UPDATE 1-Amtrak, N.J. discussing new rail tunnel options

* Rail agencies would consider new new tunnel design

* Governor had killed largest U.S. infrastructure project

* Unclear how Amtrak would fill billions in financing gap

* New Jersey seeks to downplay importance of the talks
(Adds background, details)

By Jon Hurdle

PHILADELPHIA, Nov 8 (BestGrowthStock) – Amtrak is in preliminary
talks with New Jersey’s public transit agency to study new
options for building a passenger rail tunnel between Manhattan
and New Jersey after an earlier project was killed over cost
concerns.

Any project would be a new undertaking rather than a
revival of the $8.7 billion tunnel project that New Jersey
Governor Chris Christie killed late last month, saying the
state could not afford likely cost overruns he said could reach
$4.8 billion.

“We have been talking with them ever since the (previous)
program was put in jeopardy,” Cliff Cole, a spokesman for the
U.S. national passenger railroad, said on Monday.

The tunnel controversy has symbolized a national debate on
how to stimulate the stubbornly weak U.S. economy, with
liberals arguing for more public spending and conservatives
saying the country needs to reduce government spending and keep
taxes low.

That played out in the Nov. 2 election in which Republicans
seized control of the House of Representatives and narrowed the
Democratic majority in the Senate.

The previous tunnel would have been America’s largest
public works project, creating 6,000 construction jobs at a
time U.S. employment is 9.6 percent. Construction had already
begun, and about $600 million had been spent over eight years
on design, engineering and digging.

When he killed the tunnel, Christie urged NJ Transit, the
state transit agency and manager of the project, to work with
Amtrak on new passenger rail optionss with new financial
sources.

DOWNPLAY TALKS

A spokesman for Christie sought to downplay the importance
of the current talks, saying the tunnel project as originally
envisioned was dead and that routine discussions were taking
place after the governor asked transportation authorities to
“explore fiscally viable alternatives for a trans-Hudson
tunnel.”

“As such, we will continue to explore solutions to the
trans-Hudson transportation challenge,” spokesman Michael
Drewniak said in an email.

Under the original financing deal, which was agreed to
before Christie took office, New Jersey would put up $2.7
billion, the Port Authority of New York and New Jersey $3
billion, and the federal government $3 billion. Any overruns
would be paid by New Jersey.

Paul Wyckoff, a spokesman for New Jersey Transit, described
the talks as a “preliminary and exploratory” consideration of
new ideas and not a revival of the former project. The U.S.
Department of Transportation declined to comment.

Cole declined to comment on any financing options that may
be available to Amtrak, which depends on U.S. government
subsidies to operate.

To persuade Christie to reconsider his decision to kill the
project, U.S. Transportation Secretary Ray LaHood offered $358
million more in cash, low-interest railroad loans and possible
participation by private industry — and said ending the
project was “a devastating blow” to the state.
(Reporting by Jon Hurdle; Editing by Daniel Trotta, editing
by Philip Barbara)

UPDATE 1-Amtrak, N.J. discussing new rail tunnel options