) sure is faster than the “it’ll take decades” cry of those wedded to ARC at any cost.

Many New Jersey rail advocates could not be more pleased. (And, yes, we’ll do what we can to make sure the Garden State chips in a real amount.)

Joe Steindam November 12, 2015 - 4:00 pm

True, all it took was for the tunnels to be submerged in corrosive salt water for days and then a series of system failures during the work week while the governor of the impacted state is running for president to motivate the interested parties to get it done. And by get it done, I mean agree to begin the process, as in a new funding agreement (with no official appropriations backing it up), new EIS, new engineering, and new bidding for construction.

Yes it’s a better project in general, but had it not been for Sandy, I don’t see this coalition organically getting together to pursue ARC’s replacement. It would be crass to say the region is lucky Sandy happened, but in this respect, it might be correct.

Tower18 November 13, 2015 - 10:06 am

As to the “why now” question, I have suspicions that Cuomo is angling for the VP spot on Clinton’s ticket.

Larry Littlefield November 12, 2015 - 9:08 am

So what transit service will be cut in NYC to pay for New York’s half?

Don’t expect an announcement.

Bolwerk November 12, 2015 - 10:27 am

I think going by Cuomo’s attacks on the capital plan, we already know.

oinonio November 12, 2015 - 9:23 am

So is there literally any chance to get through running at Penn when this mythic tunnel finally materializes? Or would that be asking too much?

Michael Romero November 12, 2015 - 10:56 am

There would be a lot of logistical hurdles to overcome there, the main one being that NJT/Amtrak and LIRR use incompatible power sources. There are only short sections of LIRR territory with overhead catenary and those are just to serve the NEC for Amtrak trains. Who would pay for new equipment that could do both cat and 3rd rail?

Eric November 12, 2015 - 4:01 pm

The main things to do would be:

1) Run NJT through to Jamaica (transfers to all LIRR trains and JFK airport) which would require minimal new catenary.

2) Run NJT through on the NEC (Penn Station Access route) which already has catenary.

In the opposite direction, you could run LIRR through to Secaucus, Newark, or Newark Airport. This would require minimal new third rail.

Spuds November 14, 2015 - 2:15 pm

Makes too much sense? 🙂

Bolwerk November 12, 2015 - 11:41 am

The plans published a year or two ago included that feature. I haven’t heard about them getting rid of it.

lawhawk November 12, 2015 - 9:53 am

The tunnel portion of Gateway could be done for a few billion. The real costs begin to add up once you figure out where the terminus is in New York – that’s where a huge sinkhole of capital construction costs come from.

For the critical parts between Newark Penn and New York Penn, I’m guestimating:

1) a few billion for the actual 2- single track tunnels to New York
2) $2.5 billion for the Portal Bridge replacement ($1 billion for the 2 track direct replacement, plus a separate 3 track span w/flyover for another $1.5 billion)
3) $1 billion for rail improvements between Newark Penn and NY Penn to include HSR separate rail, including a bypass/extension of Secaucus
4) $250 million for a MBPJ connector to the NEC

So, for roughly $10 billion, you get the key infrastructure to upgrade the Newark Penn to NY Penn ROW.

The real costs come in NYC, which is where the costs begin to soar. Building a new cavern terminus would result in ESA type costs and overages. That shouldn’t be acceptable to anyone. What’s needed is a budget/value way to get the tracks/platforms oriented in a way to permit through-travel, minimize dwell times, and maximize train movements in/out of NYP.

That’s necessarily going to involve the Farley Post office, but there must be a way to minimize these costs and maximize deliverables.

None of the agency/stakeholders involved have shown any interest in doing that.

webster November 12, 2015 - 10:03 am

Well…won’t they need to study alternatives in which MSG is no longer present at the site? They’re lease ends in 2020, I thought.

