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Christie: I won't pay $271 Million For Dead ARC Tunnel

Wednesday, January 26, 2011 - 12:44 PM

(Andrea Bernstein, Transportation Nation) Governor Christie's spokesman, Michael Drewniak, just emailed around the following statement. We'll have more soon, plus FTA response. (Yesterday, when asked about the ARC tunnel negotiations, Federal Transit Administrator Peter Rogoff--who'd just spoken at a transportation conference--looked like he'd swallowed several lemons whole.  He wouldn't comment. ) From the email:

Last night, New Jersey’s legal counsel filed its response to the Federal Transit Administration’s demand for $271 million in ARC transportation funding.  Attached is the submission filed electronically with the FTA on behalf of NJ Transit, as well as a fact sheet.

While the submission clearly sets out New Jersey’s case, pay particular attention to the four-page introduction, which aptly and succinctly describes why the State of New Jersey has no lawful or administrative obligation to repay any of the $271 million demanded by the FTA. The FTA overstates the funds that are even at issue and makes a demand for repayment that is far broader than authorized by statute.  Specifically:

Of the $271 million FTA demands, the vast majority -- $225.5 million -- consists of:

(1) funds that were expended prior to the execution of the August 2009 ESWA (Early Systems Work Agreements); and

(2) the State’s own formula funds that New Jersey was entitled to as a matter of right, and chose to apply to the Project.

The ESWA simply was not the source of these funds and the statute makes clear that these funds are not “Government payments made under the work agreement.”

As is by now abundantly clear, Governor Christie cancelled the project due to multi-billion dollar cost-overrun projections for a project that previously had an agreed upon price tag of $8.7 billion.  Billions in those cost overruns would have been borne by New Jersey  -- something unforeseen and entirely out of the state’s control, and a burden Governor Christie was not willing to place exclusively on New Jersey and its taxpayers.
Opposition to Demand

NJT’s Response To FTA’s Repayment Demand

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