Sen. Charles Schumer's (D-NY) announcement that he has secured $6,9 billion under the Federal Transit Administration (FTA) Capital Investment Grant (CIG) New Starts Core Capacity program toward funding the $18 billion Gateway Tunnel Phase One, and that tunnel construction will start in 2024 are both premature. All that FTA provided under the CIG program was permission earlier this month for the Gateway Development Commission to enter the second phase of the FTA CIG program for final design and engineering to proceed. The Federal Rail Road Administration cost estimate including Gateway Phase 2 is $40 billion.
The FTA funding is still not secured. The FTA and GDC still need to come to terms on a FTA CIG Full Funding Grant Agreement (FFGA). Only then would the federal funding become real. This would cap federal participation at $6.9 billion. That would be the largest FFGA in FTA history, greater than the $2.63 billion Metropolitan Transportation Authority (MTA) Long Island Rail Road (LIRR) East Side Access to Grand Central Terminal to the MTA in 2006.
The FTA granted MTA under the CIG program permission to enter final design and engineering in January 2022 for the $7.7 billion Second Avenue Subway Phase 2 project and 18 months later, the FFGA for Second Avenue Subway Phase 2 still remains a year or more away from approval. The Gateway $18 billion Phase One project is far more complex and expensive. Many other FTA CIG projects around the nation after entering final design and engineering costing far less than either Gateway or Second Avenue Subway Phase 2 have averaged two to three years before receipt of an approved FTA CIG FFGA to fund actual construction.
Both Gateway and Second Avenue Subway, due to their respective costs and complexities, will undergo far more detailed ongoing review and scrutiny. It took six years after Second Avenue Subway Phase was admitted into the FTA CIG program In July 2016 to reach entry into final design and engineering in January 2022. It is anyone's guess how many more years will be needed to bring Sen. Schumers' promised delivery of federal funding under future FTA CIG FFGA for either project.
Even the $18 billion cost estimate could change. Cost estimates have to be refined as progress proceeds beyond the planning and environmental phases into final design and engineering. This work has to be reviewed and approved by operations, maintenance and other user groups within both Amtrak and New Jersey Transit (NJ Transit).
History has shown estimated costs for construction usually trend upwards as projects mature toward 100 percent final design. Progression of final design refines the detailed scope of work necessary to support construction. The anticipated final potential cost will never be known until completion. Costs can be further refined by award of construction contracts, followed by any change orders due to unforeseen site conditions or last minute changes in scope requested by maintenance or operations groups to the base contracts during the course of construction. This will be followed by beneficial use, completion of inspection and acceptance for all work to insure it conforms to contract specifications, punch list items, receipt of asset maintenance plans, followed by release of retain age and final payment to the contractor(s).
How reliable is the non federal funding source from the states of New York and New Jersey that the GDC will use to pay for pre-construction work for the two new tunnels and other related activities? This could include advancement of final design and engineering, utility relocations, real estate acquisitions, demolition, procurement of specialized equipment and materials.
Will GDC request pre-award authority from FTA to conduct some of these specific activities? This would allow GDC to incur costs that would be eligible for federal reimbursement at a later date after FTA FFGA approval. The internal review of this request between the FTA Region 2 Office and Washington, D.C., headquarters averages several months.
What happened to President Biden's announcement earlier this year of a $295 million federal grant to the GDC toward a $600 million dollar cost for construction of a concrete casing for a box tunnel under the Hudson Yards? How much money has been spent to date? How much work has actually been completed?
Amtrak force account employees are committed to other projects all along the Northeast Corridor between Washington, D.C., and Boston, Mass., for years to come. Three of these are Metro New York area projects. They include providing track outages and Amtrak Force Account to support the $1.6 billion NJ Transit Northeast Corridor Portal Bridge, $3.1 billion Metro North Bronx East Penn Station Access and $1.6 billion LIRR East River Tunnel Super Storm Sandy Repair and Resiliency projects.
