Bloomberg News

New Jersey to Reimburse U.S. for $95 Million of Tunnel Money

September 30, 2011

(Updates with status of interest and penalties in fifth paragraph.)

Sept. 30 (Bloomberg) -- New Jersey Governor Chris Christie agreed to reimburse the U.S. Transportation Department $95 million for money the state was supposed to use to build commuter-rail tunnels under the Hudson River.

Christie killed the project in October 2010, prompting the department to seek repayment of $271 million in federal money the state had spent on it.

The first-term Republican was one of a few U.S. governors to reject federal transportation money on the grounds that providing needed matching funds would be too expensive. He also said New York state and city weren’t putting in enough money.

The agreement “represents a fraction of the federal government’s initial claim and won’t cost New Jerseyans any additional money,” Christie said in a statement.

The five-year repayment schedule for the $95 million would be offset by more than $100 million in refunds on liability insurance to cover contractors and subcontractors, Michael Drewniak, a spokesman for Christie, said by e-mail. New Jersey will not have to pay $2.65 million in interest and penalties accrued since DOT rejected the state’s appeal of its order to repay the $271 million in April, Drewniak said in an e-mail.

The deal builds on an agreement, reached last December between the Transportation Department and New Jersey Democratic senators Frank Lautenberg and Robert Menendez, that the state wouldn’t have to pay back $128 million of the $271 million, according to a statement released by Lautenberg’s office. The state must spend the $128 million on other department-approved transit projects, according to an e-mailed statement from the transportation department today.

“The governor’s decision to kill the ARC tunnel project will hurt New Jersey in the long-term, but we were happy to work with the Department of Transportation to help reduce the costs of this mistake,” the senators said in the statement.

Known as Access to the Region’s Core, the initiative was meant to double the number of commuter trains that can enter New York during peak times. Work on the tunnel began in 2009.

In February Amtrak proposed its own effort to expand access to Manhattan for commuter and intercity passenger trains. The U.S. passenger rail service was awarded $450 million in transportation department grants in April to start work.

--Editors: Bernard Kohn, Ted Bunker

To contact the reporters on this story: Lisa Caruso in Washington at lcaruso7@bloomberg.net; Terrence Dopp in Trenton at tdopp@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net


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