For better or worse, that may be the one silver lining of the ARC cancellation: we may get something much simpler and efficient.

webster November 12, 2015 - 10:03 am


AG November 12, 2015 - 3:51 pm

It’s not a lease. It’s a special operating permit. They can’t be forced to move without around 2 billion in compensation.

webster0105 November 14, 2015 - 8:48 am

Fine, “lease.”
The question still stands…if the city expects that they will vacate that property, which they’ve given every indication they want to see happen, will planning on this project take that into consideration?

I think the real obstacle in the planning phase isn’t the costs associated with MSG relocating, that sounds like the purview of the city (since it will be happening regardless of whether this project advances) but rather the logistics of reconfiguring Penn, rather than building an annex.

Bolwerk November 14, 2015 - 11:20 am

Does it really matter? The state or feds each have power to condemn the land, and the city can do fuck-all about it.

I think it’s safe to assume some party involved here, either the city of the state, will happily condemn MSG and resell the air rights at a profit to help finance this boondoggle. If nothing else, it’s in the way.

AG November 14, 2015 - 12:56 pm

Sell the air rights for profit?? You seriously think there are $2 billion in air rights there? In any event – not one of the agencies involved in this project has any plan involved where MSG moves. None of them.

Farley they want.. Penn South they want. None of them (transit agencies) has mentioned moving MSG. You will not find any of them with plans on any of their sites to do so.
I’m sure they wouldn’t mind a “clean slate” with not having MSG there – but they are not wasting their time thinking about it. It probably has to do with the fact that it is cheaper to buy those buildings on the block to the south than to try to get MSG to move. Over $1 billion cheaper.


The big noise is coming from the Municipal Art Society and some in the pocket politicians. It hasn’t come from the people who are running the trains or the station. Probably because they know a billions isn’t that easy to come by.

Bolwerk November 15, 2015 - 10:52 am

You could be right. But I’d point out that if the options are A and B

A: take MSQ complex, construct whatever you want to construct, re-sell air rights for a net project profit/loss of $a

B: work around MSG, at a net project profit/loss of $b

then option A makes more sense as long as $a > $b. That could be the case even if neither is profitable. Option A would just need to produce the smaller loss.

AG November 14, 2015 - 1:04 pm

Or at least Amtrak’s direct plans. Again – they are the landlord. They plan to build commerical towers – just at Penn Station South… Not by moving MSG.


Now of course the Port Authority is getting involved with %50 skin in the game… So yes – there will probably be adjustments.. Does that provide an impetus to try the more expensive plan of moving MSG? Doubt it. In fact it would send NJT to Penn South and give them more “independence”… Something tells me the NJ side of the equation would be more supportive of that.

The one thing I found most interesting in that plan is they only expect 6 Metro North trains per hour. If that is so – then there will be more space since LIRR won’t maintain the same capacity. So again – I think NJ would be quite happy with Penn Station South.

AG November 14, 2015 - 12:30 pm

A lot of big mouth politicians say a lot of things… Doesn’t mean it will happen. Recall when MSG WANTED to move – the politicians were for it – nd it didn’t happen. Besides – this project has absolutely nothing to do with the idea of relocating MSG… Zip – zero – zilch.

David Brown November 12, 2015 - 10:22 am

There is little doubt that the Knicks, Rangers and MSG will be moving so a Transportation Hub can be built, which is why Vornado is going on a spending spree to built first class office space to take advantage of it (adios to the bargain stores across the street) the only questions are where is it moving to and how much will it cost? What I suspect is the Javits Center Area.

AG November 12, 2015 - 3:47 pm

You put way too much stake in MSG moving anytime soon. Just getting them to move adds 2 billion dollars to a project – in today’s dollars. Not chump change by any means. And yes that’s what it would take to buy them out even using eminent domain. They just sunk over 1 billion into MSG. Any lawyer worth his salt could easily show the judge that every other sports team has the same operating permit that MSG is threatened to have revoked. That means FMV for the building and to relocate.

adirondacker12800 November 12, 2015 - 4:38 pm

Redecorating depreciates.

what other sports team has an arena over a transit hub? The subway station at Herald Square would be the country’s tenth busiest mass transit system. The station on 7th the 11th and the 8th Ave. the 12th. The LIRR and NJtransit, taken together, would be the 9th. But we don’t count commuter rail as mass transit.

