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After two-week review, Christie kills ARC tunnel, again

By , - Last modified: March 2, 2011 at 2:55 PM

Gov. Chris Christie again canceled the NJ Transit tunnel to Manhattan, two weeks after he gave a reprieve to the project he suspended, citing cost overruns.

Christie said the state did not have the money for the project, known as Access to the Region’s Core, due to irresponsible spending in the past by officials from both parties.

“The bill has come due for that irresponsible conduct,” Christie said.

Christie said the economic harm to North Jersey in halting the project would be less than the damage done to the state in paying for cost overruns.

U.S. Transportation Secretary Ray LaHood offered several scenarios to mitigate the cost, Christie said. He offered to cover $378 million in overruns — representing one-third of the low-range estimate for overruns; to arrange for low-interest federal loans to cover the cost; and for private investors to cover some of the cost in return for unspecified fees.

But Christie said none of these options would prevent the state from being responsible for the majority of overruns.

The current version of the project originally was budgeted at $8.7 billion, with the state responsible for $2.7 billion, the Port Authority of New York and New Jersey responsible for $3 billion, and the federal government paying $3 billion. However, the state committed to cover overruns, which the federal government estimated at between $1.9 billion to $4.8 billion. In addition, federal officials estimated a one-in-six chance that the overruns would exceed $4.8 billion, and only a 10 percent chance they would be less than $1.9 billion.

While the New Jersey Chamber of Commerce had supported the tunnel construction, Michael Egenton, its senior vice president, said the state’s finances made it difficult to move forward.

“The governor’s decision is probably the right course of action if the money’s not there,” Egenton said.

But the decision was immediately denounced by Democratic legislators, with Assemblyman John S. Wisniewski (D-Sayreville) saying the project would have provided 6,000 immediate jobs, as well as reduced congestion and increased economic development and property values.

“The governor has tossed that potential aside, failed to articulate a reasonable alternative and delivered a brutal blow to New Jersey’s economic future,” Wisniewski said.

The move also was criticized by the nonprofit New Jersey Future, which works on planning issues.

“We are not setting the stage for growing our economy by avoiding critical infrastructure investments — investments that will only become more costly in the future,” said Peter Kasabach, executive director of New Jersey Future.

Christie said he would like the state to be a partner with Amtrak in its proposal for a separate tunnel that would connect at New York Penn Station. The ARC tunnel would have ended at a new station near Penn Station.

Our Point of View: Tunnel will funnel away N.J. finances

The governor said he doesn’t know how the state will spend the money it saves by ending the ARC project. He said that state transportation officials have been working on this issue, which has delayed work on funding the state’s Transportation Trust Fund.

Roughly $600 million has been spent on the ARC tunnel. Federal officials may ask the state to reimburse the federal government for the $350 million it spent on the project.

E-mail Andrew Kitchenman at akitchenman@njbiz.com.

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