Hudson Rail Tunnel Project Cost Reduced by $1.4 Billion

John Jordan | August 2019

Amtrak commutes progress of PTC on the NEC between WIL and PHL

NEWARK, NJ—Officials pushing for a new multi-billion-dollar Gateway Hudson River Tunnel announced recently they have trimmed $1.4 billion off the cost of the project in the hopes of securing necessary federal funding for the venture.

Richard Cotton, executive director of the Port Authority of New York & New Jersey, the project sponsor, sent a letter to the Federal Transit Administration on Aug. 23rd requesting the Hudson Tunnel Project be included in the USDOT Fiscal Year 2021 budget. In the letter to FTA Associate Administrator of Planning and Environment Felicia James, Mr. Cotton noted that the overall estimated cost of the construction of the project has been reduced from $12.7 billion ($11.1 billion cost for the tunnel replacement; $1.6 billion cost for rehabilitation to the existing North Tunnel) to a revised $11.3 billion total cost ($9.5 billion revised cost for the tunnel replacement; $1.8 billion revised cost for rehabilitation to the existing North Tunnel).

Besides the lower projects costs, which resulted in part due to project planning and engineering enhancements, other significant changes under the revised plan include Amtrak increasing its funding commitment from $704 million to $1.282 billion as part of the updated tunnel plan.

The Port Authority, Amtrak, the Gateway Program Development Corp., a well as the states of New York and New Jersey, are now seeking a total of $4.361 billion in the Federal Transit Administrations CIG Program. Previously, the Gateway Tunnel stakeholders had been seeking $5.646 billion in federal grants for the project. The reduction in requested federal funding is directly related to the increase in funding Amtrak is now earmarking for the tunnel.

Total local commitment (Port Authority, New York and New Jersey) for construction costs related to the new Hudson River Rail Tunnel remains at $5.55 billion. The Port Authority in July 2018 committed $2.7 billion in support of the entire Hudson Tunnel project.

Among the project enhancements that contributed to the cost savings included: advancing work quickly once federal permits are issues, including a more advanced level of design, an intensive value-for-money analysis, a more efficient contracting plan that will result in in fewer contract changes and considering of delivery methods—including design-build.

The revised plan also reflects the project partners’ intent to request an “Early Systems Work Agreement” that would allow boring for the new tunnel prior to a full funding grant agreement.

Mr. Cotton said in his letter to the FTA, “The Project Partners are again requesting to be included in the annual budget proposal, and, with each passing year, the risk of a significant failure and long-term shutdown of the North River Tunnel increases.” He later cited a report by the Regional Plan Association that estimates a partial shutdown of the existing North Tunnel would cost the national economy $16 billion over four years.

“Gateway is the most vital infrastructure project in the nation and a federal asset that is critical not only for our region but for the entire country’s economy,” New York Gov. Andrew Cuomo said, “This new financial plan demonstrates that the states are doing everything possible to facilitate federal participation, including reducing the overall cost of the project and embracing a significantly higher Amtrak contribution—which together lead to a decrease in the amount being requested from the federal government.”

“With hundreds of millions in savings for taxpayers, the strength of this latest financial submission is further proof that the State of New Jersey and its partners are ready to step up and do whatever is in our power to ensure that construction of the Hudson Tunnel Project moves forward,” said New Jersey Gov. Phil Murphy.

 

John Jordan
Editor, Real Estate In-Depth