AG November 12, 2015 - 5:39 pm

“what other sports team has an arena over a transit hub?”

that has nothing to do with the law… the permit has nothing to do with being over a transit hub. again – sure eminent domain can be used – but “we” just have to throw $2 billion on the table.

Bolwerk November 12, 2015 - 10:24 am

It’s not a bad deal for the states as they shift most of the funding to the feds, but it’s still not clear how much this project will cost or when it can begin.

Eh? Arguably it’s a great deal for New Jersey, which will now only be paying what it would have paid for ARC plus a few billion more (plus what it already sunk, if you want to count that). I’d argue maybe not even that great, but probably the best they ever could have hoped for in their wildest dreams of avarice.

New York gets the shaft because now we also get to pay what New Jersey would have paid for ARC plus some more, on top of the fact that New Jersey is paying for what New Jersey paid for with ARC plus some more. All for a project that doesn’t really directly benefit us in any way. Under the ARC scheme we had no such obligation.

Really, New Jersey elected Chris Christie. Let them live with the consequences. I’m fine with a Hudson tunnel, but New York shouldn’t pay a red cent for it. We have our own projects.

Michael Romero November 12, 2015 - 11:04 am

So you don’t want the billions in income and sales tax revenues that the millions of us who commute into the City from NJ dump into the shitshow that is New York government? New Yorkers have had a lot of nice things at the expense of their friends across the Hudson to the west.

Larry Littlefield November 12, 2015 - 11:13 am

“So you don’t want the billions in income and sales tax revenues that the millions of us who commute into the City from NJ dump into the shitshow that is New York government?”

Sure city residents want it. But they don’t get a dime of it.

Bolwerk November 12, 2015 - 11:38 am

Most of what we get from New Jersey is vehicular aggression.

Re tax revenue, whatever we get already we will get no matter what happens, tunnel or no tunnel. It is not in our interest to subsidize the construction of New Jersey’s infrastructure, and it’s especially stupid to reward pay them billions of dollars to reward their bad decisionmaking.

Douglas John Bowen November 12, 2015 - 12:35 pm

Ah, the “thar be dragons” sentiment.

I’ll readily concede that New Jersey needs New York (City) far more than the reverse. But no benefit to New York at all? That seems somewhat extreme, particularly if one acknowledges the reach of the (southern) NEC. That’s Pennsylvania, Delaware, Maryland, and D.C., just to be pedantic about it.

It’s fun to remember when Amtrak’s Minute Man, once under way southbound/westbound, would include a conductor’s announcement including, “This train does NOT stop in New Jersey,” and riders would cheer! But those riders were going to someplace — or coming from Gotham. That’s some kind of benefit, no?

Bolwerk November 12, 2015 - 12:50 pm

To be clear, I didn’t say there were no benefits. However, there is no real threat to the NEC’s reach here, so the benefit is entirely to NJT commuter operations. (Amtrak is making some vague promises about better HSR, but I’m ignoring them until I see details.)

As far as NYC/NYS is concerned, there are much bigger benefits for us if we complete SAS, initiate Triborough RX, reactivate RBB, or do any number of other projects big or small. Reality is New Jersey can afford some share of a retooled ARC or Gateway, and the feds would eventually capitulate and pay for it anyway. New York doesn’t need to be involved beyond preventing obstructionism.

Cuomo gave away the farm for no reason discernible benefit to us. That’s actually typical Democratic Party executive branch behavior: only capitulate when you started out actually being right. Bill de Blasio did it with the capital plan to allow Cuomo to do this!

Eric F November 12, 2015 - 1:37 pm

The states’ relationship is actually fairly symbiotic. Pretty much every tangible item that a NYC person touches in a given period of time went through NJ. Every single thing you eat, for example.

mister November 12, 2015 - 2:17 pm

That’s probably a stronger case for funding the Cross-Harbor Rail Tunnel, not Gateway.

