Benjamin Kabak

Deep-cavern ARC station, we hardly knew ye. (Click to enlarge)

It’s now been over 48 hours since New Jersey Gov. Chris Christie announced the end of the ARC Tunnel project, and the reactions are still coming fast and furious. Let’s dive in.

New York pols put in call for unused billions for MTA support

We’ll start with the juicy stuff. Since Christie sacrificed $3 billion in federal financing when he torpedoed the tunnel, the feds have some money to spend. Not missing a beat, New York and the MTA are jumping into the fray. With a $10 billion hole in its capital budget and perennial operating deficits, the MTA is going to make a play for some of the money, and both Sen. Kirsten Gillibrand and Manhattan Borough President Scott Stringer have called upon more federal contributions to both the Second Ave. Subway and the East Side Access project. “We will certainly stake our claim,” MTA CEO and Chair Jay Walder said.

Putting the Port Authority dollars to use

The other $3 billion contribution — this one from the Port Authority — is now sitting unused as well, and the Tri-State Transportation Campaign has a solution: Spend some of the money on improving cross-Hudson bus service. Here’s their thinking:

According to ARC’s final Environmental Impact Statement, the project would have shifted daily 11,530 trans-Hudson bus trips and 31,590 trans-Hudson car trips to rail by 2030. Assuming an average bus capacity of 35 passengers, more than 1,230 additional buses will be needed to meet that demand in the absence of ARC. Another 473 buses will be needed to accommodate the baseline projected increase of 16,538 bus trips that would occur even with the tunnel. That’s another 1,703 buses needed by 2030 to accommodate this growth in cross-Hudson trips.

Currently, NJ Transit has a total of 2,125 buses statewide. If half of new trips are on NJ Transit buses (with the other half on private carriers), the agency would have to increase its existing bus fleet by at least 850 buses, or 40%. That’s a major investment.

And with the Lincoln Tunnel’s Express Bus Lane and the Port Authority Bus Terminal (PABT) already at or near capacity, there’s just no way for the existing infrastructure to accommodate 1,703 more buses. As the ARC project’s final environmental impact statement points out, “bus service levels would remain the same as existing conditions… due to capacity limitations at PABT.” In other words, drastic improvements are necessary to allow more buses to enter Manhattan. Luckily, the Port Authority is already considering plans to increase bus capacity through the Lincoln Tunnel and at the PABT.

The real issue, as TSTC notes, is access through the tunnels. Since New Jersey isn’t expanding tunnel capacity any time soon, buses must have a true dedicated access lane into and out of the Lincoln Tunnel. Until that happens, buses will be slowed by the same traffic that makes crossing the Hudson River so infuriating.

Pointing a finger a Gov. Christie but also Ray LaHood

Meanwhile, as project supporters try to make sense of the politics behind Christie’s decision, many see inconsistencies in his insistence on toeing the line when it came to cost overruns. As Mobilizing the Region explores, Christie has been more than willing to eschew financial responsibility on road projects.

In fact, shortly before canceling the ARC Tunnel, his administration borrowed $2 billion to pay for a misguided turnpike-widening project. Similar to the ARC project, the turnpike-widening plan has seen its cost go from $1.4 billion in 2004 to $3.6 billion in 2009, but Christie has bee notably silent on those cost overruns and budgetary projections.

Mark J. Magyar expands on this finger-pointing and explores the ARC Tunnel’s demise on both a state and national level. The Rutgers professor is more than willing to blame many prominent state officials for the ARC debacle, and he lays out the case in exquisite detail.

Finally, Ray LaHood enters the picture too. On both the DOT Fastlane blog and in the opinion pages of The Star-Ledger, the Secretary of Transportation lays into Christie. He says:

Against the backdrop of these enduring legacies, Gov. Chris Christie’s decision to terminate America’s largest transportation project was particularly disappointing. Unfortunately, his choice comes with profound consequences for New Jersey, the New York metropolitan region and our nation as a whole.

Tens of thousands of jobs that the tunnel would have created will be lost. Future New Jerseyans will face shrinking property values, suffocating road traffic, interminable train delays and increasing air pollution. A $3.358 billion federal investment in the region’s economic future will move elsewhere.

Yet, as Andrea Bernstein writes at Transportation Nation, this call from LaHood is too little, too late. The feds too are complacent in the death of a project they touted. “There was,” she wrote, “a substantive debate to be had here [on the planning and impact of the tunnel], one that is now lost to the sands of time…because neither party released full details until after a decision had been made.”

It’s barely been 24 hours since New Jersey Gov. Chris Christie killed the ARC Tunnel, and already the fallout is loud and divisive. New Jersey’s Democratic Senate representatives are slamming Christie for what they see as a national play for headlines while some New Jersey-based activists are blaming New York for its unwillingness to help fund an interstate project. Let’s dive in.

Christie defends his decision

After announcing his decision to kill ARC via a press release, Christie held forth for twenty minutes with members of the press. If you’d like to watch him dance around the issue, he’s made the videos available for all to see.

Basically, as I’ve mentioned before, Christie’s decision came down to the illusion of money. He wanted to, he said, find “a way to work around the unacceptable level of risk and cost that was being asked to be borne by the taxpayers of the state of New Jersey.” He still claims that the feds were putting forth total project costs as high as $13.8 billion even though Secretary of Transportation Ray LaHood disputed that total last week, and he claimed that divorcing the Portal Bridge South from the ARC Tunnel funding scheme wasn’t possible.

