Amtrak Says Gateway Project Will Be Built, Everyone Must Pay
Amtrak Says Gateway Project Will Be Built and Everyone Must Pay
(Bloomberg) -- Amtrak executives say a new rail tunnel linking New York and New Jersey must be built -- sooner rather than later -- with the costs shared among the states, railroad and federal government.
“I believe there’s an inevitability to it,” Amtrak Chief Executive Officer Richard Anderson said in a meeting with Bloomberg reporters and editors on Thursday. “The reality is Amtrak owns this tunnel, and it is a vital national asset that has to be maintained well and has to be reconstructed.”
The Gateway project is embroiled in a stalemate over funding among the states, Congress and the Trump administration, which says the federal government can’t devote too much money to it at the expense of other projects.
The Gateway program involves rail and bridge projects including $12.7 billion for a new tunnel under the Hudson River and refurbishment of a deteriorating, century-old tube damaged by Hurricane Sandy in 2012. It provides the only direct train connection between New Jersey and Manhattan, a critical link for Amtrak’s Northeast Corridor connecting eight states and Washington.
There have been estimates of projects envisioned as part of the Gateway program totaling about $30 billion, but the Gateway Program Development Corp. said the only two for which there are firm cost estimates are the tunnel and a bridge project totaling $14.3 billion.
The risk Amtrak faces is having to dramatically cut back service in the tunnel, which would cripple rush hour in the New York metropolitan area, Amtrak Board’s Chairman Anthony Coscia said.
“Do I think that’s going to happen next week? Probably not,” he said. “But I could not sit here and tell you that five years from now, we will have been operating for five years without the potential of a serious interruption in service regardless of what we do from a maintenance standpoint.’’
The Trump administration hasn’t approved the $6 billion sought by backers of the project, saying the states haven’t committed enough local funding to what essentially is a local project. State officials accuse the administration of playing politics with a national need to upgrade critical infrastructure owned by the federal government.
There’s no shortcut for the significant amounts of capital needed from the states and the federal government, regardless of how creative project planners are or any involvement by the private sector, Coscia said.
“We’ve now gotten them over the dispute of what needs to be built,” he said, referring to all parties. “So the dispute now is, ‘How much should you pay and how much should I pay, and how should that work?’”
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The Gateway project is a high-profile example of a long list of U.S. infrastructure assets nationwide that now need to be rebuilt without a clear financial mechanism for doing it -- underscoring the challenge facing federal, state and local officials, the Amtrak officials said.
“We’ve just been sort of going to town on the investments of our forefathers and surviving more or less on minimal maintenance expenditures,” said Stephen Gardner, Amtrak’s senior executive vice president. “That time period is coming to an end and it’s now time to re-capitalize these assets because we’ve gotten everything we could hope to get out of them, and the structure doesn’t exist to do that. Gateway is really the first big test.”
Amtrak is pressing ahead on the design and environmental work for the new tunnel, and while politics have colored much of the debate over the project, Anderson said the railroad approaches it with a colder calculation: it’s Amtrak’s fiduciary responsibility to taxpayers, who own the railroad, to safely maintain the tunnel and see that it’s rebuilt.
Coscia said Amtrak is thinking about Gateway in the same way it is trying to eliminate the railroad’s operating loss by 2020 while making needed improvements in aging infrastructure that will only get more expensive to repair the longer work is delayed.
“We are trying with Gateway, as we are absolutely doing with the operations of the company, ignoring the politics that we know in our hearts plays a very big role in this,” Coscia said.
Amtrak has improved on-time performance, shed debt and narrowed its operating losses, and the railroad will break even on an operating basis next year, the executives said.
The Northeast Corridor, which carries about 800,000 passengers between Boston and Washington each day, needs roughly $25 billion in capital expenditures over the next decade, Gardner said.
They’ve also sought to parlay that improved performance into additional funds from congressional appropriators, telling them “‘you need to in fact increase the amount of money that you give us because now what you’re spending the money on is capital that represents long-term investment in the system and a better return,”’ Coscia said.
To contact the reporters on this story: Mark Niquette in Columbus at mniquette@bloomberg.net;Ryan Beene in Washington at rbeene@bloomberg.net
To contact the editors responsible for this story: Sara Forden at sforden@bloomberg.net, Elizabeth Wasserman, Justin Blum
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