Updated: 6 questions about the Gateway Program, answered

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Updated: 6 questions about the Gateway Program, answered

The Gateway Program is like Lucy’s football – long-promised and long-awaited, but always just out of reach.
March 29, 2018

The Gateway program is the Lucy’s football of regional politics – long-promised and long-awaited, but always just out of reach. In 2010, New Jersey Gov. Chris Christie scuttled a plan to construct a tunnel underneath the Hudson River, which had already secured $3 billion in funding. Nearly eight years later, progress towards the project continues to be agonizingly slow. In December, Gov. Andrew Cuomo and Christie reached a tentative funding deal for the tunnel project, but the Trump administration killed the agreement. As the latest federal spending bill included some funding for the program, here are the most important things to know about what the Gateway program is, who’s involved, and how easy it is for the football to be snatched away.

What is it?

The project includes building an additional rail tunnel underneath the Hudson River and repairing existing tunnels. It also involves expanding Penn Station, and replacing the Portal Bridge, which carries NJ Transit trains to and from New York. Construction for the Portal Bridge began in October, with state funding secured and federal funding pending. The Gateway Program, and specifically building and repairing tunnels beneath the Hudson, was a priority for the Obama administration. In 2015, that administration ranked it as the most important rail infrastructure project in the country in 2015, and committed to paying up to half the cost.

How much will it cost?

A report released in July by the Federal Railroad Administration and NJ Transit estimated that the entire Gateway program could cost as much as $29.1 billion, while the tunnel project could cost nearly $13 billion.

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Who are the key players?

Planning for the project is administered by the Gateway Program Development Corp., which was formed in 2016. Its stakeholders include Amtrak, the Port Authority of New York and New Jersey, NJ Transit, and the U.S. Department of Transportation. The corporation originally had four trustees – one representative each from the states of New York and New Jersey, one from Amtrak, and one from the U.S. DOT. However, in keeping with President Donald Trump’s tradition of opposing most policies championed by his predecessor, his administration has backed away from supporting the program. In July, the U.S. DOT pulled out of the board overseeing the corporation. The Trump administration also aims to phase out a grant program that would have provided funds for the project.

In September, Trump met with Cuomo and Christie and a bipartisan congressional delegation from both states to discuss the issue, but no definitive deal was made. According to Regional Plan Association President Tom Wright, the two governors hoped to put pressure on Trump with their new joint proposal.

“I think what they're doing is they're advancing the issue and forcing the federal government to keep playing ball and to stay on the field,” Wright told City & State in December.

Members of New York and New Jersey’s congressional delegations, including Republicans like New Jersey Rep. Rodney Frelinghuysen and Rep. Peter King, pushed for Gateway funding to be included in the omnibus government spending bill passed in March. Although Trump threatened to veto the bill if it included funding for Gateway, the ultimate bill signed by the president included $540 million to be allocated to Amtrak for capital improvements that could be used for the program, as well as grants to the Department of Transportation that New York and New Jersey could apply for.

What was Cuomo's plan?

The agreement reached by Christie and Cuomo specifically addresses the Gateway tunnel project, that is, building the new tunnel under the Hudson and repairing existing infrastructure. Cuomo proposes contributing $1.75 billion from New York using a loan from the federal Railroad Rehabilitation and Improvement Financing program, and designating a portion of the state budget to refinance that each year for 35 years. NJ Transit would provide $1.9 billion, also financed through a RRIF loan. NJ Transit would generate funding for the loan by hiking train fares beginning in 2020. The Port Authority previously committed $1.9 billion to this project, bringing the total contributions to $5.55 billion.

The federal government would be expected to finance the other portion of the project, in addition to providing the loans. Wright said it would be “absurd” for the Trump administration to believe that the RRIF loans would be their only contribution, likening these loans to ones from the bank.

“When I bought my house, I borrowed money from a bank to buy it, but I was still paying for the house, not the bank,” he explained. He also noted that this project fulfills the purpose of RRIF loans, which is to finance railroad infrastructure.

With New Jersey and New York splitting half of the local cost through RRIF loans, the federal half of funding for the Gateway project would have needed direct investment.

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Why did the federal government reject this plan?

Apathy from the White House and animosity from some New Jersey officials dimmed this proposal’s chances for success. According to reporting by Politico New York, the Trump administration is unenthusiastic about Christie and Cuomo’s proposal, which focused on funding for the new tunnel while sidestepping the issue of repairing existing tunnels. The two states also have not yet applied for the RRIF loans upon which their whole plan relies. Crain’s New York Business reported a senior administration official calling this proposal “entirely unserious.” Furthermore, the Trump administration’s infrastructure plan attempted to shift more responsibility for infrastructure projects to the states.

Trump officially scrapped the spoken agreement between the federal government and the states laid out by the Obama administration at the end of December. “We consider it unhelpful to reference a nonexistent 'agreement' rather than directly address the responsibility for funding a local project where nine out of 10 passengers are local transit riders,” a top Federal Transit Administration official wrote. In February, the FTA downgraded Gateway’s importance in its ratings of grant proposals.

The new plan was also hammered by new New Jersey Gov. Phil Murphy and New Jersey Democratic leaders for adding a fee to NJ Transit tickets. However, Murphy has made obtaining funding for Gateway a priority since entering office.

What happens next?

Because the spending bill did not specifically allocate funding for the Gateway program, the Department of Transportation said that it “removes preferential treatment for the New York and New Jersey Gateway projects.” The administration continues to believe that state officials should put more “skin in the game” and contribute more to funding the program.

In an interview with City & State, Scott Rechler, a member of the MTA Board and chairman of the Regional Plan Association, said that state officials should try negotiating Gateway funding on Trump’s terms, as the president has “made it clear that he doesn't want to fund a $30 billion project to the New York region.”

“Let's try to resize the Gateway Project to a level that’s more of the $10-12 billion,” Rechler suggested, adding that the states would have to create user fees to help fund the project. “I would not debate whether or not we should be using Washington's money, I'd go out to the private sector and use that incremental revenue stream to fund bonds on behalf of New Jersey and New York, to fund their half.”

Grace Segers
is City & State’s digital reporter. She writes daily content on New York City and New York state politics.