New Jersey Rail Tunnel Needs Tighter Oversight, Federal Document Says

New Jersey began its stalled $8.7 billion rail tunnel without proper oversight and faces “significant risk” of overruns, according to a document from the U.S. Transportation Department inspector general’s office.

Former Governor Jon Corzine’s administration should have hired a private-sector inspector general to oversee the project when it commenced work in September 2009, the federal officials said in a May 17 report that a state lawmaker released today. Corzine, a Democrat, gave Comptroller Matthew Boxer that responsibility.

Republican Governor Chris Christie on Oct. 7 ordered work halted, saying the project might end up costing $14 billion. Under the original plan, the federal government and Port Authority of New York & New Jersey each were to pay $3 billion for the work, and the state $2.7 billion. Christie said state taxpayers would be “on the hook” for anything more.

New Jersey Transit started the project “despite the benefits and widespread use of integrity monitors in New York and New Jersey,” Joseph W. Come, assistant inspector general for surface and maritime program audits at the Transportation Department, said in the memo. “Based on our years of monitoring major construction projects in the area, we believe NJT should reconsider its decision.”

The Federal Transit Administration’s “decision to award an early systems work agreement may keep the project within budget and on schedule but it is not without significant risk,” Come wrote, without estimating how much the project may go over budget.

Adding it Up

The memo was among more than 150 pages of documents the Christie administration released to Assembly Transportation Chairman John Wisniewski, a Sayreville Democrat who has opposed the governor’s decision, after a public-records request. Wisniewski said the documents don’t support the overruns of as much as $5 billion Christie cited in stopping the project, known as Access to the Region’s Core.

The governor’s spokesman, Michael Drewniak, said the documents were the first of many that will be released on a “rolling basis.”

The report was “among the red flags for the governor,” Drewniak said in an interview.

Calvin Scovel, U.S. Transportation Department inspector general, announced in March that he planned to audit FTA oversight of projects in and around New York. The projects to be scrutinized included the Metropolitan Transportation Authority’s Fulton Street Transit Center, Second Avenue Subway and East Side Access projects, all of which received money from President Barack Obama’s economic stimulus-package.

‘Thin Air’

Olivia Alair, a Transportation Department spokeswoman, declined to comment on the report. David Wonnenberg, a spokesman for the inspector general’s office, didn’t immediately respond to a telephone call and e-mail seeking comment.

Federal officials never justified Christie’s estimates of as much as $5 billion in overruns, Wisniewski said in a statement.

“That claim seems as though it was simply pulled out of thin air by the governor,” the lawmaker said. “The governor is risking New Jersey’s economic future with numbers that, at least according to these documents, have no basis in reality.”

To contact the reporters on this story: Terrence Dopp in Trenton, New Jersey, at tdopp@bloomberg.net; Angela Greiling Keane in Washington at agreilingkea@bloomberg.net.

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

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