ONTD Political

NJ must pay $271M to feds for killing tunnel to NY

11:08 am - 11/30/2010
NJ must pay $271M to feds for killing tunnel to NY

New Jersey owes the federal government more than $271 million after canceling a rail tunnel connecting the state with New York, according to a debt notice obtained Monday by The Associated Press.

The letter from the Federal Transit Administration's chief financial officer to NJ Transit's executive director demands payment of $271,101,291 by Dec. 24.


It's money the government wants New Jersey to repay for work done on the Hudson River tunnel before Republican Gov. Chris Christie terminated the project. The notification follows a warning letter earlier this month estimating the charges.

"FTA demands payment in full within 30 days from the date of this letter, hereinafter referred to as the 'delinquency date,'" the letter states. The letter was dated Nov. 24.


NJ Transit Executive Director Jim Weinstein said earlier this month that the state hadn't determined if it would have to pay any money back.

NJ Transit, which had been running the project, has the right to request a review of the charges and to dispute all or part of the debt. However, if the state does nothing and allows the debt to become delinquent, it could be assessed interest and penalties.

Christie spokesman Michael Drewniak would not say Monday whether the charges would be paid in full or disputed or where New Jersey would get the money if it decided to repay the government or was found liable for all or part of the bill.

The $8.7 billion project to construct a second rail tunnel between New Jersey and New York — known as Access to the Region's Core, or ARC — was 15 years in the making when Christie pulled the plug Oct. 27, citing potential cost overruns.

More than $600 million had been spent for engineering, construction and environmental studies.

The federal government and the Port Authority of New York and New Jersey had each committed $3 billion to the project. New Jersey's portion was $2.7 billion. The state and Port Authority were responsible for overruns, which Christie said could add $2 billion to $5 billion to the price tag. Other states including New York immediately began lobbying for the federal share.

The tunnel was intended to supplement a century-old two-track tunnel under the Hudson River that has been at capacity for years. The new tunnel would have been able to handle an extra 25 NJ Transit commuter trains per hour during peak periods; without it, New Jersey is left a tunnel that can handle 23 Amtrak and NJ Transit trains.

More than 625,000 people trek into Manhattan from New Jersey each work day, about 185,000 by rail, and even a minor delay can translate into long waits.

Christie has since said he would consider contributing to a cheaper alternative: extending New York's No. 7 subway line under the Hudson River to New Jersey.

John Wisniewski, who chairs the state Democratic State Committee and heads the transportation committee in the state Assembly, questioned Christie's financial acumen.

"We now know that his looking out for our financial interests will cost New Jersey taxpayers at least $271 million," he said. "To make matters worse, the governor has now pledged New Jersey money to help finance New York's subway expansion — without even seeing a plan or a cost estimate. It doesn't seem like he's being much of a financial watchdog, only a theatrical bulldog."

Six months before Christie pulled the plug on the project, Weinstein received word that NJ Transit's request for $206 million more in start-up money had been approved. The approval letter, sent from an FTA regional administrator on April 14 and obtained Monday by The Associated Press, allowed NJ Transit "to advance construction and support activities to maintain the project budget and schedule." The money was part of the FTA's overall funding commitment.

The letter also raises financial issues including how New Jersey intends to fund its capital road repair program administered through the Transportation Trust Fund, which is nearly broke. Critics like Wisniewski have speculated that Christie killed the tunnel, at least in part, to divert some money to state road projects.

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Oohh, dis gon' be good.
bludstone 30th-Nov-2010 04:24 am (UTC)
Feds holding states hostage with money. Typical. Of course, the federal goverment just borrows it from the federal reserve. the states gotta actually COLLECT the taxes.

is the 207 mil less then NJ would be on the dole otherwise.

/i guess ill enjoy another economic ignorance thread
(no subject) - Anonymous
bludstone 30th-Nov-2010 04:33 am (UTC)
The article says absolutely nothing about people not being paid for work they have done.
(no subject) - Anonymous
bludstone 30th-Nov-2010 06:36 am (UTC)
Ugh what an idiotic contract. That'll go to court, Im sure. Why pay people for work not done. But its a contract.

Hrm.
apocalypsos 30th-Nov-2010 12:21 pm (UTC)
Why pay people for work not done.

AFAIK (my dad's in construction, so I pick up some stuff), that line gets put into contracts like that so the people in charge don't do something like, oh, cancel a large project like this fifteen years into it. So basically, you're either paying for a tunnel, or you're paying for people who were supposed to build a tunnel but aren't, and you know that from the start so you might as well get a tunnel out of the deal.

I think it'd be more idiotic if that were some sort of surprise clause written in invisible ink that just magically appeared when Christie turned them down. It's always been in there. As merig00 pointed out up above, Christie knew about it and wants to fight it. The problem is that they put that line into contracts like this for a reason on huge construction contracts -- because of how much time, energy and man-hours have already gone into a project like this. Even if you cancel it fifteen years into the work, there's STILL a lot of work to be done just to shut down production. It's not like it's a big data entry project and they can just turn off their computers and leave.

All of that said:

It's money the government wants New Jersey to repay for work done on the Hudson River tunnel before Republican Gov. Chris Christie terminated the project.

So if that's true, this is more like a student loan than a payment for work not yet done. Which -- and I know this from personal experience -- you can't just not pay if you drop out of school. You're still stuck paying the loan even if you never finished. Which sucks, but hey, that's the contract you signed.
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