Christie’s excuses ran deep. When discussing the cost-saving measure of connecting the tunnel to Penn Station instead of the deep cavern beneath 34th Street, he said that his idea didn’t address the real problem. “Even if that aspect of the project was successfully implemented,” he said, “it would not provide a means for covering current cost overruns nor the contingencies necessary to conclude a funding agreement with the FTA, and I’ll get back to that in a second. Simply put, it wouldn’t hold taxpayers harmless in New Jersey for cost increases and cost overruns that have already emerged, and could continue to be even greater as the project moved forward over the next eight years.”

Ultimately, Christie’s 20-minute statement was a national show of economic force designed to say all the right things in an appeal to voters looking for fiscal responsibility. “I cannot place upon the citizens of the State of New Jersey an open-ended letter of credit,” he said, later adding, “This is how we got ourselves into the third highest debt load in America. This is how we got ourselves in to the awful fiscal mess that we’re in, and often during the campaign, I would say that if I were elected I would make the hard decisions that were necessary in order to return our state to fiscal health.”

He didn’t make mention of any future plans to study cheaper alternatives or ways to improve transit access from New Jersey to New York City. We’ll just have to keep waiting for that.

LaHood, Lautenberg respond

Following Christie’s press conference, both New Jersey Sen. Frank Lautenberg and Secretary LaHood issued statements in response to the development. Lautenberg’s was more vehement than LaHood’s.

Says Lautenberg:

“The Governor was given a deal from the federal government on Sunday that put no extra imposition on the state of New Jersey for its obligation to the ARC Tunnel project, and the Governor refused it. It was clear from the beginning that Governor Christie planned to kill the ARC Tunnel no matter what. In doing so, the Governor has once again put politics over performance.

“This is a tragic day in New Jersey’s history. Two weeks ago, Governor Christie made the biggest public policy blunder in New Jersey’s history. Today he repeated it. Today he killed the prospect for improving New Jersey’s economy and creating thousands of new jobs. He increased the amount of toxic fumes that will be discharged from idling cars stuck in traffic, and he took away an opportunity for New Jersey housing values to go up.

“I was a CEO and I know you need to be at work to do your job, and Governor Christie is out stumping in other states and not doing his job at home. While the Governor is on political missions in Indiana, California, Ohio and other states, he is ducking the needs of people in New Jersey. In just nine months of being in office, the Governor has bungled the opportunity to score $400 million dollars for our students and now he has lost over $6 billion in transportation funding.

“New Jersey Transit is coming off one of the worst summers for delays in recent memory. 1,400 delays were recorded this summer, and just this week a minor derailment caused hour-long delays for thousands of commuters. Delays and derailments are only going to get worse on our aging infrastructure and thanks to the Governor, New Jersey commuters shouldn’t count on new rail service options for decades to come.

“The Governor has put politics before performance, and it is the people of New Jersey who will pay the high price.”

In a “Truths and Myths” section of the press release, Lautenberg starts to get a little sloppy with the facts. He disputes the idea that Christie is “killing the tunnel because the state cannot afford it” and instead claims thats Christie torpedoed the project only to “move $1.25 billion in New Jersey Turnpike Authority funds dedicated to the ARC Tunnel to the state’s Transportation Trust Fund.” The reality is a mix of the two.

LaHood chose a more diplomatic approach. “I am extremely disappointed in Gov. Christie’s decision to abandon the ARC tunnel project, which is a devastating blow to thousands of workers, millions of commuters and the state’s economic future,” he said. “The governor’s decision to stop work on this project means commuters — who would have saved 45 minutes each day thanks to the ARC tunnel — will instead see no end to traffic congestion and ever-longer wait times on train platforms. Our team has worked hard over the last several weeks to present Governor Christie with workable solutions to bring the ARC tunnel to life.”

Looking at New York

Meanwhile, Mary Forsberg points her finger at our side of the river. In an Op-Ed for The Times, Forsberg questions why New York wasn’t willing to help fund the ARC Tunnel. “Where, specifically, is New York’s contribution to the effort? Original estimates put the project’s cost at $8.7 billion, with New Jersey chipping in $2.7 billion and the federal government and Port Authority of New York and New Jersey each contributing $3 billion,” she writes. “In other words, New Jersey would have to shell out more than its fair share for the tunnel project, while New York, which stands to gain in a number of big ways, would pay nothing.”

Forsberg, the director of research at the New Jersey Policy Perspective, calls upon New Jersey to rais its gas tax, but she also cites the tax revenue disparities between New York and New Jersey due to the tax credits granted to commuters. Because New York is in a comparatively better tax position, she urges the Empire State to help out the Garden State in realizing a project that benefits both. “To match New Jersey’s contribution, New York should dedicate the billions of dollars of income taxes that it annually collects from New Jersey residents toward construction of the tunnel. That way each party would have a quarter in the kitty,” she writes.

The state though already fronts numerous costs borne by commuters. We do not enforce a commuter tax and pay for all of the services — police, fire, transportation, etc. — that accrue as a result of the numerous people who commute into the city each day. Some would argue that we already pay our fair share of costs, but Forsberg’s argument is not without merit.

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?

10.26.10 Memo