NEW YORK CITY—Officials from New York and New Jersey announced a critical agreement that will help finance the construction of the multi-billion dollar Amtrak Gateway Tunnel project.

New York Gov. Andrew Cuomo and New Jersey Gov. Chris Christie also announced the formation of the Gateway Development Corp., which they say will help both states leverage billions of dollars in federal grant and loan funding for the project that has been estimated to cost between $15 billion to $20 billion to build.

The funding agreement announced late Wednesday calls for the US Department of Transportation and Amtrak to cover no less than 50% of the project costs via grants and other federal funding. New York, New Jersey and the Port Authority of New York & New Jersey would provide funding for the remaining 50% of the project costs. The states and the Port Authority through the new development corporation will pursue a low interest loan from the Railroad Rehabilitation & Improvement Financing and the Transportation Infrastructure Finance and Innovation Act that will allow them to access capital as inexpensively as possible. According to the joint announcement they will lobby to make sure that payment of debt service will be deferred to the time when the Gateway project is placed into service.

Gov. Cuomo says of the latest agreement on the Gateway project, "Building this new tunnel is absolutely critical to the long-term vitality of New York and the entire northeast region. We have been working to break the federal logjam and get the federal funding that this massive undertaking requires, and for the first time, with this agreement, our partners in Washington are putting real dollars—not just loans—on the table."

He notes that once the federal government delivers its promised funding, "We will proceed, because our shovels are ready."

State officials say that the 50-50 funding agreement was made possible by U.S. Sens. Charles Schumer (D-NY) and Cory Booker (D-NJ) who secured an agreement from the USDOT to finance 50% of the tunnel project.

The concept of creating the development corporation came from a proposal by Sen. Schumer on Aug. 11 to establish a Gateway Development Corp. that would be a collaborative partnership of tunnel stakeholders. In addition, Sen. Booker convened a meeting on Aug. 18 with US Sen. Robert Menendez (D-NJ), Gov. Christie and US Transportation Secretary Anthony Foxx to discuss governance and funding for the project.

Sen. Schumer says of the new agreements, "It was a long struggle but getting all the parties on the same page is a very big first step. We will scour every part of the federal government to get our 50% and we know the states will do the same. The Gateway Development Corporation, which we proposed in August and provides a way for all four key stakeholders to work together effectively, is the best way to get this project moving."

"Since the meeting I convened in my Newark office on August 18, this group has put forward tremendous effort to find an equitable funding and governance structure for the Gateway Development Corporation," Sen. Booker says. "This agreement is a significant step forward for the Gateway project, which because of the current tunnel's deteriorating condition and growing demand is among our nation's most important infrastructure projects."

The federal share of funding for the project is likely to come from a combination of New Starts grant dollars, Amtrak Northeast Corridor profits, Amtrak capital funds, annual appropriations, and other federal sources. In addition, the federal partners may utilize a low interest federal loan to lower the cost of capital for their share, for which Amtrak and/or their federal partners or federal designees take responsibility for debt service payments.

All project partners say that they plan to work together to expedite all environmental and planning approvals needed to bring the project online as soon as possible. However, in the announcement they did not release a projected date that project might break ground.