Independent report disputes NJ gov's tunnel fears

AP News
Posted: Apr 10, 2012 4:01 PM
Independent report disputes NJ gov's tunnel fears

Projected cost overruns for a massive rail tunnel project were below what Gov. Chris Christie used as justification for scrapping the project, according to an independent congressional report released Tuesday.

The Government Accountability Office report also differed with the governor on New Jersey's stake in financing the project _ about 14 percent, compared to Christie's statements that New Jersey would be on the hook for 70 percent of the project.

Christie's office immediately denounced the report's conclusions, and the Republican governor had his own response Tuesday morning in New York, where he was addressing the George W. Bush Institute Conference on Taxes and Economic Growth.

"The federal government was wrong before, and they are wrong again," he said.

In 2009, under Christie's predecessor Democratic Gov. Jon Corzine, construction began on the project, known as the ARC, or Access to the Region's Core. More than a half-billion dollars had been spent on it when Christie pulled the plug in October 2010, saying he didn't want New Jersey to be on the hook for cost overruns he estimated at $2 billion to $5 billion over the estimated $8.7 billion price tag.

About $3 billion was to be provided by the federal government, $3 billion was to come from the Port Authority of New York and New Jersey, and the state was committing about $2.7 billion, drawing from flexible federal highway funds and turnpike toll increases. New York City hadn't committed any money.

On the day he canceled the project, Christie said his advisers estimated the cost of the tunnel at $11 billion to $14 billion. But the GAO report concluded that the actual price tag was lower.

According to the report, the figure of $8.7 billion remained basically unchanged from mid-2008 to mid-2010. In August 2010, the Federal Transit Administration issued a risk assessment that put the project's cost at $10.8 billion to $13.7 billion. After input from NJ Transit, which was running the project in New Jersey, the FTA revised the cost range to $9.8 billion to $12.4 billion.

Cost increases are customary in large-scale projects and can happen for a variety of reasons, the report said. For example, the Port Authority discovered there were no existing surveys of Penn Station and had to perform one before designs could be developed.

Tuesday's report served as justification for the governor turning down "a very, very bad deal for New Jersey," according to Christie spokesman Michael Drewniak.

"The cost overruns, projected to be anywhere between $2 billion and $5 billion, were all to be borne by New Jersey, and those escalating cost estimates were affirmed by the FTA themselves in their own risk assessment documentation," he said.

Christie said one of the reasons for canceling the project was that New Jersey would be solely responsible for cost overruns. But the GAO report said additional options including a public-private partnership were being discussed, but the project was canceled before an agreement could be reached.

According to Drewniak, the public-private partnership would have taken "years to develop" and other options would have required the state to pay back loans.

The GAO report also concluded New Jersey would have been responsible for about 14 percent of the cost of the tunnel, far less than the 70 percent Christie had cited. But Drewniak said the 70 percent figure was more accurate because it included money committed by the bi-state Port Authority of New York and New Jersey that would have counted against New Jersey.

The government sought to force New Jersey to pay back about $271 million for work that had already been done on the tunnel. Under an agreement announced last fall, that amount was lowered to $95 million.

Democratic U.S. Sen. Frank Lautenberg, who worked for years to raise money for the project, said the report shows Christie deceived New Jersey residents.

"This was the most important transportation project of our time," he said. "ARC was critical to the future of New Jersey's economy and it took years to plan, but Gov. Christie wiped it out with a campaign of public deception."

The New York Times first reported on the GAO report Tuesday.