N.J., N.Y. sign funding agreement on Gateway rail tunnel, bridge. Tunnel work could begin in 2023.

Gov. Phil Murphy and New York Gov. Kathy Hochul signed a first agreement delineating how the two states will fund the local share Gateway project to build a rail tunnel under the Hudson River and a new bridge across the Hackensack River, a critical step on the road to obtaining federal funding.

The phase one Memorandum of Understanding deals with financing two critical pieces of Gateway infrastructure, a new Portal North Bridge to carry the Northeast Corridor line over the Hackensack River in Kearny and construction of two new rail tunnels to Penn Station New York and rehabilitation of the 111-year-old existing tunnels to and from Manhattan.

The funding formula calls for a 50-50 split between the federal government and the two states for the tunnel project and a similar funding split for the Portal North Bridge, which has begun construction.

The agreement is a major milestone toward a goal of having federal funding in place by the end of 2022, with tunnel construction possibly starting in summer 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 size of Gateway’s cost.

“Today marks a pivotal milestone toward the completion of the most significant transportation project not just in New Jersey, but in the entire United States,” Murphy said in a statement. “As we proceed with construction of a new tunnel under the Hudson River, we advance one step closer toward a New Jersey that is better connected and better positioned to reap the full economic benefits of our status as a regional crossroads.”

Hochul called it a critical step forward in turning this vision into reality.

“By signing the Phase One Memorandum of Understanding, we are establishing the framework to get this project over the finish line and are making good on our promise to modernize the state’s transportation infrastructure and create a mass transit system worthy of New Yorkers,” she said in a statement.

Last month, Hochul and Murphy held a joint press conference to announce improvements to Penn Station, New York that could run concurrent to the tunnel project.

Obtaining a memorandum of understanding between the two states was cited by U.S. Sen. Chuck Schumer, (D-NY) at this year’s Regional Plan Association General Assembly as a necessary task to get a federal funding commitment for the Gateway Tunnel. The veteran lawmaker told state officials to “put aside aside their differences and sign memorandums of understanding” to get Gateway done.

“RPA is thrilled to see this MOU signed and sealed, marking yet another critical milestone for the nation’s most important public works project,” said Zoe Baldwin, the association’s New Jersey director. “With the full funding grant agreement soon to be in place, agencies can finally begin the real work of bringing this project to construction.”

RPA released the results of a study on June 15 which found that even under the most conservative forecasts of 50% of Manhattan office employees working from home and a sluggish job market, rail ridership between New Jersey and New York will still grow, making the Gateway Tunnel a necessity.

The MOU advances the Gateway Program to its next phase, which will detail the parties’ responsibilities with respect to delivery of the Hudson Tunnel Project and move forward in the federal project review.

The agreement also meets a major milestone required under the acts passed by both states in July 2019 to create the bi-state Gateway Development Commission that is overseeing the project. That legislation requires both states to equally share the local cost to build new tunnels, rehabilitate the existing tunnels and construct a new Portal Bridge and establishes strict standards of transparency and accountability.

The agreement equally divides the local share to build the Portal North Bridge at $386.2 million per state. A full funding agreement for a $766.5 million grant was entered into with the Federal Transit Administration on Jan. 14. 2021. Besides the transit funds, that deal calls for Federal Highway Administration to pay $57.1 million and Amtrak $261.5 million. It reduces the local funding that New Jersey initially committed to the project to secure federal funding before the MOU was signed.

A contract to build Portal North Bridge was awarded last October and a notice to start construction was issued

The agreement says the Port Authority of New York and New Jersey’s total commitment for Phase One is $2.7 billion. How the states would fund their share of the tunnel project still has to be decided, although one option discussed was applying for low interest long term federal railroad infrastructure loans.

But an expert said this is a beginning, especially because of the potential size of the grant and all the other processes that have to be completed

“The MOU is just one of many steps necessary to be completed prior to FTA offering a $12 billion plus Full Funding Grant Agreement for the Gateway Tunnel project,” said Larry Penner, a former FTA region 2 official for the New York New Jersey metro areas and transit expert.

He called the MOU a baby step when considering the other work that has to be done to satisfy the FTA, from project management, budget and cost up dates, tracking how cost increases and how they will be paid for. Also there is ongoing FTA review of technical, legal and financial capacity to implement the project, ongoing updates to the final project scope, budget, schedule, project management and how the project will comply with Civil Rights requirements.

“A $12 billion FTA Full Funding Grant Agreement might be the largest in the agencies history. Given the complexity of the project (budget, scope, funding sources and stakeholders), you may be waiting until 2024, before FTA is comfortable offering the FFGA,” Penner said. “Negotiating any FFFGA of this size and magnitude may take many months up to a year before all parties can agree on the content and sign on the dotted line.”

Supporters said they’ll also look to the $1 trillion Biden administrations Infrastructure Investment and Jobs Act, for gateway funding, officials said in a joint press release.

“This agreement between New Jersey and New York is a big step in moving the Gateway Project forward,” said U.S. Senator Robert Menendez, D-NJ, who praised the governors and Port Authority for reaching the agreement. “I will continue working with our state and federal leaders, as well as other stakeholders, to ensure the Gateway Project is completed and every commuter in the region has access to safe, reliable transportation.”

U.S. Rep. Josh Gottheimer, (D-5th Dist.) joined Menendez in saying said vital projects such as Gateway was one of the reasons why he helped draft and shape the infrastructure bill

“Our goal was simple: to finally move forward the most important infrastructure project in our country — the Gateway Train Tunnel,” he said in a statement. “With the major federal resources we secured for the Gateway Project and with agreement between New Jersey and New York, we will finally replace the century-old tunnels. Today’s announcement is real progress in our fight to get the Gateway Project done. We cannot afford to delay.”

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Larry Higgs may be reached at lhiggs@njadvancemedia.com.

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