Politically, criticism of Christie’s decision on ARC never entirely died down, and it came roaring back to life during hearings held in May over NJ Transit’s decision to hike fares 9 percent to close a $56 million budget gap.
record file photo
The entrance to the ARC tunnel under Tonnelle Avenue in North Bergen as
it looked in October 2010 when Governor Christie canceled the project
for fear of cost overruns. The opening has since been closed off.
The new total includes nearly $1 billion spent before Oct. 27, 2010, the day the Access to the Region’s Core tunnel was canceled by Governor Christie, a project that would have doubled train service between New Jersey and New York after it was to open in 2018.
ASSOCIATED PRESS file photo
An NJ Transit train crossing the Hackensack River on the
105-year-old Portal Bridge in Secaucus. Design plans for a new bridge
that were part of the ARC project could still be useful.
“That’s a shocking number,” said Michael Phelan, a Leonia resident and co-founder of the New Jersey Commuters Action Network. “It is a shocking example of waste and bureaucracy. After 20 years, there’s not even a hole in the ground to show for it.”
Of the total spent, hundreds of millions of dollars were lost forever, spent on lawyers, environmental studies and other costs that will never be recovered.
Taxpayers did receive some things for their money that they can use today, including a fleet of new NJ Transit trains. Their money also purchased things that may become useful in the future, including property rights, but that potential hangs on the fate of Amtrak’s unfunded plan to build its own tunnel under the Hudson.
The bottom line is this: No tunnel has been built, and no construction project exists to build one. Those facts were brought into stark relief over the past several weeks as a series of breakdowns and electrical failures near New York Penn Station repeatedly crippled train service in New Jersey at the height of rush hour. And the problems aren’t over. This weekend Amtrak planned to close one of two tracks between Newark and Secaucus Junction for emergency repairs, resulting in train cancellations on the Northeast Corridor and delays along the majority of NJ Transit’s rail network.
Experts say failures of this sort are likely to continue — and worsen — until new tunnels are built. The existing tunnels are 105 years old, and are deteriorating rapidly due to flooding from Superstorm Sandy, Amtrak has said.
The widespread delays also refocused attention on the decision by Christie — who is in the midst of a bid for the Republican presidential nomination — to cancel the ARC tunnel. At the time, Christie said he was concerned that any cost overruns on the project would fall exclusively on the backs of New Jersey taxpayers, and that the tunnel would end at a station in Manhattan disconnected from Penn Station and New York’s subway system.
Christie’s comments at the time made clear that ARC would never be resuscitated, even with a different financing plan.
“This decision is final,” he said. “I am done. We are moving on.”
That decision led to political, financial and legal ripples that continue today.
Financially, it resulted in New Jersey forfeiting $3.3 billion in federal support for the ARC tunnel, money that flowed instead to transit projects in California and other states. Under the leadership of Christie appointees, the Port Authority redirected another $3 billion from ARC to road projects in New Jersey, including $1.8 billion to rebuild the Pulaski Skyway.
That move is under investigation by the Manhattan District Attorney’s Office and the federal Securities and Exchange Commission. Both are probing whether bondholders were misled when told the New Jersey road projects would benefit the Lincoln Tunnel. The roads in question, including the Pulaski Skyway, are miles from the tunnel.
Lingering criticism
Politically, criticism of Christie’s decision on ARC never entirely died down, and it came roaring back to life during hearings held in May over NJ Transit’s decision to hike fares 9 percent to close a $56 million budget gap. Critics said the move penalized train commuters with higher fares and less service. They also said it will hurt drivers, as some train riders abandon NJ Transit’s fares and delays and start driving to work instead.
Many people at the hearings blamed Christie for the fare hike. The governor’s budgets have reduced general fund subsidies to NJ Transit from $309.4 million in 2012 to $33 million in fiscal 2016. Christie has tapped other sources to keep NJ Transit afloat, including $295 million from the Turnpike Authority and $62 million from the Clean Air Fund.
