Frantic behind-the-scenes dealings could resuscitate Hudson River tunnel project

A tale of politics, planning and spending that could have lasting consequences on a critical corridor

The white, twin-engine Gulfstream IV jet lifted quickly off the runway, banking purposefully toward Trenton like a cruise missile seeking its target.

On board, the anger had yet to fully subside. Just 24 hours earlier, the governor of New Jersey had killed the nation’s largest public transit project — a crucially needed rail tunnel under the Hudson River connecting New Jersey and New York that had been in the planning for more than two decades. He had done so without even waiting to hear from the guy who had already agreed to write him a $3 billion check to help pay for it.

The federal transportation officials on the special flight were still stunned and furious. Some saw it as a naked, seat-of-the-pants political play, made without regard to the long-term consequences. Others wanted to pressure Gov. Chris Christie in an all-out media offensive. "Slam the (expletive)," said one official the previous night.

But U.S. Transportation Secretary Ray LaHood, rebuffed the day before when he asked Christie to wait before taking any action, was calm as the jet settled on its path heading north.

"We’re going to find a way to fix this," he confidently told his team.

Hours later, emerging from a private meeting with Christie in the State House, LaHood, his salt-and-pepper hair brushed back and dark eyes revealing nothing, strode past waiting reporters without a word. And the governor’s office put out a short statement late Friday afternoon, saying only that there would be a brief reprieve for the multi-billion-dollar tunnel project to study new options presented by the secretary.

No one will say publicly what was discussed.

Those familiar with the turn of events, however, say what was put on the table offered a menu of possibilities literally drafted off the back of an envelope on the flight up, which were enough to give the governor at least brief pause. Options included design proposals discarded earlier in the planning process; minor route realignments; staging construction in segments, with non-essential elements of the project held off for later; and alternative financing proposals, such as public-private partnerships.

The governor’s office declined comment, as did LaHood’s.

A state transportation spokesman also would not answer questions. "We’re not going to negotiate this in the media," said NJ Transit spokesman Paul Wyckoff.

The account of what transpired, though — pieced together through interviews with officials and aides in New Jersey, New York and Washington who were both intimately involved in the process and not authorized to discuss what they know — described a frantic effort to turn a decision some thought inconceivable, even after they knew it was coming.

It is a tale of politics, transportation planning, government spending, and overspending, that could have long-lasting — if not permanent — consequences on one of the most congested and critical corridors anywhere on Earth.

And it all came down to a remarkable, 36-hour rush of behind-the-scenes activity that may yet save a project designed to open a bottleneck on growth in the metropolitan region, or see it written off as a lost opportunity overtaken by the timing of a recession that has shrunk government budgets beyond the point anyone would ever have been able to image.

TWO GROWING PROBLEMS

In Trenton on Thursday, Christie was still reveling in the glow of national attention and Republican superstardom as he took a brief hiatus from a month-long political tour, during which he had been barnstorming the nation on behalf of GOP candidates.

The tunnel for him had long been a back-burner issue; a project that was begun a generation ago.

Officially known as the ARC, or Access to the Region’s Core, Trans-Hudson Express Tunnel, it was designed to more than double passenger rail capacity between New Jersey and New York.

Christie had initially supported the project during his election campaign. But now in office as governor, he was being confronted with two mounting problems. The costs of the tunnel were continuing to escalate. The price tag had gone up from $5 billion to $8.7 billion in just the past few years, and now the Federal Transit Administration was referring to it as a $9 billion to $10 billion project.

While the federal government had already pledged $3 billion, and the Port Authority of New York and New Jersey had earmarked another $3 billion, the rest was coming out of the state’s pocket. Christie wasn’t sure he had the money.

At the same time, the state Transportation Trust Fund — which would be tapped to cover the shortfall — was nearly broke. Not only was it all but bankrupt, but the governor had to find additional money for the fund, which also pays for road and bridge repairs and transit services. And raising the gas tax to do that was an anathema to a governor who ran on a promise of no new taxes.

