LaHood Says He'll Discuss New Jersey Train-Tunnel `Options' With Christie

Los Angeles and other governments may go after the $3 billion in federal funds that New Jersey Governor Chris Christie will forgo if he stands by his cancellation of a Hudson River train tunnel, officials interviewed at a White House briefing said.

U.S. Transportation Secretary Ray LaHood said today he plans to continue discussions with Christie to salvage the enterprise originally estimated at $8.7 billion. Two Democrats who were transportation secretaries for presidents George W. Bush and Bill Clinton said Christie, a Republican, was making a mistake in killing the largest U.S. infrastructure project.

Christie, 48, suspended construction on the tunnel on Sept. 10 amid concerns that the project’s price had risen as much as $5 billion. He canceled the project outright Oct. 7, and ordered work already done dismantled. He agreed the next day to give LaHood two weeks to present options for salvaging it.

“It boggles my mind that a state could refuse that kind of investment,” Los Angeles Mayor Antonio Villaraigosa said in an interview after a speech on public-works spending by President Barack Obama. “California, particularly Los Angeles, is ready to fill the void.”

‘New Jersey’s Loss’

Norman Mineta, a Democrat who was transportation secretary for former Republican President Bush, called Christie’s decision short-sighted. Rodney Slater, transportation secretary in Democrat Clinton’s administration, predicted Christie will reconsider.

“It’s New Jersey’s loss when something like this happens,” Mineta, who is now a vice chairman at the Washington consulting firm Hill & Knowlton, said in an interview at the White House. “It’s a lost opportunity for them.”

LaHood declined to specify what he might offer Christie to reconsider a project the governor said isn’t financially viable.

“I believe over the next couple of weeks, he will listen to the options we will present,” LaHood told reporters at the White House.

LaHood could relieve financial pressure on the state by offering federal aid for other projects, or could promise expedited reviews of the tunnel, Mineta said.

Shoring Things Up

New Jersey, the third-most indebted state in the U.S. behind California and New York, according to Moody’s Investors Service, is scheduled to borrow $1.4 billion for transportation projects Oct. 13 and 14. The bond issue will exhaust the borrowing capacity of the state’s Transportation Trust Fund to support new projects after next year, because the entire $895 million dedicated to the fund annually will be needed for debt service through 2026, bond documents show.

Killing the tunnel would enable Christie to shore up the trust fund using $1.25 billion in borrowing capacity backed by New Jersey Turnpike Authority tolls. The capacity is now earmarked for the Hudson project.

“There are not billions of extra dollars lying around to cover cost overruns that were not honestly built into the cost estimates,” Mike Drewniak, Christie’s spokesman, said today by e-mail. “It’s that simple.”

The tunnel, the largest mass-transit project in the history of the Federal Transit Administration, according to spokesman David Longo, would be an 8.8-mile (14-kilometer) conduit under the Hudson River to double the number of commuter trains to New York at peak times.

To contact the reporters on this story: Angela Greiling Keane in Washington at agreilingkea@bloomberg.net;

Dunstan McNichol in Trenton, New Jersey, at

dmcnichol@bloomberg.net

To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net

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