Rail tunnel project tabs finance firm amid funding dilemma
NEW YORK (AP) — A multibillion-dollar project to build a new rail tunnel into New York announced the selection of a financial adviser Friday, another step in a process still stalled by the absence of a funding agreement with the federal government.
The Gateway Development Corp. said at its monthly board meeting Friday that it has reached an agreement with Ernst & Young to do financial analysis and modeling, identify funding sources and develop procurement criteria. Board members didn’t say how much would be paid to the firm but said the three-year term would include a provision allowing the board to terminate the contract in as little as five days.
The estimated $12.7 billion project to add a second tunnel under the Hudson River and refurbish the existing, century-year-old tunnel damaged by Superstorm Sandy still lacks a commitment from the federal government. That’s despite an agreement under President Barack Obama that the government would pay half the cost, with New York and New Jersey combining for the other half.
Transportation officials in the Trump administration have called the deal “non-existent” and have said the two states’ use of federal loans doesn’t count as a local contribution to the project, even though the states will be paying back the loans.
Both states have released plans for paying back the loans, with New Jersey planning fare increases for 2020, 2028 and 2038 and New York planning to allocate money annually from its state budget over a 35-year period.
Steven Cohen, the Gateway board’s chairman, said Friday he was still confident an agreement will be reached. He and other officials have said the project can’t be completed without federal funding.
“We will get what we need,” Cohen said. “I can’t tell you with certainty how this will come to pass, but I can tell you with certainty it will come to pass.”
This month, Gateway officials submitted an updated financial plan to the federal Department of Transportation as they seek to be included in the budget for the 2020 fiscal year.
While the funding impasse plays out in Washington, preliminary work is continuing on the tunnel project and a companion project to replace a century-year-old swing bridge over New Jersey’s Hackensack River that is a source of regular delays due to age and maintenance issues.
The estimated $1.7 billion bridge project has received environmental approvals and could start construction within months of a federal funding commitment, officials have said. Project organizers completed the tunnel’s environmental report and are awaiting federal approval.
In future phases, the project also envisions expanding New York’s Penn Station and adding track capacity on the New Jersey side. It is seen as essential to alleviating worsening congestion and delays in the New York region and on the Boston-to-Washington corridor. Roughly 750,000 people per day ride the corridor on Amtrak and several commuter railroads that share the tracks.