GAO Report Misleads Over Scrapped ARC Tunnel Numbers

The NY Times is reporting that the General Accountability Office is disputing figures put out by Gov. Chris Christie last year when he killed the ARC tunnel project on the basis of cost overruns that all parties conceded were likely to run $1 billion but potentially up to $5 billion more than the cost estimate.

The report claims:

The report by the Government Accountability Office, to be released this week, found that while Mr. Christie said that state transportation officials had revised cost estimates for the tunnel to at least $11 billion and potentially more than $14 billion, the range of estimates had in fact remained unchanged in the two years before he announced in 2010 that he was shutting down the project. And state transportation officials, the report says, had said the cost would be no more than $10 billion.

Mr. Christie also misstated New Jersey’s share of the costs: he said the state would pay 70 percent of the project; the report found that New Jersey was paying 14.4 percent. And while the governor said that an agreement with the federal government would require the state to pay all cost overruns, the report found that there was no final agreement, and that the federal government had made several offers to share those costs.

That is contradicted by the various reports that came out during the timeframe when Christie was seeking to get the federal government to share cost overruns or to have New York pick up a share.

The federal government's plan for picking up cost overruns was to backstop the plan with New Jersey taking on more debt. It offered to pick up a paltry $350 million in overruns, when New Jersey taxpayers would be on the hook for all overruns over that amount with no chance for reimbursement from the feds or New York. If the Obama Administration was truly interested in pursuing this shovel ready project and to increase mass transit capacity, it could have gotten a deal done by taking on the cost overruns. It chose not to do so because it recognized that bottomless pit of overruns that were beyond its own control. NJ Transit could not be trusted in containing costs.

Federal officials had previously acknowledged that NJ Transit, the lead build agency on the ARC project couldn't contain costs and that costs already expended were significantly over budget. Moreover, I've repeatedly pointed out that NJ Transit can't afford to operate any new facilities - it can barely keep existing facilities fully staffed and maintained. A new facility may look great for photo ops for politicians, but the operating budget has been slashed to the point that service has been cut across both bus and rail schedules.

Then, there's the fact that even the most conservative estimates - the $1 billion in overruns, is subject to revision and that the costs would likely exceed that amount.

The fact is that the ARC project was poorly conceived and that the successor tunnel project, Gateway, is a better conceived project that will accomplish far more than the ARC project ever could.

For starters, Amtrak is the lead build agency, which makes sense for an interstate rail project that anticipates increasing high speed rail connectivity as a result of the project. It would expand Amtrak capacity as well as NJ Transit service into Penn Station. High speed trains would have direct access and be able to bypass bottlenecks into New York, resulting in a significant cost and time savings. The ARC project would have done nothing for high speed rail and would have increased NJ Transit access to the new platforms, but would have significantly increased NJ Transit costs because there was no place for trains once they disembarked passengers. There was no way to store trains at the site, and there was no thru-track access to Sunnyside Yards in Queens, where NJ Transit and Amtrak share space with MTA trains into Penn Station. NJ Transit would have been forced to send empty trains back to some undisclosed location in New Jersey until needed - increasing train congestion without paying customers. That's just idiotic.

In fact, the Port Authority has a similar problem with storage of buses at the Port Authority Bus Terminal. It can't keep buses on site or nearby for the evening rush, so they're sent back into New Jersey to await passengers, and that increases costs to the bus companies, including New Jersey. The ARC project would have resulted in the same problem for NJ Transit.