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NJ to Pay One-Third of Original Bill in ARC Tunnel Settlement

Friday, September 30, 2011 - 06:21 PM

New Jersey has agreed to pay the federal government $95 million for a never-built transit tunnel under the Hudson River. The U.S. Department of Transportation and  NJ Governor Chris Christie's administration have been engaged in a bitter dispute over $271 million in federal funds that New Jersey had already spent on the tunnel when Governor Christie pulled the plug on the project a year ago, citing a fear of cost overruns on the $9 billion project.

Under the terms of the deal, New Jersey has also promised to direct $128 million of the money to transit projects approved by the DOT. That money was already allocated for New Jersey, but could, in theory have gone to other projects. This is nearly identical to a deal offered by the DOT in December.

Construction on the he so-called "Access to the Region's Core" -- or ARC -- began during the administration of Christie's predecessor, Governor Jon Corzine.  The tunnel, which would have been completed in five year's time, would have doubled transit capacity for commuter trains going from New Jersey to Manhattan.

Christie had initially said he was in favor of the project, but last fall he changed his mind, saying he feared the project would go way over budget.

This had been a marquee project for the U.S. Department of Transportation -- it was the biggest transit expansion underway in the nation.  U.S. Transportation Secretary Ray LaHood strenuously fought to save the project, traveling to Trenton and offering a number of sweeteners.

But Christie was unpersuaded, and workers began filling in the hole that had been dug last fall.

The bitterness over the tunnel's cancellation spilled over into a dispute about whether New Jersey would have to pay back funds it had already spent, with LaHood insisting that New Jersey pay back all the money, plus penalties and interest. Christie's administration hired the influential lobbying firm, Patton Boggs, at a cost of about $1 million, to negotiate the deal.

Today's settlement represents about a third of what the federal government initially said NJ owed. Governor Christie's office said the full amount would be covered by insurance on the project.

New Jersey Senators Frank Lautenberg and Robert Menendez -- both Democrats and vocal critics of the project's cancellation -- praised today's decision nonetheless, saying they didn't want New Jersey to have to pay nearly $300 million to the federal government for an unrealized project.

Tom Wright, Executive Director of the Regional Plan Association, which had worked on the ARC tunnel for 20 years, said, at the end of the day, he too approved of the decision. "You don't want big projects to be canceled with no repercussions," he said in a phone interview. "But at the end of the day you want that money for transit projects going forward."

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