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.


Oohh, dis gon' be good.
(no subject) - Anonymous
merig00 30th-Nov-2010 05:28 am (UTC)
By the original contract NJ is responsible for 1/3 of the budget and all the expenses beyond the original budget. The construction hasn't started yet and NJ was already on the hook for additional BILLION dollar. And was projected to go for another 2-3 BILLION dollars over.

So NY would pay 3 billion dollars, Feds would pay another 3 billion dollars and NJ was already on the hook for about 3.7 billion dollars and was projected to pay good 7 billion dollars at the end. That's why Christie stopped the project. Not because he's evil, because it is financially irresponsible for NJ to bear most of the costs when the whole North East if not Eastern seaboard financially benefits from it.
(no subject) - Anonymous
merig00 30th-Nov-2010 05:42 am (UTC)
Selfish? He's just trying to balance NJ budget which is way over in red right now. He said he would be fine if NJ paid it's share of 3 billion and that's it, but he is not willing to write a blank check. You don't need to go far looking for examples of run-away projects (I'm looking at you Boston). NY and Feds pay their nice neat 3 billions and stick NJ with the rest whatever that number might end up to be.
(no subject) - Anonymous
merig00 30th-Nov-2010 06:04 am (UTC)
If it helps everyone, and it does it's a part of the north-eastern corridor at least from Boston to DC then why not everyone chips in for it and not leave NJ with most of the burden?

He is doing what he must do to fix the budget.

I hope that Corzine was the last governor we had that was irresponsible enough to spend money we don't have. I know... I know... hopes
aujourlejour 30th-Nov-2010 04:42 pm (UTC)
IA. Plus, like I've said below, it just doesn't make sense to cancel it. Construction costs are as low as they'll ever be right now. Putting the project off now just means it'll be more expensive later.
aujourlejour 30th-Nov-2010 04:41 pm (UTC)
Actually, it makes the most fiscal sense to do this now because it will have to be done eventually. The current tunnel is 100 years old and we can't depend on it forever. Construction costs are at an all-time low and all the planning has already gone into this. Christie's cancellation means that it will be pushed back until the situation is critical and when that happens, costs will be enormous compared to now. Yes, there probably would have been overruns. That's what happens when you build something. But the financial benefit to New Jersey itself would have balanced that out, not to mention the benefit of doing it now when costs are low, like I've said.
merig00 1st-Dec-2010 02:41 am (UTC)
Again you are missing the point about the breakdown of costs between participating parties.
aujourlejour 1st-Dec-2010 02:45 am (UTC)
I'm not missing the point... I actually don't think it's wrong to ask NJ to share the costs. First of all, New Jersey was likely to be the state to receive the most financial benefit from the project. Yes, the overruns would have been a visible cost, but consider how much money the state would have made in return. With transportation into the city doubled, far more professionals would choose to settle in New Jersey... you get the point. It wouldn't make sense at all to burden any state other than NJ and NY to share the cost. One can argue that we benefit from, say, the Big Dig, but could you imagine what would have happened in Massachusetts had asked NJ to contribute? What a joke.
merig00 1st-Dec-2010 02:57 am (UTC)
Actually you are not entirely correct here since this line is also part of the North-Eastern corridor. Also it was canceled exactly because NJ wasn't sharing the cost but was paying what everyone else was paying + all overruns. Which is more than unfair.
aujourlejour 1st-Dec-2010 03:23 am (UTC)
No, I do know that. However, the main usage of the rail tunnel would have been for NJ Transit, not for the Northeastern corridor. It's like I said- it's unfair to expect any state other than NY and NJ to contribute because they're the two states who'd receive the greatest financial benefit. To that end, I don't think it's "more than unfair" that NJ pay part of the overruns (which is what i was referring to) because it's also receiving the bulk of the economic benefit.
wrestlingdog 30th-Nov-2010 09:59 am (UTC)
Chris Christie is just a dickbag.
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