U.S. News

U.S. bills New Jersey $271 million for tunnel costs

WASHINGTON (Reuters) - The Obama administration wants prompt repayment of more than $270 million in federal grant money dedicated to New Jersey for a rail tunnel to Manhattan that became a political flashpoint when the state withdrew from the project.

In a letter sent on Monday to New Jersey Transit Executive Director James Weinstein, the Federal Transit Administration (FTA) said the state “must immediately repay all the federal assistance” spent so far on the project canceled by Gov. Chris Christie due to costs.

This includes $271 million, plus interest and penalties, that already had been sent to the state. In addition, FTA is canceling nearly $80 million in funds that were scheduled to be delivered.

The Obama administration had promised a total of $3 billion in financing for the commuter rail project, which would have become the nation’s largest public works undertaking. The state and the New York and New Jersey Port Authority were also going to put up funds.

The tunnel between New Jersey and Manhattan became a charged symbol during the just-completed congressional elections of Democratic efforts to stimulate the economy and Republican aims to cut spending.

Christie said in October that New Jersey could not proceed with the $8.7 billion project due to billions in projected cost overruns that would be borne by the state.

New Jersey Transit is reviewing the request and assessing its options, according to a statement that noted the agency “does not agree” that Washington made a clear-cut case in its letter.

Reporting by John Crawley; Editing by Eric Walsh