“The buck literally stops with the Christie administration and its blatant disregard of the transportation funding crisis,” said Janna Chernetz, New Jersey policy analyst for the Tri-State Transportation Campaign, a non-profit group that promotes transit-oriented growth.
The canceled project also returned to the spotlight in October, when Amtrak officials said that the current tunnel was so badly damaged by floodwater from Superstorm Sandy that one of its tubes must be closed within 19 years and completely rebuilt. If that happens before a new tunnel is built, Amtrak estimates the maximum number of trains between New Jersey and New York will drop from 24 trains per hour to six.
Though Christie’s move to cancel ARC was one of the region’s most important transportation decisions in recent decades, the move alone cannot be blamed for the current problems with the system. The planning process that eventually led to ARC started 15 years before Christie became governor. And had construction continued, the ARC tunnel would have been complete two years after Christie left office.
Christie canceled the project citing the possibility of billions of dollars in cost overruns borne solely by New Jersey taxpayers.
“If the tunnel would have gone to Penn Station, and New York would have shared the cost of the funds, I would have let the project go forward,” Christie told a reporter last week, according to a spokesman. “But … I’m getting an inferior product, at a greater price, and I have to carry the whole thing on my back. No!”
Since ARC was canceled, Amtrak and federal transportation officials have called for work on a new tunnel to begin as soon as possible. Christie, New York Gov. Andrew Cuomo and U.S. Transportation Secretary Anthony Foxx have agreed to meet soon to discuss the project.
Moving forward, Amtrak has proposed a project called Gateway that would build a tunnel, plus a new train station next to Penn Station, a new rail yard in New Jersey, new bridges over the Hackensack River, and two new tracks between Newark and New York Penn Station. Amtrak must somehow get funding for the project approved by the Republican-led Congress, which passed a bill in June to cut Amtrak’s funding by $242 million. Then it must start planning the tunnel almost from scratch, beginning with an environmental review that could take years.
It’s a tall order, especially within the hard deadline set by Amtrak’s engineering studies of the existing tunnel’s condition.
“We lost a decade of planning work … and the engineering studies show it was a decade we didn’t have to give,” Peter Rogoff, the third-highest official at the U.S. Department of Transportation, said in May at a conference on trans-Hudson transportation. “We really don’t have time to appoint commissions. We don’t have another decade to spend thinking and talking about it.”
NJ Transit officials pointed out that much of the money spent on ARC may not go to waste, especially if the Gateway project moves forward on a path similar to ARC’s.
“ARC was a bad project that was going to strap the New Jersey taxpayer,” said Nancy Snyder, an NJ Transit spokeswoman. “But there’s lots to be derived from ARC that will be able to expedite future tunnel projects.”
Total costs shift
NJ Transit and Port Authority officials claim that a precise breakdown of the money spent on the scuttled ARC tunnel is impossible to decipher because the project ended five years ago, and most of the people who worked on it have moved on to other jobs or retired. Public information requests from The Record were filed with the Port Authority in January, but officials at the agency did not respond until late July, largely because documents detailing the project’s financials proved so difficult to locate and decipher, said Steve Coleman, a spokesman.
When the agencies did respond, their documents showed that NJ Transit and Port Authority used different accounting methods to tally tunnel-related spending. Moreover, the latest totals for spending by NJ Transit, the Port Authority and the federal government are different than the amounts released by NJ Transit officials in 2012.
The numbers released in July changed again when calls were made to the Christie administration for response for this article. After that, staffers at NJ Transit were asked to perform another review of the costs, which produced new totals, said Kevin Roberts, a spokesman for Christie.
In January 2012, NJ Transit had said $521.6 million was spent on ARC by New Jersey, the Port Authority and the federal government. Two weeks ago, NJ Transit first put the figure at $619.2 million and then, after the governor’s office got involved, dropped the reckoning of the total spent to $517.7 million. No explanation was given for the changing tally.
The Record’s total incorporates the lowest figure. It also includes other costs, including hundreds of millions of dollars spent on the new trains and planning for a new bridge over the Hackensack River, which together bring the total amount of taxpayer money spent on tunnel projects before Christie’s cancellation of ARC to $967.5 million.
