FRIDAY, SEPTEMBER 9, 2022
The Gateway Development Commission has announced that the construction of the new Hudson River Tunnel, a part of the larger Gateway infrastructure project, has been delayed amid increased cost projections.
The now $16.1 billion project will involve building a new tunnel parallel to the existing structure between New York and New Jersey, which would be taken out of service for repairs after the replacement is completed.
Latest Delay, Price Increase
On the financial side, the overall tunnel project, including financing, is now anticipated to cost $16.1 billion, up from the previous estimate of $14.1 billion.
“One of the things we did differently was calculated this in a more conservative way,” Stephen Sigmund, a spokesman for the Gateway Program, told NY1. “We included higher interest rates for the loans and a two-year contingency on the schedule for the first time.”
CEO Kris Kolluri cited “pandemic-related” cost hikes and “time lost from the political delay during the last federal administration,” adding that the commission will seek addition grants from the bipartisan infrastructure law, “ensuring we have a cost and schedule for the project that our partners and the public can rely on.”
“We'll continue to mitigate these costs and speed up aspects of the project,” Kolluri said. “But most critical is that we now have a path forward, working hand in hand with the federal government.”
The Gateway tunnel --arguably the region's most important infrastructure project -- will cost even more and take longer to complete: https://t.co/dJf9xnm8G9
— Dana Rubinstein (@danarubinstein) August 31, 2022
He also attributed at least $1 billion of the cost escalation to “market volatility and inflation.”
“We are going to look to mitigate and bring down the costs over time,” Sigmund said.
Construction is now anticipated to begin in 2024. Consequently, the new tunnel would then be completed by 2035, three years later than originally expected.
The old tunnel will now undergo repairs expected to last until 2038. However, some experts say that the new 2035 end date is a year after the old one should be shut down. According to reports, there was no discussion about what will happen if the old tunnel must be closed before the new tunnel is completed.
“There is no deadline date by which the existing tubes must be shutdown,” Sigmund said. “Amtrak is investing hundreds of millions of dollars to keep the existing 112-year-old tubes functioning. They are increasingly unreliable and failing, but they are not, however, unsafe.”
“In light of the impact of inflation and other market factors on Gateway’s cost, we remain unwavering in our commitment to affordable and accessible transportation for all New Jersey residents, commuters, and visitors,” said New Jersey Governor Phil Murphy in a statement.
Project History
Part of Amtrak’s massive Gateway Program, developed in 2017 to overhaul parts of New York’s and New Jersey’s transportation infrastructure, included plans to build the Hudson Tunnel from 2019 to 2026.
The tunnel was thought as one of the most important transportation projects in the nation, in part because it would allow for the reconstruction of the North River Tunnel. Completed in 1910, the North River Tunnel was already well into its prime when in 2012, Super Storm Sandy inundated it with millions of gallons of salt water, which left behind corrosive chlorides.
An engineering report from 2014 claimed the Amtrak tunnels would require $689 million to repair the corrosion and cracking caused by Superstorm Sandy. The 57-page report, "Structural Assessment of the Amtrak Under River Tunnels in NYC Inundated by Super Storm Sandy," found that chlorides and sulfates caused, and were continuing to cause, significant damage to key tunnel components.
In addition, the report recommended a phased process to take individual tubes out of service for extended periods to perform repair work—ultimately underscoring the urgency to advance the Gateway Program.
To investigate the possibilities of the Amtrak Gateway Program, among other projects in the country, the U.S. Government Accountability Office reviewed the cost of mass-transit infrastructure projects in 2018. As part of its investigation, the GAO oversaw factors including how contracts are written and carried out, and whether regulatory barriers are driving up costs on transit projects, particularly in New York City.
The investigation arose at a time when Congress and President Donald J. Trump attempted to move forward on an infrastructure funding plan that would include $200 billion in spending to spur $1.5 trillion in state, local and private infrastructure investment over the next 10 years.
