In a deal that closes a key chapter in a long-running dispute between the U.S. Dept. of Transportation and New Jersey, the state will have to repay only $95 million of the $271 million that DOT had disbursed for early phases of a commuter-rail tunnel that New Jersey Gov. Chris Christie (R) cancelled last year.
The nine-mile-long Access to the Region’s Core (ARC) tunnel was to run under the Hudson River, from Secaucus, N.J., to midtown Manhattan. Construction had begun in 2009, on an early-phase contract. But in October 2010 Christie, who was sworn in to office in January of that year, killed the project, citing what his office said were billions of dollars in overruns and revised cost estimates.
The Port Authority of New York and New Jersey had committed $2.7 billion and New Jersey had put up $1.25 billion from the New Jersey Turnpike Authority and $1.35 billion in federal highway funds. The Federal Transit Administration was to contribute about $3 billion.
But those funds were about $1.5 billion short of the low end of a fall 2010 Federal Transit Administration estimate, which pegged the ARC tunnel’s cost at between $9.8 billion and $12.4 billion. Christie contended that under the tough economic environment, New Jersey would be unable to come up with the additional money to cover the gap.
After Christie cancelled the project, U.S. DOT had wanted the Garden State to repay all $271 million it had obligated for the tunnel.
But New Jersey’s two U.S. Senators, Democrats Frank Lautenberg and Robert Menendez, said that they had reached a deal with DOT last December that called for the state to repay just $143 million. That amount was trimmed to $95 million under the final agreement, which DOT Secretary Ray LaHood announced on Sept. 30.
Christie called the deal “a good-faith settlement,” adding that the state’s payments will be spread over five years and will be offset by more than $100 million worth of insurance-premium refunds.