“The project is just not a financially viable project that we can responsibly move forward,” said Christie, who has been reportedly eager to use New Jersey’s own planned contribution of $2.7 billion to the tunnel to maintain the state’s highways.
Work on the tunnel began last year, and around $600 million has been spent so far. Approximately $6 billion was pledged toward its construction by the Port Authority of New York & New Jersey and the Federal Transit Administration. The project was expected to generate 60,000 construction jobs over a ten-year period (6,000 jobs per year).
The state will “immediately begin an expeditious and orderly shutdown ofthe project,” Christie said. “Iwill not allow taxpayers to fund projects that run over budget with no clear way of how these costs will be paid for. The ARC project costs far more than New Jersey taxpayers can afford and the only prudent move is to end this project.” The FTA’s $3 billion contribution is capped at that amount, Christie said, and cost overruns would have to be absorbed by New Jersey.
According to New Jersey Democratic U.S. Sen. Frank Lautenberg, the state will have to repay the federal government about $300 million plus interest and penalties for its share of the paid funds. “Cancelingthe tunnel project is not just bad transportation policy—it’s bad fiscal policy,” Lautenberg said.
At a press conference announcing the project’s shut-down, Christie said that NJ Transit has other options for dealing with congestion on its statewide rail system, the nation’s third-largest. He did not say what those other options might be.
FTA spokesperson David Longo, in an interview with Bloomberg News prior to Christie’s announcement, said the ARC tunnel project “would be the largest mass transit project in the history of the FTA, and it’s of national significance.”
The ARC tunnel has come under fire from critics who object strongly to a major change in the project. The original plans called for the new tunnel to have a connector to the existing Penn Station, providing NJT as well as Amtrak greater operational flexibility. The original plans were revised, eliminating the connecting tunnel (planners cited too-steep grades and other engineering problems), making the ARC Tunnel exclusive to NJT operations.
Some industry observers have speculated that Christie’s cancellation of the project is really an attempt to remake it, and restore the original planned connector to Penn Station, and possibly obtain additional federal funding. A source in the governor’s office told Railway Age that “the administration’s strategy is to let the decision settle in for a day or two and informally regroup next week.” As well, Bloomberg News reported that U.S. DOT spokeswoman Olivia Alair said Christie and U.S. Transportation Secretary Ray LaHood “plan to meet tomorrow afternoon to discuss a path forward on the ARC tunnel project.”