Who Will Pay For New Train Tunnel In NJ, NY? Feds Up Their Ante

NEW JERSEY — When you’re talking billions of dollars, it raises a lot of eyebrows when you can’t answer an important question about the Gateway Tunnel, one of the most significant construction projects happening in New Jersey and New York: “How will it be paid for?”

Now, that conundrum has finally been put to rest, officials say.

On Monday, a group of high-ranking Congress members, lawmakers and transit officials announced that $6.88 billion in federal funding and $4.06 billion in Railroad Rehabilitation and Improvement Financing loans from the Build America Bureau have been approved for the massive project, which will build a new commuter train tunnel across the Hudson River.

With the latest round of funding, the Gateway Development Commission has secured the entire $16 billion commitment needed to complete the tunnel. Federal funding for the project has now hit $12 billion, making it the largest such commitment to a rail transportation project in modern history, officials said.

Construction started on both sides of the Hudson River in November 2023. The project is projected to create 95,000 jobs and generate $19.6 billion in economic activity by the time it crosses the finish line.

Here are some important updates, according to a statement from the New Jersey governor’s office:

WHAT IS IT? – “The [Gateway Tunnel] is the main component of the Gateway Program, a series of strategic infrastructure investments designed upgrade rail infrastructure in New York and New Jersey. The project is particularly critical because the existing North River Tunnel serving Penn Station is more than 110-years-old and was severely damaged during Superstorm Sandy in 2012. The Hudson River Tunnel project will build a new two-track rail tunnel from the Bergen Palisades in New Jersey to Manhattan, directly serving New York Penn Station and rehabilitating the existing North River Tunnel. Additionally, as part of the construction, nearly 5,000 new affordable housing units will be created in the adjacent Hudson Yards.”

WHEN WILL IT BE DONE? – “The new tunnel will be in service by 2035 and the full rehabilitation of the existing tunnel will be complete by 2038.”

WHO WILL PAY FOR IT? – “The total $16 billion cost of the HTP will be split 70/30 between the federal government and the project’s local partners: New York, New Jersey, and the Port Authority of New York and New Jersey. This arrangement saves the local partners multiple billions of dollars compared to the original plan to split the project costs 50/50.”

In practical terms, the latest funding agreement will allow the GDC to move forward with heavy construction and tunnel boring activity. Work will begin in the coming weeks with the Hudson River Ground Stabilization Project, which will stabilize the riverbed on the Manhattan side of the Hudson River to enable tunnel boring machines to excavate the new tunnel.

Dignitaries and officials present at Monday’s news conference included U.S. Sens. Charles Schumer of New York and Cory Booker of New Jersey, Gov. Phil Murphy and Gov. Kathy Hochul, and representatives from the U.S. Department of Transportation and the Federal Transit Administration.

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The Gateway Tunnel is the centerpiece of a larger construction effort dubbed the Gateway Program, which aims to take some pressure off one of the most notorious railway chokeholds in the nation: the Northeast Corridor.

Learn more about the project here.

The new tunnel is especially crucial to the region, as the existing North River Tunnel serving Penn Station is more than 110-years-old and was severely damaged during Superstorm Sandy in 2012. While the tunnel has been repaired frequently, its age and damaged condition present reliability concerns for more than 200,000 people who travel through the tunnel on more than 400 trains every weekday.

If the existing tunnel were to shut down for just one day, it would cost the United States more than $100 million, experts have noted. See Related: Hudson River Tunnel Shutdown Would Devastate Local Families, Report Says

In addition to building a new train tunnel from New Jersey to New York, the plan also includes building new Portal North and South Bridges over the Hackensack River in New Jersey, as well as making several other smaller upgrades between Newark Penn Station and New York Penn Station.

The nonprofit Regional Plan Association pointed out in an April report that paying for the Gateway Program is no small feat. Learn more about how the project is being funded here.

The overall cost of the Gateway Program has risen to roughly $17.18 billion according to a recent White House fact sheet, significantly higher than earlier estimates of $16 billion. However, the price tag is well worth it, supporters say, including U.S. Transportation Secretary Pete Buttigieg, who visited Newark and New York City in 2021 to express his support for the project.

The Gateway Program was greenlighted during the administration of former President Barack Obama. It hit a brick wall when Donald Trump took office. But it has picked up steam again since Joe Biden entered the White House, and has seen several key milestones since then.

Last summer, the governors of New York and New Jersey signed a written agreement that guarantees a 50-50 split when it comes to funding Gateway (which has now evolved into a more lucrative split with the federal government, as per the above article). Read More: NY/NJ Governors Sign Agreement To Split Cost Of Gateway Tunnel

Gov. Murphy and Gov. Hochul said they would work to “aggressively” chase more federal funding through President Joe Biden’s landmark infrastructure package. Read More: Here’s What NJ Will Get From $1 Trillion Infrastructure Bill

Those efforts appear to have been paying off. In the past year, several major infusions of federal dollars for the Gateway Program have been announced.

Work on the other components of the Gateway Program have seen “significant” progress in recent months, according to a joint statement from Amtrak and the Gateway Development Commission (GDC).

That progress includes construction of the new Portal North Bridge, which recently passed the 35 percent completion mark. Read More: There’s Good News For One Of NJ’s Most Hated Bridges

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