Amtrak and NJ Transit prepare annual Track Outage and Force Account Plans. The latest are for calendar year 2023. Do they indicate that there are sufficient resources to advance both Gateway Tunnel Phase One (two new tunnels plus rehabilitation of the existing two tunnels) along with other capital investment projects , routine safety and state of good repair maintenance of assets to insure safe and reliable operations for existing services? FTA will have to receive and review Amtrak and NJ Transit Force Account and Track Outage Plans annually for years to come. This is to ensure they have the resources to carry out all of the work.
What is the current status for New Jersey Gov. Phil Murphy and New York Gov. Kathy Hochul's respective $4.5 billion local share? Are they clearly identified within state budgets to document that these dollars are real? There is no guarantee (based upon future advancement of design and engineering, construction contractors responses to the procurement process for contract(s) award followed by change orders during construction due to unforeseen site conditions or last minute changes in scope) that the final cost could end up billions more than the current $18 billion first phase project cost
The FTA will continue ongoing reviews to GDC's technical, legal and financial capacity to implement the project. This would include ongoing updates to the final project scope, budget, schedule, project management and fleet management plans. Cost and schedule must be updated to reflect today's market condition and construction schedules.
The GDC must also be in continued compliance with a number of civil rights requirements. This includes their Title VI, Equal Employment Opportunity (EEO), Disadvantaged Business Enterprise (DBE) and Americans With Disabilities Act (ADA) programs all approved and proceeding in accordance with FTA rules and regulations.
The most critical issue to be resolved is identifying and securing the $9 billion local share toward the first phase and $10 billion more for the full build $40 billion total project cost. It is a basic legal requirement.
This is needed to leverage any future FTA capital grants to support advancement of the project. The GDC must also demonstrate they have the financial capacity to pay for any unanticipated cost increases or funding shortfalls.
There is no firm commitment date for approval of the FTA CIG FFGA to pay for this project that also includes a cap on the total dollar commitment from Washington.
Acceptance of the FTA CIG FFGA means that GDC, the project sponsor, is legally on the hook to pay for any additional costs above and beyond the agreed upon project cost at the time the CIG FFGA is offered and accepted by the grant recipient. Sen. Schumer has said he is pursuing another pot of up to $3.5 billion in federal funding to cover potential cost overruns. This could be double dipping in violation of the FTA CIG FFGA. Any FTA CIG FFGA includes contingency funding within the total project budget to cover contract change orders and unanticipated cost overruns. Does this request by Schumer imply he has no faith in the GDC cost estimate?
The FTA requires an independent project risk assessment for budget, construction feasibility and schedule. This report might reveal there either the phase one $18 billion or the full build $40 billion Gateway Tunnel project could become the New York version of the infamous Boston "Big Dig." The GDC having no financial resources of its own, would have to turn to Amtrak, NJ Transit, Port Authority of New York and New Jersey, Trenton and Albany to cover any costs overruns. They, in turn might raise tolls on bridges and tunnels, commuter fares and other taxes to pay for these potential additional costs. Commuters and taxpayers.
FTA will offer extra federal love in project oversight. The FTA has its own Project Management Oversight (PMO) independent engineering consultant firms to supplement regional and headquarters staff for oversight. These firms provide both oversight and technical assistance for capital projects. The FTA usually assigns their own engineering consultant firms to those projects over $100 million or more. Engineering firms monitor the progress of these major capital projects and prepare monthly progress reports. These monthly reports should be made available to GDC senior staff, GDC Board Members, Amtrak, NJ Transit and both governor's offices. They will be shared with FTA headquarters and regional office senior management teams and in house project oversight staff.
Will GDC be transparent by having information submitted to the FTA posted on their website? Transit riders and taxpayers are looking for accountability, efficiency, transparency and timely completion of capital projects, programs and maintenance to assure more reliable and safe commutes. If you want to build trust for this project, riders, transit advocacy groups, taxpayers, elected officials, transportation reporters and editorial boards deserve easy access to all of this information.