Bolwerk November 12, 2015 - 2:33 pm

I was going to say, if this deal included that project too I might have a different evaluation. At least then the package benefits both states very strongly.

Eric F November 12, 2015 - 3:50 pm

Or the tunnels could be sealed off and 200,000 NJ employees and their dependents can look for housing/schools in NYC.

Bolwerk November 12, 2015 - 4:20 pm

If it came to that, I think mostly they’d just disperse to buses, PATH, ferries, or driving themselves. In turn, they’d probably end up driving away people who can’t afford to do those other things as easily as they can.

Yeah, some would eventually move too, likely to the effect of gentrifying Long Island. :-O

But really it’s not not so different than things on this side of the Hudson, with a governor and mayor who are indifferent to mass transit. Poorer people end up getting fucked.

JJJJ November 12, 2015 - 2:14 pm

Dont NJ residents who work in NYC pay some kind of NY tax?

Larry Littlefield November 12, 2015 - 2:18 pm

NJ residents pay state income taxes. But NYC residents pay more in taxes to the state than the state spends on the city.

Ergo, the taxes paid by NJ resident to NY State do not go to NYC.

22r November 12, 2015 - 10:48 am

Lately when looking at this site in Chrome, an ad takes over the whole screen and I can’t get back to the content.

Chris C November 12, 2015 - 7:39 pm

sounds like you have a piece of malware on your computer so best do something about that

You really should have contacted Ben directly rather than posting in the middle of a thread.

22r November 12, 2015 - 10:35 pm

Isn’t it kind of rude to bother Ben directly?

Ethan Rauch November 12, 2015 - 10:48 am

If CC wants to be president, he needs to show he has the muscle to bring some benefit to his own state.

Bolwerk November 12, 2015 - 12:20 pm

I bet a big part of why people like Carson and Trump are running so far ahead probably is because they have prima facie deniability regarding their own administrative/fiscal incompetence. Trump even makes himself look good by pretending he made himself rich. Such deniability probably helps second runner-up Rubio too, the “respectable” guy, even though he never shows up for work. Jeb, Christie, and also-ran Walker don’t have that excuse. They’re all on record as overt fuck-ups.

Christie doesn’t have a path for becoming president. That he leads the perhaps most overtly corrupt (maybe or maybe not literally the most corrupt) state in the union is probably a turn-off for GOP primary voters who are made uncomfortable by…well, the obvious.

Eric F November 12, 2015 - 1:52 pm

I hope this portends a smooth path to the tunnel and all the rest of the elements of the multi-state project. However, not really seeing financing sources for the four payers as yet. I hope the $ to satisfy the various commitments materializes.

JJJJ November 12, 2015 - 2:13 pm

How were the original tunnels financed and what was their cost adjusted for inflation?

Spuds November 12, 2015 - 2:22 pm

It was a private investment by the PRR but it did have its political issues of the times. Not much has changed since then I’m afraid.

Spuds November 12, 2015 - 2:26 pm

Here is a good book, “Conquering Gotham” by Jill Jonnes http://www.conqueringgotham.com/b04-cg.html

AG November 12, 2015 - 3:36 pm

Yeah pretty much all those railroads went bankrupt.. And politics were always disgusting and dirty. There was no 24 hour news nor social media but newspaper archives show there is nothing new under the sun. People tend to have false views of “the good ol’ days”. The poor children think there were just a few pilgrims that came – made nice with a few “indians” – had Thanksgiving dinner and lived happily until the mean British tried to extort tax payments

Eric F November 12, 2015 - 4:14 pm

There was a recent-ish PBS show on the construction of the original tunnels: both the Hudson and East River sets. The East River tunnels were substantially more problematic, which I wouldn’t have expected given that the East River is a much narrower crossing. The show made for good viewing, I;d recommend it.

