In February, the Gateway Development Commission submitted an updated financial plan for the Hudson Tunnel Project, the last major hurdle the Commission needed to clear before securing a Full Funding Grant Agreement from the federal government. The financial plan delineates the cost breakdown of the project as well as the funding share between the federal government and the states of New York and New Jersey.
This updated financial plan showed an incredible change: the federal government is now expected to cover 73% of the total project costs, up from the previously projected share of just under 50%. This means the New York and New Jersey shares will dramatically decrease, saving the states billions of dollars. And the overall cost of the project is down slightly, from $16.05 billion to $16.04 billion.
The amount of money this will save the two states cannot be understated. New York will see a 58% reduction in costs and New Jersey will see an 87% reduction in costs – the discrepancy is due to New Jersey’s local funding share of the Portal North Bridge project, where construction is underway.
This important step from the Commission comes as construction continues on both sides of the river on early work projects, including Hudson Yards Concrete Casing, Section 3 in Manhattan and the Bridge and Utility Relocation Project at Tonnelle Avenue in North Bergen. Additionally, the Commissioners just authorized a contract award of $100 million for the first phase of the Hudson River Ground Stabilization project – and issued a Notice to Proceed. This piece of the project will mark the beginning of the heavy and subaqueous construction work on the long-awaited new tunnel. This level of construction work coupled with a soon-to-be-secured Full Funding Grant Agreement means the Hudson Tunnel Project is moving according to schedule.
This funding model is unprecedented for a transportation project, signaling how the Hudson Tunnel Project is a clear priority for the Biden Administration. The federal government has repeatedly demonstrated this over the past year, from President Biden’s visit to New York in January, 2023 to announce the $300 million MEGA grant to Senator Schumer’s announcement of a $7 billion award for the project in July.
And while the federal funding share is unheard of, it shouldn’t be. Projects to expand or improve interstate highways typically receive 80%-90% of federal funding or more. According to the Federal Highway Administration Bipartisan Infrastructure Law Fact Sheet, the standard federal share payable for projects is listed as 90% of total project cost for Interstate System projects and 80% of total project cost for projects not on the Interstate System. The same should be true for transit, and many have called for ensuring transit projects receive the same treatment as highways. States should not have to bear a more significant burden to improve transportation systems that are better for people, better for the economy, and better for the environment.
This is especially important to keep in mind as attention turns to funding Gateway Phase 2 projects, including Sawtooth Bridges Replacement, Dock Bridge Rehabilitation and Harrison Fourth Track, which are also expected to be funded through a combination of federal discretionary grants and local matches. Our region will not attain the robust capacity benefits from the Hudson Tunnel Project until the entire Gateway Program – which encompasses 11 projects between Newark and New York Penn – are completed. In order to complete these projects, the money needs to be there.
The federal government has not ignored Phase 2 projects: in 2023, both Dock Bridge and the Sawtooth Bridges projects were awarded roughly $300 million and $133 million, respectively. The local funding source should be identified swiftly so that we can take advantage of this historic amount of federal funding on the table.
Right now, there is no formal funding scheme for remaining Gateway Phase 2 projects, such as Portal South Bridge, Secaucus Expansion and Bergen Loop. But we know there is a massive amount of federal funding available and a widely demonstrated commitment to the Gateway Program from the current federal government. We should urge the states, transit agencies and project sponsors to work with the federal government to devise a funding model for Phase 2 projects akin to that of the Hudson Tunnel Project, to lift some of the burden from the states. It’s time that mass transit projects receive the same large swaths of federal funding that mass highway expansion projects receive.