But funding for the project had been plagued with question marks from the start as a key funding option became unavailable in April 2019 as the Hudson Tunnel and associated rail bridge project in northern New Jersey received low ratings from the Federal Transit Administration, deeming them ineligible for federal grant funding.
In terms of actual project plans, there were question marks there as well with how exactly to move forward. Even after significant saltwater damage, rehabilitation attempts during overnight and weekend hours, deterioration still stands as the biggest issue for the existing tubes.
Though still managing to transport more than 400 trains and 200,000 passengers each day, Amtrak Chairman Tony Coscia said: “In the interim, we have to deal with the reality that we may have to consider some other options that are available to ensure the tunnels are durable for as long as possible.”
Previously approved by the Metropolitan Transportation Authority were plans to remove damaged concrete from the Canarsie tunnel that lines and encases power cables—followed by replacing the cables and rebuilding the concrete walls.
Looking at new ideas, another plan was brought to the table that advised the installation of cables on racks that would run along the inside of the tunnels, abandoning the old cables where they are. The surrounding concrete would also be rehabilitated and encased with a protective fiber-reinforced polymer.
While debates on how the repairs will be carried out continue, urban research and advocacy organization, Regional Plan Association (New York), noted that cables used in the Canarsie tunnels run on 625 volts, while Hudson River’s use 12,000 volts, making them much larger and requiring more protection.
In September 2020, the cost of the project was reported to have climbed in cost and time, increasing $275 million to its current estimation of $11.6 billion, and its start delayed to 2022. According to a statement released by the Gateway Program, the project was submitted in response to the Federal Transit Association’s annual call for projects for the Capital Investment Grant Program.
When infrastructure priorities were being outline for the Biden administration in March, Buttigieg told lawmakers at the time that the Hudson River Tunnel replacement repair and replacement would be a top priority.
In his comments to House lawmakers, Buttigieg said that a true recovery from the COVID-19 pandemic must include “a national commitment to fix and transform America’s infrastructure” and that maintaining the “status quo” of how the U.S. approaches infrastructure is “a threat to our collective future.”
During the same week, the USDOT announced a $230 million discretionary grant program for U.S. port and intermodal construction projects and that the $30.5 billion provided in the American Rescue Plan for the country's transportation programs was available.
The following month, Buttigieg received a letter from the New York State Conference of Mayors and Municipal Officials, in addition to three New York-based contractor groups, requesting that he waive the state's Scaffold Law for the Hudson River Tunnel construction project.
In the letter to Buttigieg, the coalition is again requesting that the regulation be waived, citing the same claims to cost increases regarding the Hudson River Tunnel and Mario Cuomo Bridge made just four years prior. This time around, however, the group suggests that the law be replaced with a comparative negligence standard, where NYDOT would mandate the comparative negligence standard for any project receiving federal grants.
In reporting from their perspective on the matter, the NYCOSH points out that contractors only have liability for fall injuries if they do not provide the proper safety equipment or violate safety and health regulations, suggesting that companies should allow insurance providers to allow an evaluation of their records so that it can be determined if the Scaffold Law is really behind rising policy prices.
In May, New York Representative Ritchie Torres (D, NY-15) introduced bill H.R. 3002, requiring that Amtrak adopt a repair-in-place method for track maintenance, rehabilitation and other purposes. While the legislation aims to target rehabilitation projects on East River train tunnels, according to Torres and other government officials, if passed, the legislation could have a ripple effect on other projects in New York as well, such as the Hudson River Tunnel.
At the end of June 2021, the Federal Railroad Administration and Federal Transit Administration issued the final Environmental Impact Statement and Record of Decision for the project.
At the time, New York and New Jersey were slated to split project costs with the federal government, although no federal funding was dedicated. In the meantime, FTA and the Port Authority, along with other project partners looked to advance the Hudson River Tunnel project through the Capital Investment Grants Program.
According to FTA spokesperson, after the non-profit agency is made a project sponsor, the FTA planned to provide technical support to the Port Authority and the Commission as those agencies complete transferring the role.