And because Amtrak is in the very preliminary stages of planning Gateway, said Drew Galloway, Amtrak’s chief planner for the Northeast Corridor, the exact route of the tunnel has not been decided, which makes it impossible to know exactly how much money spent on the ARC tunnel will be useful for Gateway.
“We want to try to take advantage of the previous work that NJ Transit has done, where it makes sense,” Galloway said.
But even with this fragmentary information, it’s possible to piece together some of the spending on ARC that likely will never be seen again. The state of New Jersey and the federal government together spent $115 million on preliminary engineering for ARC and $143.6 million on final design, Snyder said.
The former includes $24.7 million spent on an environmental impact statement that took six years to complete. Federal law mandates that all the data in the review expire after three years, however, so Amtrak planners must redo the process.
Much of the remaining $233.8 million spent on engineering and design by the two agencies will not be useful to Amtrak, either. The ARC plan involved two tracks in New Jersey that would have been completely independent of Amtrak’s Northeast Corridor tracks from Kearny into Penn Station. ARC’s tracks would have led to a tunnel that swooped far south of the existing tubes, then looped underneath the old tunnel to arrive in Manhattan at a spot north of Penn Station.
“It was essentially a separate railroad,” Galloway said.
Even at this early stage, Amtrak’s vision for Gateway is quite different. Planners there envision two new tracks tied directly to the Northeast Corridor, and terminating in Manhattan on the opposite side of Penn Station.
“It’s not universally applicable since the Gateway program as we’ve laid it out follows quite a different route,” Galloway said of NJ Transit’s planning work for ARC.
In addition to those large expenses, NJ Transit and the Port Authority racked up smaller costs that add to the total. The two agencies plus the Metropolitan Transportation Authority spent $8.5 million between 1995 and 2003 on a “major investment study” of different cross-Hudson tunnel and bridge options, which resulted in ARC being named the best alternative.
The Port Authority’s primary role in ARC was to buy the necessary properties in Manhattan — some of which could be used for Gateway. In addition to purchases and leases of land, the Port Authority paid its own staff, outside engineers and lawyers $29 million in salaries and expenses to work on ARC, and that money will not be recouped. For its role in acquiring properties in New Jersey, NJ Transit spent $3.6 million on outside legal support, $2 million on appraisers and a consultant to help tenants of purchased properties relocate, plus $2.7 million on administration costs.
The state of New Jersey, the Port Authority and the federal government spent $143 million on prepaid insurance premiums for the ARC Tunnel. The vast majority of that money was refunded when the project was canceled, leaving the parties with a total insurance bill of $17.4 million, NJ Transit said.
The tunnel’s cancellation also prompted a number of lawsuits. New Jersey paid $5.6 million to settle a suit by a planning company over ARC design work, and $1.2 million to lawyers who defended the state from the federal government’s efforts to recoup money spent on the project.
In total, taxpayers spent approximately $320 million on ARC-specific items that may have little or no future value.
Some benefits seen
Not all the money spent on ARC was wasted. In fact, New Jersey residents use some of those investments every day: The $288.8 million spent on 100 double-decker train cars and $79.2 million on nine electric/diesel locomotives.
NJ Transit officials said the trains should not be included in the tally of ARC costs because they are being used now, even without the ARC tunnel. The train cars and locomotives were described as necessary components of ARC in the tunnel’s environmental review, however.
NJ Transit worked with Bombardier, manufacturer of the train cars and locomotives, to design the new trains specifically to fit into the ARC tunnel, an NJ Transit official said. And NJ Transit “proposed that it purchase only the 10 locomotives and 100 bilevel railcars necessary for the opening day service on the ARC Project,” Brigid Hynes-Cherin, the Federal Transit Administration’s official in charge of New York and New Jersey at the time of the ARC tunnel planning, said in a deposition in March 2011. (The total locomotive order was later reduced to nine.)
