Thursday, April 12, 2012

NJ Transit Executive Director Jim Weinstein Backs Christie Killing ARC Tunnel Project

NJ Transit was the lead agency on the plan to build the ARC Tunnel. Much has been made over the past two days that Gov. Chris Christie killed the plan and a GAO report seems to suggest that Gov. Christie overstated the cost overruns in killing the plan.

The GAO plan acknowledged not only that there would be cost overruns, but that the FTA had estimated cost overruns exceeding those of NJ Transit - to the tune of anywhere from $1 to $5 billion over the $8.7 billion budget.

Media outlets are playing games with the agreed upon budget for the tunnel. It was set at $8.7 billion, and anything over that figure constitutes an overage. That means reports indicating that the plan would cost $9.8 billion was an overage of $1.1 billion.

Late yesterday, Executive Director of NJ Transit, Jim Weinstein, held a presser and announced that Gov. Christie was right to kill the plan. In fact, he reiterated the reasons to do so for the reasons I've set forth over the past two days.

Let me restate that. The head of the agency leading the construction of the ARC tunnel said the governor was right to kill the plan because of the way that cost overruns would inure to New Jersey taxpayers.
The $9.8 billion project was terminated 18 months ago based on a recommendation from a committee headed by Weinstein.

"It was canceled because we didn’t have the money," Weinstein said after NJ Transit’s monthly board meeting in Newark. "It was a bad deal for New Jersey. The governor made the right decision."

The Access to the Region’s Core tunnel, America’s largest public works project, would have linked Secaucus to a new station deep under West 34th Street in Manhattan.

Christie scrapped the tunnel in October 2010 after he said its pricetag had ballooned to between $11 billion and $14 billion.

However, the independent Government Accountability Office report said the range projected by NJ Transit just two months earlier had a high estimate of no more than $10 billion and that the Federal Transit Administration estimated the project would cost between $9.78 billion and $12.43 billion.

Christie also said New Jersey was responsible for 70 percent of the tunnel costs, but Tuesday’s GAO report determined the state was responsible solely for $1.25 billion — or 14.4 percent of what was then an $8.7 billion project.

Critics contended Christie raided the tunnel money to prop up the state’s nearly bankrupt Transportation Trust Fund — which pays for road and bridge repairs and transit projects — and keep his pledge not to increase the state’s relatively low gasoline tax.

But Weinstein said the tunnel was terminated because New Jersey simply could not afford it.
"While there were differences between the FTA and us on the price, the bottom line is that the exposure wasn’t to the FTA, it wasn’t to the federal government, it was to New Jersey," he said. "And Chris Christie refused to expose New Jersey’s taxpayers to that kind of risk."
Note what happened with the Star Ledger report. They were indicating that the cost for the project had already risen to the top end of the NJ Transit overage and they had barely started construction. It would have been impossible to keep costs contained on the rest of the project when barely 10% of the project had gotten underway.

Cost overruns are invariably inevitable on major construction projects because of unforeseen difficulties during construction such as ground conditions that require additional time or equipment to stabilize the ground or higher costs for materials.

That's why the FTA estimates were not only much more plausible, but were more likely to be an accurate reflection of the true cost for the project.

As to the rest of the expenditures being made by the agency, I've previously noted the importance of increasing commuter capacity and the purchase of bilevel cars addresses that since the bilevel cars offer 20% more capacity as compared to the single level cars in service today. Given the constraints across the NJ Transit rail system, those bilevel cars will allow NJ Transit to offer more seats during peak periods without needing to run additional trains. Alternatively, if conditions permit, it can run additional service utilizing the modernized rail stock.

The purchase of diesel-electric locomotives not only should go ahead, but it would help address fuel costs and pollution at terminals such as Hoboken where idling diesel locomotives spew out particulates and other emissions that foul the air with a haze and contribute to poor air quality.

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