ARC Tunnel

When Gov. Chris Christie canceled the ARC Tunnel in the fall, transit advocates from around the region were exasperated. Although the project had its design flaws on the Manhattan side, 20 years of planning and lobbying were flushed down the toilet by one stroke of the Governor’s pen. Furthermore, the region needs improved cross-Hudson rail access and simply cannot afford to wait another two decades to see shovels hit the ground.

Luckily, the major players involved in the region’s transportation policy seem to recognize the importance of cross-Hudson crossings. In a talk last week, Anthony Coscia, the chairman of the commissions of the Port Authority, spoke with financiers and construction magnates on the need to build. Transportation Nation was there and offered up a transcript. Coscia spoke a length about the need to reform pricing and the cost of building as well as the funding mechanisms. He pushed for more private sector investment opportunities as well.

The part that caught my attention was his bit on the ARC Tunnel. I’ll quote at length:

The Port Authority’s role was as a financing partner in the project. We did have certain responsibilities in terms of acquiring real estate on the New York side, but that was more a legal function of our ability to acquire land in the state of New York, which New Jersey Transit didn’t have. Our real role was: we were a $3 billion partner in the project. The reason we were a $3 billion partner in the project is that our mission is to move people between New York and New Jersey. We’re of the view that building another lane in the Lincoln Tunnel isn’t really going to solve that problem, even if we could do it, which we can’t. Mass transit or intercity rail was our way of addressing that problem.

I have to say that—since finance is really where my professional activities have been—I’ve never gone through an episode where I raised $3 billion dollars and it hasn’t been used. That’s never happened. But then it happened. We did raise $3 billion for the project, but I think [Governor Christie], for a lot of reasons that are fundamental of the time we’re in right now, was not comfortable going ahead with the project.

We are still looking for solutions to trans-Hudson commuting, and those solutions will come in some form. I also serve on the Board of Amtrak and I know that Amtrak has remained pretty dedicated to finding a solution to that issue as well, because the Northeast corridor is very dependent upon it.

We have the $3 billion and we are reinvesting it in other projects that hopefully will add to the region’s transportation strength. In terms of “will a new tunnel be built?” I think the answer to that is yes, but it will be in a configuration, of a financial model, that will be acceptable to a broad variety of stakeholders, and that’s still a work in progress.

It’s interesting here to see Coscia talk directly about the funding. Christie has long maintained that New York was not a solid funding partner, but due to its contributions to the Port Authority, a good deal of money came from New York. It wasn’t as a big a contribution as New Jersey’s portion, but considering which state’s residents stand to benefit more, it was arguably a fair allocation of dollars.

Meanwhile, it’s comforting to hear that the Port Authority is still working toward an ARC-like solution. Unfortunately, it sounds as though concrete plans are still a few years off, but hopefully, with a groundswell of support and an obvious need, the region can find something to build before the decade is out. We can’t afford to wait much longer.

'Macy's Basement' has become a rallying cry for those who opposed the ARC Tunnel. (Click to enlarge)

We join this episode of As The ARC Turns already in the progress…

When last we heard from New Jersey Gov. Chris Christie, he had recently announced a plan to borrow billions after quashing ARC over concerns over cost overruns. The federal government had asked Christie to return $271 million in New Starts funding, but Christie balked at the request. Today, he fired back in a big way.

“We are not paying the money back,” the New Jersey Governor said on Ask the Governor yesterday, and today, the state’s lawyers made that position official. In a 55-page filing, embedded at the end of this post, New Jersey insists that it both cannot afford to pay back the $271 million and is not legally required to do so.

Jim O’Grady from WNYC has more:

Tuesday’s submission to the FTA, filed by Washington, D.C., law firm Patton Boggs, argues no repayment is required because the project was cancelled for reasons beyond the governor’s control — or more precisely, of New Jersey Transit’s, which was overseeing the project. It was the project’s estimated over-runs in a time of “severe financial stress” for New Jersey that made shutting down the project unavoidable, the filing argues.

The filing further claims the FTA is only authorized to ask for money classified as New Starts funds and that $225.5 million of the $271 million doesn’t fit that description. “The FTA overstates the funds that are even at issue and makes a demand for repayment that is far broader than authorized by statute,” read a statement accompanying the filing.

Christie is also claiming that preliminary engineering for the ARC tunnel is proving useful to the study of other projects, such as the proposed extension of the No. 7 subway line from Manhattan to New Jersey and upgrades to Amtrak service in the Northeast Corridor.

Ultimately, the submission says that New Jersey is not in a fiscal position to remit the money, even if it will get half of it back. “Repaying any amount would be deeply counterproductive and harmful to the citizens and taxpayers of NJ,” it states. “The work produced with these funds has enduring value to future projects. Moreover, compelling NJT to repay these funds will force NJT to cancel projects it can afford to undertake to reduce congestion, enhance the condition of critical infrastructure and create needed jobs.”

The FTA has yet to comment.

Meanwhile, Christie let slip this week that he has had talks with the Bloomberg Administration over the mayor’s plan to send the 7 to Secaucus. He didn’t say much, but his words offer up a tantalizing glimpse at a project I still think is a pie-in-the-sky fantasy.