AG November 12, 2015 - 5:41 pm

yeah- I saw a small part…. want to get to see the whole thing.

lawhawk November 12, 2015 - 2:29 pm

According to the wayback machine, looks like the original tunnels cost $75 million. In current dollars? That’d be at least $1.8 billion (from 1913 to 2015).

AG November 12, 2015 - 3:31 pm

Well inflation is a poor measurement… For one thing labor and real estate values went up much much more. Plus this calls for much more than a tunnel.

JJJ November 12, 2015 - 3:33 pm

Real estate? It’s a tunnel, by definition, thats not an issue.

Labor went up? Sure. But we have big tunnel making machines now that negate that.

What are we paying 10x more for?

Safety? I don’t know, the existing tunnels have a good safety record, dont they?

Bolwerk November 12, 2015 - 3:38 pm

Real estate is a big issue no matter what. Tunnels still require eminent domain, and this plan includes demolishing much of a block south of Penn Station.

Labor went up, but labor productivity has gone up much more. Most of the problems in this case probably are labor-related.

AG November 12, 2015 - 3:55 pm

This is way more than a tunnel – real estate matters. Labor costs absolutely are a huge chunk – machine or no machine. 100 years ago those guys were not as well compensated at all. They were expendable in many ways.

AG November 12, 2015 - 7:11 pm


To quote from an article about cost overruns in LA transit projects:

“If you’re condemning land in a remote area of the Central Valley, the risks of utility problems are low,” said USC’s Moore. “If you’re digging up streets in downtown Los Angeles, be prepared for a circus.”

Well Penn South is a part of this project – that requires a big “circus” to borrow from Mr. Moore.

AG November 12, 2015 - 3:00 pm

Ben – you hit the nail on the head with the last part. It’s good that the Feds are willing to put up half the money – but federal projects have ballooned costs too. With nothing to control it – there is no guarantee it will be reasonable. That said – the fight isn’t over. Plenty of grandstanding congressional members would love to use this to extort something for themselves (though they are most often already subsidized by our region).

In any event- at least something material is happening

Eric November 12, 2015 - 4:21 pm

For all the people complaining about the costs to NY state:

If this plan costs $20 billion, and NY pays 25% of that, and NY has 20 million residents, then on average each resident pays $250. (Meanwhile, each NJ resident pays $550.)

$250 per person is not a huge amount of money. I can’t say that every New York Stater will get their full $250 back in benefits from the project, but they won’t go bankrupt from it either.

AG November 12, 2015 - 5:42 pm

more to the point is that it will probably have a 100 year useful life.

Larry Littlefield November 12, 2015 - 5:56 pm

“If this plan costs $20 billion, and NY pays 25% of that, and NY has 20 million residents…”

I think those complaining are well aware that 20 million will not be paying for this. Let’s see how many actually area, and in what form.

Ed November 12, 2015 - 7:15 pm

Does the 25-25-50 split also apply to cost overruns? The avg cost overrun for US rail transit projects is 61% according to USDOT (Megaprojects and Risk, Flyvbjerg et al., 2003).

I’d support a design-build-operate contract which, although costly, will keep the Gateway asset from becoming a battleground for feuding commuter RRs. It should also keep ownership out of the hands of Amtrak which has no way of maintaining this capital since all NEC profits are funneled to wasteful long distance routes.

DBOs are typically reserved for 3rd world nations which are too corrupt and inept to manage a large capital investment. Sadly, we are seeing 3rd world type levels of graft and incompetence in NYC today.

Nathanael November 12, 2015 - 11:12 pm

The NEC does not subsidize long distance routes.

In fact, what’s actually going on is that Congress subsidizes both long-distance routes *and* the NEC *and* Amtrak’s backshops and other general overhead. Long-distance routes get operating funding (but no capital subsidy), the NEC gets capital funding (but no operating subsidy), and the general overhead actually eats the bulk of the federal subsidy.

Alon Levy November 13, 2015 - 2:55 pm

The cost overrun has already happened. Remember when ARC was going to cost $3 billion?


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