Canceling the tunnel would solve both problems. The state would not have to fund the project, and it would free up billions for the trust fund.

Christie — riding a wave of national popularity built on the combination of his government-cutting bona fides and his tough-guy-from-Jersey image — was already leaning toward killing the project as far back as June, say those close to him.

Last month, in a decision that startled transportation advocates and Washington, Christie abruptly suspended the project after more than half a billion dollars had already been spent. But it was not until last week that he made the final decision to cancel.

The actual timing of the governor’s final decision caught many off guard — including those in Washington. And it came as the governor was suffering through a public flogging at the hands of one of his own — the man he had chosen to lead his push to reform education. Bret Schundler had been fired in August in a dispute over a failed $400 million federal grant.

Thursday morning, Schundler was telling the Senate under oath that the governor lost the federal funding because of a vendetta against the state’s leading teachers union. And as Schundler’s testimony was reaching toward its third hour in a Statehouse committee room, the governor’s office sent out a news alert, summoning reporters for an announcement.

The topic was not specified, but it was quickly learned that Christie was killing the ARC tunnel.

Christie denied he timed his announcement to steal Schundler’s thunder, but political observers said it couldn’t have been mere coincidence since less than 24 hours earlier the governor had said he didn’t know when he would have enough information to make his decision.

LaHOOD GETS THE NEWS

In Washington on Thursday, LaHood was preparing to leave town for a Friday morning event planned in Florence, S.C., when word came in to his offices at the new Department of Transportation headquarters on New Jersey Avenue that Christie that day was going to actually pull the plug, say those who were close to the situation.

About 12:30 p.m. on Thursday, only minutes after his staff alerted the media about the impending 1:30 p.m. news conference, Christie phoned LaHood. The governor was not looking for assistance or money; he just wanted to notify the nation’s top transportation official that the biggest project he had going was being shut down.

"Can you make time for me tomorrow?" LaHood asked calmly.

"You want to come see me? Come and see me," the governor responded.

LaHood suggested 1:30. Done, Christie said.

But Christie had already made his decision.

A press release was issued: "Christie Administration Enforces Budget Discipline and Protects New Jersey Taxpayer Dollars. ARC Project Executive Committee Unanimously Agrees New Jersey Can’t Afford ARC Project and Recommends Immediate Termination..."

The governor’s office cited figures that suggested the ARC tunnel project could top $11 billion or even $14 billion.

"The ARC project costs far more than New Jersey taxpayers can afford and the only prudent move is to end this project," declared the governor.

LaHood and his top aides huddled over Christie’s announcement. The group was well aware of Christie’s reputation, the national political tour he had been on in recent weeks and his status as a main attraction and rising star in the Republican Party. Some around the secretary, according to those aware of the meeting, suggested Christie was little more than schoolyard bully who had to be put back in his place through the public-relations strength that can be mustered by a member of the president’s Cabinet.

"We should slam him," one of LaHood’s advisers thought out loud. "Start talking about the thousands of jobs lost, all that."

However, LaHood apparently was not ready for that. A Republican and former longtime congressman from southern Illinois, LaHood — once a social studies teacher — had built a career on bipartisanship and being able to work with politicians of all stripes. It’s how he came to know President Obama and his first chief of staff, Rahm Emanuel, when they all served in Congress. And it’s the brand he brought with him to the DOT. LaHood told his team they could reason with Christie, say sources briefed on the meeting.

They first set an itinerary: D.C. to South Carolina early in the day; then back on the plane and go to Trenton. The secretary’s team had Thursday night and two flights on Friday to figure out what to say to the governor.

But first, they felt they had to find out from Christie how he arrived at his estimate of cost overruns. They weren’t naïve enough to believe that $8.7 billion was going to be the final sum, but they couldn’t believe their ears when they were hearing numbers in the neighborhood of $5 billion more than that.

Tunnel projects are enormous endeavors and burrowing under the surface of Manhattan is both complicated and costly.

"The bottom line is that these jobs are expensive," said Gary Brierley, a tunneling expert and president of Brierley Associates LLC of Denver. "You’re dealing with Mother Nature and it has a lot to do with how Mother Nature behaves."

