Costs Escalate for New York City’s “Hub to Somewhere”

The US taxpayer is currently on the hook for “only” about $2.2 Billion for New York City’s new transportation hub. However, it has been reported that while over $174 million has been spent for architects and engineers, no construction has yet begun. Nor does the report indicate where the funds will come from for the latest cost escalation. It would be reasonable to expect that additional funding will be requested from the taxpayer.

The latest details are contained in a 70 page report issued October 2, 2008 by the Port Authority of NY and NJ.

In 2004 the transportation hub project was unveiled with a projected cost of $2.2 Billion. In this, the latest round of re-estimates, the projected costs for the hub have now risen to $3.2 Billion. However, as no construction has yet begun and as construction is not scheduled for completion until the “probabilistic date” of the second quarter of 2014, it is also reasonable to assume that the costs will further increase. The report states that for the period 2004 to 2007, construction costs in NYC increased at the rate of 12% per year. The project is not even scheduled to go to market for the purchase of steel until “as early as” November 2008.

To put the cost of the hub into perspective, the cost of the “One World Trade Center, Freedom Tower” is currently projected to be less than the hub, at $3.1 Billion!

Cost projections include additional payments of $128 Million to the architects, for a total bill of about $302 Million for design. It is to be noted that the taxpayer’s money is administered through the Federal Transit Administration. A FTA spokesman has been quoted as saying that the design cost of "10% for design is consistent with best practices.” The report acknowledges however, that the FTA “has long called for greater project controls and a candid and on-going assessment of where this project stands.”

The report states that “If you consider how much value this money is buying, it begins to put the cost into perspective”.

The hub is intended to be a “Grand Central Station” for lower Manhattan and will be 800,000 square feet in size. However, according to the report, the hub will include “500,000 square feet of first class retail and restaurant space [which is] larger than the retail contained in the Time Warner Center” and is “a world-class retail venue serving all of lower Manhattan.”

As further stated in the report, this hub is to help “revitalize the Lower Manhattan Economy.”

I have to ask the question whether or not this is a good use of taxpayer money. While other communities all over the USA are struggling, the taxpayer is footing what could be argued to be most of the bill to construct a world-class shopping mall for Manhattan.

Note: After this was posted, a decision was made by the owners of the World Trade Center site in which they announced "scaled back designs for ...[the] transit hub....and delay...[of] other projects by several years...costs will still be more than $1 billion over budget".