NYC Rail Tunnel Cost Up 6% to $12.3 Billion on Trump Delays

(Bloomberg) -- The cost of the planned Gateway project under the Hudson River into New York City has escalated to $12.3 billion, a 6% increase over the $11.6 billion estimate of a year ago, according to the latest financial plan from the agency overseeing the project. 

The increased cost from the Gateway Development Corporation is due to delays during the four years in which former President Donald Trump’s administration held up the project, said Amtrak Chairman Anthony Coscia. The rail agency, along with the states of New York and New Jersey, is one of three local entities sponsoring and financing the project. The latest estimate is still below the $12.7 billion that project planners gave in 2017, Coscia said. 

“What’s important is that the project didn’t advance in the prior administration, and the Biden administration, in stark contrast, has been supportive,” Coscia said in an interview. A major logjam was removed when the federal government allowed the local financing partners to treat loans received through the federal Railway Rehabilitation Improvement Financing program as part of their financial contributions to the project’s cost. 

Trump’s refusal to do that boosted expenses even as the agency was able to cut costs in other areas, he said. Pandemic-caused supply chain problems and higher costs of materials and labor also increased the price tag. 

Advocates applauded the updated financial plan for restating the financial commitments of the local partners and called on the Federal Transit Administration to make the project eligible for federal financing.

“We fully expect all project partners to contain costs and bring the project in on or under budget,” said Brian Fritsch, campaign manager for the Build Gateway Now Coalition, which represents civic, labor and business groups as well as elected officials.

Gateway would ease a major Northeast U.S. rail bottleneck. Amtrak says the project will allow for twice as many trains to run under the Hudson River, including those that are part of its Northeast Corridor service connecting Boston, New York and Washington.

Before the pandemic, about 820,000 rail passengers a day traveled to New York City or some other destination in the Northeast. The project’s sponsors have warned that a failure of Amtrak’s only Hudson River tunnel would cause economic harm to a region that is key to 20% of the nation’s gross domestic product.

The two-track tunnel is safe, according to Amtrak, but its decaying electrical and other components, damaged by Hurricane Sandy in 2012, are increasingly unreliable. New Jersey Governor Phil Murphy and others have called the proposal the nation’s most urgent infrastructure need.

The revised Gateway estimate places the cost of the new tunnel at $10.1 billion and the rehabilitation of the existing North River Tunnel at $2.2 billion, with construction to take more than 11 years to complete.

The project was delayed for four years while the Trump administration assigned a low priority to the project and didn’t act on Gateway’s requests for financial and environmental approvals. The environmental decision was due in March 2018.

In May, President Joseph Biden’s administration approved the environmental impact statement for the project. That paved the way for Amtrak to purchase land on Manhattan’s west side for ventilation shafts and other infrastructure, Coscia said.

The project includes construction of a new two-track rail tunnel beneath the Hudson River, and the comprehensive rehabilitation of an existing 110-year-old North River Tunnel. The Biden administration would foot the bill for about 44% of Gateway, which includes a new tunnel plus the closing, rehabilitation and reopening of the North River Tunnel that serves Amtrak and New Jersey Transit commuter trains, according to Amtrak. 

An earlier tunnel project, called Access to the Region’s Core, was fully funded and to be completed by 2018. But it was scrapped in 2010 by Chris Christie, New Jersey’s Republican governor at the time. Christie, who cited issues with that project’s cost and design, used some of the money that had been set aside to plug budget holes and avoid a gasoline-tax increase.

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