For the project, crews intend to construct a new Northeast Corridor rail tunnel under the river connecting to the Penn Station rail hub in New York City and rehabilitate the existing North River Tunnel. According to Amtrak, about 450 trains use the Hudson Tunnel daily, including those operated by New Jersey Transit. Before the COVID-19 pandemic in 2020, more than 200,000 daily passenger trips took place.
Following a tour in July, Buttigieg pledged that the Biden administration was committed to building a new train tunnel under the Hudson River. Joined by U.S. Sen. Chuck Schumer, among other lawmakers, Buttigieg reported that seeing the tunnels in person was an eye-opening experience.
Construction of the new tunnel was projected to start in 2023, but Schumer said at the time that he hoped that could be moved up to 2022 and that the tunnel could be completed within seven years. It was also reported that the Gateway Development Commission—a newly formed bi-state agency of commissioners from New York and New Jersey along with Amtrak representation—was tasked with project funding and oversight.
Thus far, the project sponsor has requested nearly $5.5 billion in federal funds, about 44% of the total project cost. Amtrak has committed nearly $1.3 billion, the Port Authority of New York and New Jersey will chip in $2.1 billion, and the remaining $3.35 billion would be split using state funds from New York and New Jersey. Despite all the pledges of support for Gateway, no funding had been secured at the time.
At the end of last year, officials for the Gateway Development Commission announced that the final permit for the Hudson Tunnel Project has been obtained. The U.S. Army Corps of Engineers’ Section 404/10 permit allows digging of the tunnel to begin once necessary funding is in place.
Funding for the Gateway Tunnel Project was included in the recently signed bipartisan infrastructure bill. According to a press release from New Jersey Rep. Mikie Sherill, the Infrastructure Investment and Jobs acts includes $66 billion for passenger rail expansion and improvements, including $22 billion for Amtrak and $24 billion for Northeast Corridor Modernization Grants, which can directly be used to finance the completion of the Gateway Project, including the Hudson River Tunnel.
However, at the time, officials were still waiting on the approval of a $5.6 billion grant from the Federal Transit Administration to finance the tunnel, which was not received. Construction was reportedly anticipated to begin in August 2023 and take 12 years to complete.
At the beginning of this year, the FTA announced that it has upgraded the Hudson Tunnel project’s rating, clearing the final roadblock needed to receive federal funding. The rating, which has been raised to “medium-high” from “medium-low,” allows the project to move forward in seeking funding from the Capital Investment Grants program.
NJ.com reported that federal funding could be as much as $5.6 billion, or approximately 44% of the project’s cost to build. $1.4 billion of funding would come from Amtrak, alongside property it has purchased for the project, and New Jersey and New York governments would funding up to $6 billion through low intertest, long-term railroad infrastructure loans.
More recently, in July, New York Governor Kathy Hochul and New Jersey Governor Phil Murphy signed a funding agreement to split the cost for the Hudson Tunnel and Portal North Bridge projects, advancing the Gateway Program to its next phase. The Memorandum of Understanding, required by the Gateway Development Commission Act, outlines sources, uses and timing of funding for Phase One Gateway Projects.
Phase One of the program will be funded by a combination of federal and local sources, with a 50-50 split for the tunnel project. The Port Authority of New York and New Jersey will commit a total of $2.7 billion for the first phase. The states also note they intend to work with partners and federal entities to pursue greater federal resources of funding for the program through the Infrastructure Investment and Jobs Act.
The goal was to have federal funding in place by the end of 2022, with tunnel construction potentially starting in summer of 2023. However, a former Federal Transit Administration official said a full funding grant agreement might not happen until 2024 because of the complexity of the work that remains and the cost.
Tagged categories: Funding; Government; Government contracts; Infrastructure; Infrastructure; Ongoing projects; Program/Project Management; Public Transit; Rail; Rehabilitation/Repair; Transportation
