The Hudson Tunnel Projects trims $1.4 billion with new financial plan

Aug. 26, 2019
Early work package and private sector input among major factors driving cost savings; project still needs federal permits to move ahead.

The project cost for the construction of a new rail tunnel beneath the Hudson River and the comprehensive rehabilitation of the existing 108-year-old tunnel will cost $1.4 billion less than previously anticipated, resulting in an estimated cost of $9.5 billion for the new tunnel and $1.8 billion for the rehabilitation.

The revised figures are included in an updated financial plan submitted to the Federal Transit Administration (FTA). The reduced cost results from work conducted at the request of New York Gov. Andrew Cuomo and New Jersey Gov. Phil Murphy to position the project to advance quickly once the federal permits are issued. This work includes a more advanced level of design, and an intensive value-for-money analysis, including analysis of risks and associated mitigations, a more efficient contracting plan resulting in fewer contract packages, and consideration of delivery methods including design-build. The new Hudson River Tunnel’s level of design is now at the 30 percent threshold - the level typically used to move forward to bid for projects of this type.

In addition, the financial plan submitted reflects the project partners’ intent to request an “Early Systems Work Agreement” that would allow boring of the new Hudson River Tunnel in anticipation of a Full Funding Grant Agreement, saving the overall project considerable time and money and providing a clear pathway for the completion of the remainder of the new tunnel and rehabilitation of the existing tunnel.

Amtrak’s funding levels have been adjusted by $600 million to better reflect its allocated share of passenger trips through the trans-Hudson rail tunnel, which along with project cost savings, reduces the amount sought from the FTA’s Capital Investment Grant (CIG) Program to $5.4 billion, down from the $6.8 billion previously sought. This represents a reduction in the percentage of the total project, from 49.4 percent to 44 percent. The state of New York, state of New Jersey, and Port Authority of New York & New Jersey reiterated their construction cost commitments of more than $5.55 billion, including the $2.7 billion commitment to the project in the Port Authority’s board-approved 10-year (2017-2026) Capital Plan.

Additional details of the financial plan include:

• Fully maintaining the local partner’s previous commitment of $5.55 billion towards the project, which, following the reduction in overall project cost, allows $700 million to be committed to the local share of rehabilitating the damaged North River Tunnel (the existing 108 year-old one-track-in, one-track-out link between New York and the entire Northeast Corridor).

• The Port Authority continuing as the project sponsor for the new Hudson Tunnel, while the newly established bi-state Gateway Development Commission is constituted.

• Responsibly updating the project’s projected start of major construction to early 2021, since the Federal government has yet to provide a Record of Decision on the EIS that was completed in under 22 months in February of 2018, or to move the project’s funding forward.

The cost savings were achieved despite this schedule change in the start of the project’s major construction, which has cost the project in projected escalation from inflation. The financial impact of escalation was overcome via the Gateway Program’s advancement of design, engineering and technical efforts, as well as encouraging private sector feedback and innovation through the Request for Information to reduce project unknowns and refine project cost estimates.

“Gateway is the most vital infrastructure project in the nation and a federal asset that is critical not only for our region but for the entire country’s economy,” said Gov. Cuomo. “This new financial plan demonstrates that the states are doing everything possible to facilitate federal participation, including reducing the overall cost of the project and embracing a significantly higher Amtrak contribution - which together lead to a decrease in the amount being requested from the federal government. New York and New Jersey are laser focused on completing this project in the most inexpensive and efficient way possible while restoring our nation’s role as a global leader in infrastructure.”

Gov. Murphy added, “With hundreds of millions in savings for taxpayers, the strength of this latest financial submission is further proof that the state of New Jersey and its partners are ready to step up and do whatever is in our power to ensure that construction of the Hudson Tunnel Project moves forward. The Gateway Program delivers critical safety improvements across the most urgently needed infrastructure projects in the country, each with far-reaching economic impacts. The President and United States Department of Transportation must stand with us and our commuters who have waited far too long.”

Jerry Zaro, New Jersey trustee and chairman of the Gateway Program Development Corporation (GDC), said, “There is no infrastructure project in the country more urgent than Gateway. We are continuing to do absolutely everything within our power to demonstrate that our states and our partners are 100 percent committed to this project, including cutting the cost and passing legislation in both New Jersey and New York to strengthen the Gateway Program. We need the Federal Administration in Washington to start to recognize those efforts and meet us halfway.”

Tony Coscia, vice chairman of GDC and chairman of Amtrak, added, “The Gateway Program Partners continue to go the extra mile to demonstrate the resolve to getting a new tunnel built. We feel strongly that we can work with the FTA and get to a place that funds this project and meets a real need for this nation.”

Port Authority of New York and New Jersey Executive Director Rick Cotton said, “The Port Authority is committed to the success of the Gateway Program. The Port Authority Board has specifically authorized $2.7 billion for this critical project. We are a full partner with GDC in ensuring project sponsorship for the new tunnel project doesn’t miss a beat while the Gateway Development Commission is established and built.”

The plan also includes proposed funding for completion of the third and final section of the Hudson Yards Concrete Casing on the west side of Manhattan, which is fully designed. A request for an environmental determination for this element has been submitted and is awaiting approval from FTA.