Looking to the future, hundreds of millions of dollars spent on ARC may come in handy if Amtrak succeeds in building the Gateway tunnel. It’s also possible that much of this money will be wasted, too, due to uncertainty about whether Amtrak can get funding, how long the project takes to build and where exactly the new tracks go.
One ARC-related expenditure that will likely be useful for Gateway is the $70 million spent by Amtrak and NJ Transit to design a replacement for the Portal Bridge over the Hackensack River. The existing structure is a 105-year-old bridge that uses complex mechanical systems to swing open for boats on the river. Those systems fail often, causing widespread delays for Amtrak and NJ Transit trains. Amtrak has made clear it will use those plans to build the bridge.
“The bridge is ready to go. All we need is money” to build it, said Craig Schulz, an Amtrak spokesman.
NJ Transit officials argued that the $70 million spent on the Portal Bridge replacement should not be included in the tally of spending associated with a tunnel because the aging bridge must be replaced just to handle current traffic. While a replacement bridge is necessary independent of any tunnel project, both ARC and Gateway envisioned the replacement as part of a larger project that would add a second bridge, built immediately south of the original, to handle the extra traffic.
When he canceled the ARC tunnel, Christie said that without the bridges in place, “The trains heading to what would be the ARC Tunnel would fall into the river.”
The total cost for construction of the replacement bridge alone would be close to $1 billion, according to Amtrak.
Real estate expenses
The biggest expenses that may be repurposed involve land. Using money from the federal government and the state, NJ Transit bought $41.7 million worth of real estate for ARC in New Jersey, Snyder said. Those purchases included buying the underground rights to properties in North Bergen and Union City along the path of the proposed tunnel.
NJ Transit also used properties along Tonnelle Avenue in North Bergen, where the ARC tracks were to drive into a tunnel under the Palisades. The last building standing in that swath of land is 1801 Tonnelle Ave., a warehouse now owned by NJ Transit that sits empty. A sign on the front reads “John Roberts Inc.” in faded gray letters, and a bright NJ Transit sign has been screwed in on top. North of the warehouse is a vast concrete lot with 70 NJ Transit buses parked in rows next to hundreds of stacked steel railcar wheels.
It is here that the only construction on the ARC project took place. NJ Transit was building a bridge to carry Tonnelle Avenue over the route of the new tracks when Christie canceled the project.
The construction work cost $35.6 million. Standing at the site today it’s difficult to tell where the bridge is, since workers were ordered to fill and cover the space under the roadway after the project was canceled. But that doesn’t make it any less attractive to Amtrak.
The bridge “made a lot of sense to place it there originally and we’re looking there to reuse it,” Galloway said.
On the New York side of the Hudson River, the Port Authority spent $131.7 million to purchase properties for ARC. The biggest and most controversial of those purchases involved a lot near the corner of 30th Street and 12th Avenue, where the Port Authority purchased a temporary, 10-year lease on the land and permanent access below ground.
The $95.5 million purchase was completed seven days before Christie canceled the ARC tunnel. Today the land is used by NJ Transit and the Port Authority as a parking lot.
The lease expires in 2020. Amtrak believes it can finish the environmental review and final designs for Gateway between 2018 and 2020, Galloway said, which means it could be ready to start construction before the lease expires. Even if Amtrak meets its aggressive timetable, however, the lease would need to be renewed for construction work to continue on the site. That would cost the Port Authority an additional $11.5 million per year, according to Port Authority records. The agency paid $10 million for a 10-year lease of an adjacent property, which would cost $2.2 million a year to extend.
One investment that taxpayers have made that isn’t going anywhere is a concrete tunnel box that Amtrak is constructing to carry trains from Penn Station west toward the Hudson River. The construction was necessary, Amtrak said, because of development of the Hudson Yards project on Manhattan’s West Side, which threatened to place new building foundations in the Gateway tunnel’s path.
Amtrak officials hope the tunnel under the river will eventually connect to the tunnel box. Amtrak has spent $185 million to build the box from 10th to 11th Avenue. Phase two, which will take the box under 11th Avenue, is under construction for $66 million, said Schulz, the Amtrak spokesman.