Feds reject Gateway Tunnel financing plan

Written by Mischa Wanek-Libman, Editor, Railway Track & Structures; and Engineering Editor, Railway Age
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Federal Transit Administration Deputy Administrator K. Jane Williams outlined a series of concerns regarding an updated financial plan for the Hudson Tunnel project in a letter to New York State Director of Budget Robert Mujica on Dec. 29.

Among the issues Williams raised was that there is no 50/50 agreement between the U.S. Department of Transportation (USDOT), New York and New Jersey.

“There is no such agreement,” Williams wrote in the letter, which was obtained by Crain’s New York Business. “We consider it unhelpful to reference a non-existent ‘agreement’ rather than directly address the responsibility for funding a local project where 9 out of 10 passengers are local transit riders.”

An agreement between USDOT, New York and New Jersey was established in 2015 under the previous Obama Administration. Elected officials from New York and New Jersey met with President Trump and other USDOT representatives in September to make the case for the Gateway Program and called the meeting productive, but inconclusive.

Securing a financial commitment from the federal government for the Gateway Program has also been used as a bargaining chip in the delayed confirmation of Ronald Batory as the Federal Railroad Administrator.

In his response to Williams, Mujica referenced the 2015 agreement, as well as the meeting this summer between administration and elected officials.

“The USDOT stepping away from the 50:50 framework now would represent stepping away from a previously agreed upon path and the entire basis for getting this critical national infrastructure project done,” wrote Mujica.

Williams also questioned the new financial plan’s move toward what she labeled as greater federal reliance. Williams said the project is now 100 percent dependent on federal financial assistance given that the plan calls for 50 percent of the funds from Federal Capital Investment Grants (CIG) and the other 50 percent from a trio of Railroad Rehabilitation and Improvement Financing loans. She also explains that the plan’s expectation of $5 billion or more in CIG funds could exhaust the CIG program completely.

Mujica responded that labeling the utilization of federal loan programs to pay for infrastructure as “federal assistance” or “federal dependency” is a misinterpretation that goes “against decades of precedent when it comes to funding infrastructure projects of this scale and importance.”

Williams letter also notes that the project budget was reduced $2.2 billion without explanation.

“We understand this new plan does not address the rehabilitation of the existing tunnels, and now only addresses the building of two new tunnels. Given the age of the existing tunnels was the impetus for the project, we question the decision to ignore any funding commitment to that critical component, and to omit billions in other costs previously acknowledged to be part of the overall project cost,” wrote Williams. Phase 1 of the Gateway Program includes three elements: the Portal North Bridge Project, the new two-track Hudson River Tunnel and Hudson Yards Concrete Casing. At the time the updated financial plan was released, New York and New Jersey said the cost to rehabilitate the existing tunnels would be addressed in the future, as rehabilitation work on the tunnels was not expected to begin until 2026. Williams noted that the federal government remains “open to paths that would enable” the Gateway Program to proceed before concluding that infrastructure will be discussed in Congress in the coming weeks. Mujica reciprocated his department’s willingness to engage the federal government and expressed his hope that “any national program with the ambition to improving our infrastructure must begin with Gateway.”









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