The Federal Transit Administration (FTA) dealt a severe blow to the prospect of securing large-scale federal funding for the Hudson Tunnels Project, a component of the Gateway mega-project.

In a letter released near the close of business Friday, FTA Deputy Administrator K. June Williams outlined "the serious concerns raised by the updated financial proposal" for the project, according to the agency's press release.  Williams sent the letter to officials from New Jersey Transit, the New York State Division of the Budget, the Port Authority of New York and New Jersey, and the Gateway Program Development Corporation.  

"The revised plan seeks at least $11.1 billion from the Federal government and makes the Project 100% reliant on Federal assistance" according to the FTA Release, which also said that there is no "50/50" agreement between New York, New Jersey and the U.S. Department of Transportation to finance the project.  Williams' letter went on to say: "We consider it unhelpful to reference a non-existent "agreement" rather than directly address the responsibility for funding a local project where 9 out of 10 passengers are local transit riders."  NJ Transit riders use a portion of the Amtrak-owned Northeast Corridor (NEC) between Penn Station and Trenton, or they ride trains to and from Penn Station that use part of that route.  The Long Island Rail Road (LIRR) also uses Penn Station as a major terminal.  Amtrak passengers, who ride north of New York or beyond Trenton account for about 10% of total Penn Station riders.  The other 90% ride on NJT or LIRR trains.

The financing plan called for a 50/50 split of federal funding between loans and Capital Investment Grants (CIG).  In the letter, Williams added: "the assumption that $5 billion or more in CIG grant funds will be available to New York and New Jersey for this one project lacks recognition of the impact that such funding would have on the availability of funds for the remainder of the country" and said that such a large grant "could exhaust the program entirely."

The estimated cost of the Hudson Tunnel Project was lowered from $14.9 billion in October to $12.7 billion, purportedly without an explanation for the reduction.  Williams criticized the reduction, saying: "We understand this new plan does not address the rehabilitation of the existing tunnels, and now only addresses the building of two new tunnels. Given the age of the existing tunnels was the impetus for the project, we question the decision to ignore any funding commitment to that critical component, and to omit billions in other costs previously acknowledged to be part of the overall project cost."

New tunnels between New Jersey and Penn Station, New York are necessary, since the existing tunnels were damaged in flooding from Hurricane Sandy in 2012, and must be taken out of service for major repairs.  Amtrak has said that the work should be performed no later than 2034.  Current projections for the Gateway Project say that it should be completed in 2030; only four years before that deadline.  

The Hudson Tunnel Project is a component of Gateway, which also includes other features such as the proposed Penn South, which would be a stub-end terminal at 30th Street for NJ Transit trains, new infrastructure near Secaucus Station, and a loop around Secaucus Station for trains coming from Bergen County.  Current cost estimates for the entire Gateway Project run around $30 billion.  To date, there has not been any financing plan proposed for Gateway in its entirety.

The Lackawanna Coalition has consistently expressed deep concern that there will not be sufficient funds available from federal or local sources to build the entire Gateway Project.  Instead, we have called for a less-ambitious and less-costly plan that would include two new tunnels into Penn Station, a new bridge with enough tracks to handle all trains into and out of Penn Station (or a new two-track bridge and rehabilitating the existing Portal Bridge over the Hackensack River) and improvements at Penn Station that would allow more trains to enter and leave that facility, especially at busy commuting hours. 

Supporters of the Gateway Project, including the Regional Plan Association and the Gateway Program Development Corporation, have expressed the hope that the entire Gateway Project will be built someday.  Given the new stance by the FTA, the likelihood of that outcome appears to be diminishing, and it is looking more likely that the more modest project that we propose could be built, instead.