The Federal Transit Administration raised doubts about proposed plans by New York and New Jersey to fund half the projected costs of building a new train tunnel under the Hudson River into New York City, and rejected the idea that a 50/50 cost-sharing deal is in place with the federal government.
In response, the New York state budget director said that if the federal agency backs away from a 2015 framework agreement that included the federal and local cost sharing, that action would jeopardize "the entire basis for getting this critical national infrastructure project done."
Crain's New York Business reported that a Dec. 29 letter from FTA Deputy Administrator K. Jane Williams effectively wiped out the agreement bi-state officials had counted on.
"Trump Administration Kills Gateway Tunnel Deal," said the Crain's headline, referring to the broader Amtrak infrastructure program whose centerpiece is building a new tunnel before the existing century-old, decaying rail route collapses. Other reports cast the FTA letter as raising serious concerns.
The issue arose just as the Trump administration was saying it wanted to unveil its long-planned infrastructure initiative early in the new year.
Officials in both states have argued that the Hudson tunnel project is important to the entire Amtrak Northeast Corridor, since it serves long-distance as well as regional and commuter trains in the most heavily traveled Amtrak region in the country.
"The lone existing tunnel is rapidly deteriorating, threatening to sever Amtrak's popular Northeast Corridor route and to divert tens of thousands of New Jerseyans from their daily Manhattan commutes via NJ Transit," Crain's said, underscoring the urgency of the project.
The two states had proposed taking out federal long-term, low-rate loans to help finance the work and repaying them with budget allocations in New York and commuter fare hikes in New Jersey. The Port Authority of New York and New Jersey would also contribute a share, for a local total of $5.55 billion, and the state proposal would rely on federal funding for the other half.
But in her letter the FTA's Williams wrote that all the local contributions rely on federal loans and the plan "is thus 100 percent reliant on federal financial assistance."
As for the 50/50 cost share, Williams said, "there is no such agreement." Further, she added: "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."
New York Budget Director Robert Mujica in his Dec. 31 reply laid out the economic importance of the project.
"The Gateway Tunnel connecting New York and New Jersey is critical to the long-term vitality of the entire Northeast region and, as a result of significant damage caused by Hurricane Sandy in 2012, is now considered the nation's most urgent major infrastructure project," he wrote.
"This project does not simply represent a local priority, but rather connects the entire Northeast Corridor and is a critical single point of failure for 10 percent of the GDP [gross domestic product] of the entire country."
As for the cost-sharing agreement, Mujica said that in addition to working it out with the U.S. Department of Transportation in 2015, "the 50/50 framework was discussed at a meeting in the White House this past August with the president, [USDOT Secretary Elaine] Chao, both governors, and the Senate and senior House delegation from the New York-New Jersey region as a basis for keeping this project moving forward."
He also took issue with the idea that taking federal loans amounts to federal assistance or dependency, since the local governments and agencies are repaying them. "The people of the bi-state region are paying for the commitment and the very economy of the Northeast depends on it," Mujica said.
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