At the same time, tunnel projects take a long time and inflation may lead to increases in the costs, like steel and concrete.

The Big Dig tunnel project in Boston went billions over cost. Yet despite those increases, it raised the more important issue to Brierley — the potential benefit of any infrastructure project.

"Infrastructure is extremely valuable," said Brierley. "What’s the value of New York’s subways? What’s this tunnel going to be worth in 10 years?"

MEETING WITH CHRISTIE

LaHood arrived in Trenton at the appointed time and wound up waiting only a few minutes for the governor. The group gathered in Christie’s private inner sanctum. The governor was in shirtsleeves; the rest kept their suit jackets on. All were seated around the governor’s conference table, Christie at the head as always.

First came the small talk preliminaries, recalled those briefed on the discussion. Christie told LaHood that he had met the secretary’s son in Peoria last week while traveling the country on behalf of GOP candidates. LaHood said he knew that the governor and his kid had crossed paths and that the two had posed for a photo together.

Then, the talk turned serious. Peter Rogoff, the administrator of the Federal Transit Administration, told Christie he wanted answers. He wanted to know how the governor arrived at his estimates for the overruns and suggested certain pieces of the project — like the Portal Bridge South project — should not be included.

The Portal Bridge is an unreliable, two-track, 100-year-old swing span over the Hackensack River owned and operated by Amtrak that has long been considered a bottleneck for rail traffic into New York. The bridge mechanism frequently jams and speed restrictions cause considerable delays.

As part of the ARC tunnel, the project anticipated building a second bridge known as Portal Bridge South at an estimated cost of $775 million, which was made a condition of the federal approval for the tunnel itself.

Christie and his team responded that putting certain pieces on a different ledger would be meaningless if the state was still responsible to pay the bill.

Looking to calm the increasingly tense situation, LaHood turned on his inner politician. He tried to find out where they could agree. And if so, how?

"We need to know if you’re willing to look at options," LaHood said. What he was asking was whether Christie was philosophically and intractably opposed, or would the governor be willing to agree to the project if the numbers worked.

Christie had been growing more skeptical about the tunnel since May, when his handpicked guy at the Port Authority, former state Sen. Bill Baroni, started telling him the numbers were ticking upward at a disturbing pace.

The governor also was never thrilled that the project required a new station in New York and had Amtrak and NJ Transit terminating in different locations.

Still, he said he was not committed to opposing the project, citing the long list of serious battles that have defined and continue to mark his young administration. "You can only break so many eggs in this job," Christie told LaHood.

That was the opening LaHood was looking for, and he proposed a period of time for everyone to look at some of the options his staff had come up with. He threw out some back-of-the-envelope ideas, none of which was new to the New Jersey side of the discussions.

How about a 50-cent ticket surcharge for commuters?

Christie said he knew that concept and had already dismissed it in light of the recent toll hikes that are hitting hard the very same commuters who might one day be aided by ARC.

What about the Port Authority?

Christie went back to a theme he had been talking up in the press, explaining that the Port Authority is not some mystical force that manufactures cash and runs airports and bridges through divine right. He told LaHood that hitting Port Authority fee-payers is no different than hitting New Jerseyans directly.

They talked about scaling back the project somehow or seeking other partners — like the city or state of New York.

They agreed that both sides would look over the proposed options. The secretary’s aides asked for four weeks. Christie shot that down without a blink.

"Two weeks," the governor offered.

LaHood, after a career in the hard-edged world of Illinois politics, knew the score and quickly chimed in: "Two weeks it is."

They also hammered out a framework for a public comment that would emerge from the session, agreeing that neither side would talk about the details and would tell the public only that the talks were productive.

Nothing had changed in terms of the project. It was still too expensive and not financially viable, the governor said in his statement. But they agreed to take a second look.

As they broke, up the bottom line was reinforced by the governor.

"We have to work on the money," he said.

By Josh Margolin and Ted Sherman / The Star-Ledger