“We’re having conversations with Mayor Bloomberg and others regarding the extension of the No. 7 train to Secaucus, New Jersey, which would do what we really wanted the ARC tunnel to do originally,” the governor said. “We’d like to get [commuters] in a more efficient way over to the East Side of Manhattan,” he said. “That was the original ARC plan. It got morphed into this plan that has a multibillion-dollar terminal in the basement of Macy’s, blocks away from any other connecting train.”

After the jump, read New Jersey’s filings with the FTA.

New York needs the ARC Tunnel too.

Charles Schumer, my neighbor and the senior senator from the great state of New York, took to the stage this morning at Crain’s breakfast forum. His topic concerned the city’s aging public transportation infrastructure and the need to expand the system within the city’s five boroughs and improve interconnectedness outside of it. I’ll tackle what he did and didn’t say about the MTA later, but for now, let’s look at Schumer’s choice words for New Jersey Gov. Chris Christie.

As the Senator touted New York’s investment in rail, he spoke at length about the East Side Access project, the Second Ave. Subway and the 7 line extension. These three efforts are the MTA’s key capital projects and are all supported by federal dollars to one extent or another. New Jersey though has earned Schumer’s ire.

To open his talk on Christie, Schumer did not mince words. “Though I am extremely sympathetic to the fiscal problems Governor Christie clearly faces and I recognize there are not easy choices to make,” he said, “I believe pulling the plug on ARC was a terrible, terrible decision.”

Schumer touting the ARC Tunnel job creation numbers and the “starkly evident” traffic mitigation impact the tunnel would have had. He spoke of the RPA study that showed how ARC would raise property values throughout New Jersey and how we must improve connections westward as well as eastward.

Yet, his strongest words were reserved for Christie’s current political machinations. The New Jersey governor is making a play to grab the ARC money to help cover his state’s budget gap, and Schumer fears for the future. I’ll quote at length:

Governor Christie, faced with very real and very difficult budget decisions, has turned to the Port Authority, and the money that was originally dedicated to the ARC project. While I would certainly support using the funding the Port Authority had committed to ARC to extend the 7 train to New Jersey, I do not think it is appropriate to use Port Authority funds for what are essentially maintenance projects.

Governor Christie’s proposed idea that $1.8 billion of what was originally committed by the Port Authority for the ARC for other projects is to compound one mistake with another, perhaps even a greater one. These are smaller projects aimed at maintaining existing roadways that would otherwise be funded with New Jersey transportation dollars. In essence, the Governor wants the Port Authority to help fill his budget gap…Asking the Port Authority to take capital funds and redirect them on this scale, a scale never before contemplated, would be a mistake that rivals, and perhaps even surpasses the cancellation of the ARC tunnel as a risk to our region’s future.

It could well begin the cannibalization of Port Authority dollars and could mark the beginning of the end of the long-term ability of our region to respond to its major transportation needs. The Port Authority as an agency has always been committed to the long-term, the future, to building out the infrastructure of the region so that we can accommodate future growth. While it is a creature of politics, and certainly not immune to them, it has also managed to retain over its history an independence that has served the entire region. Because it has dedicated revenue stream, the Port Authority has been able to plan and complete projects, regardless of the momentary crises that the states themselves have sometimes faced. We cannot allow the agency to be cannibalized in order to solve short term budget problems, however acute. Following New Jersey’s lead, New York could well request the Port Authority to provide dollars for similar repairs, like fixing the Belt Parkway. And were this to become the norm, then where would be? If we allow the Port Authority to be turned into a rainy day fund, used year to year to fill gaps, or if we allow it to become a bank of last resort to make up for shortfalls, it’s the end of the agency as we know it, and of its ability to fulfill its function, which is to support the future economic growth of the region.

Christie, through a spokesman, fired back later this afternoon. “Where was the senior senator from New York with funding alternatives to a project that was predicted to run billions over projections – all of which were to be borne by New Jersey and its taxpayers?” Michael Drewniak said. “This was a ‘bi-state’ project for which Senator Schumer’s state and the federal government were set to pay zero, zilch, nothing for the cost overruns. We can live with the criticism while protecting taxpayers from this boondoggle, which was simply a bad deal for New Jersey.”

Of course, Christie never tried to work out a funding agreement on cost overruns with New York, the feds or anyone. He simply pulled the plug and tried to keep the federal dollars. He’s shown no willingness to respond to Mayor Bloomberg’s pie-in-the-sky proposal to extend the 7 line to Seacaucus and now wants to use dedicated ARC dollars to cover the Transportation Trust Fund’s sinking budget.

Ultimately, New York and New Jersey will have to work together to address these cross-Hudson concerns. New York, through the Port Authority, was footing some of the ARC costs, but the state will likely need to come up with more to make a project work. Yet, Christie should not be playing fast and loose with the Port Authority money. As Schumer said, “There are too many important current projects on the Port Authority’s plate…for us to allow it to be diverted from its core mission. Nothing less than the future of the agency and the future of our region are at stake.”