Release #026-97

Contact: Colleen Roche (212) 788-2958, Deirdra L. Picou (212) 788-2971or Bernadette O'Leary (212) 312-3523 (EDC)

Mayor Giuliani said, "This initiative is the next step in my administration's efforts to revive New York City as a major shipping center. If successful, these efforts could lead to thousands of jobs, lower costs for goods manufactured in New York, lower prices for consumers, less congestion and diminished transportation costs."

"The City has taken the first steps toward exploring the real possibility of making New York City the future hub port and rail center of the Eastern seaboard," said Deputy Mayor for Economic Development and Planning Fran Reiter. "That could ultimately mean more jobs for New Yorkers and more enhanced opportunities for businesses."

EDC President Charles Millard said, "These preliminary reports indicate that if we build it, they will come. The market potential for New York Harbor is extraordinary, and the logical growth of the harbor to accommodate future markets is on the New York City side."

The decision by Mayor Giuliani to pursue plans for a rail freight tunnel is based on the positive results of a 2-year federally-funded feasibility study entitled the "Intermodal Goods Movement Study" (Rail Study), which looked at ways to improve rail freight access into New York City. Similarly, the next step in developing a New York City Hub Port is predicated on the results of the "New York Hub Port Study" (Hub Port Study), a 5-month feasibility analysis, which compared developing a hub port in either Brooklyn or Staten Island to developing a comparative facility in New Jersey. A hub port is a large port, capable of serving its local market, as well as longer distance inland (intermodal) markets. Hub ports also require deep water to accommodate the large container ships that are to be introduced in the next several years.

As a result of the positive findings of the Rail Study, the City, through its Economic Development Corporation (EDC), has already taken the initial steps to conduct a Major Metropolitan Investment Study (MIS) of a cross-harbor rail freight tunnel. An MIS is required under Federal Intermodal Surface Transportation Efficiency Act (ISTEA) legislation for transportation projects of "regional significance" that are estimated to cost more than $100 million. The recently completed rail freight access feasibility study estimated that a tunnel connecting rail lines in Brooklyn to those in either New Jersey or Staten Island will cost between $800-$900 million. The MIS is estimated to cost over $2 million and will be funded by the federal government along with local matching funds. It will take approximately two years to complete.

While there is no similar federal legal requirement for the development of port facilities, the City is taking the initiative to conduct its own MIS-level analysis for constructing a hub port in either Brooklyn or Staten Island. The City estimates that such a development plan will also cost over $2 million and require 1-2 years to complete.

Rail Study Addresses Need for Increased Rail Freight Access

New York City currently lacks adequate rail freight access, which results in an over-dependence on trucks for the movement of goods. Overall, 3 percent of goods delivered to New York City arrive via rail, while nationwide this figure can reach 30 percent. This discrepancy is primarily the result of the 260- mile detour encountered by New York City-bound freight trains, which must cross the Hudson River at Selkirk just south of Albany and travel south on the east side of the Hudson River. New York's heavy dependence on trucks results in several negative impacts on its local economy, including high maintenance costs for City roads and bridges due to increased wear and tear, increased congestion, high levels of air pollution, and higher costs of goods and raw materials.

The Rail Study evaluated the economic benefits of each rail freight tunnel both with traffic created by a hub port and assuming normal growth within the New York City economy. Economic benefits derived from the tunnel include the following:

• Increased jobs
• Reduced maintenance and construction of highways and bridges
• Reductions in air pollution
• Reduced fuel consumption
• Revenues from user fees

The Giuliani Administration initiated the Rail Study conducted by Mercer Management Company in January of 1995, to address these issues by determining the best investment to improve rail freight activity in New York City. The Rail Study found that a substantial market exists for rail freight service in New York City but it is unrealized due to poor infrastructure. The study identified a potential market of 97 million tons that are divertible to rail. Currently, only about 3 million tons travel to and from New York City by rail. While the study looked at a variety of infrastructure improvements, the alternatives which captured the highest market share were the two rail freight tunnels. Either tunnel would double the amount of rail traffic expected in the City by the year 2020. This increase in rail activity could remove as many as 870,000 truck trips across the Hudson River annually by 2020.

Hub Port Feasibility Study Cites Great Potential for New York City Hub Port

The Hub Port study, which was conducted by Booz-Allen & Hamilton, Inc., found that cargo volumes at a hub port in the Port of New York and New Jersey would increase to approximately 10 million TEUs (20 foot equivalent units or containers), or 4 times its current volume over the next 50 years. This rapid increase in cargo throughput at a New York Hub Port would result in thousands of direct and indirect jobs.

The study's findings are as follows:

• The most expensive hub port alternative is Port Elizabeth at a cost of $4.4 billion -- approximately $3 billion of which is for dredging to 51 feet.
• The Staten Island alternative is the lowest at $1.3 billion and will create 450 acres.
• The environmental problems of blasting bedrock to deepen channels to depths of 50 feet and the lack of maneuvering space for ships could prove to be the single largest barrier to a deep-water port in New Jersey.
• While Port Elizabeth would double in size to approximately 1,800 acres for container storage, only 906 acres of that total would be new capacity.
• At a cost of $4.1 billion, Brooklyn provides the most economic benefits and new capacity with approximately 1,100 new acres for container storage and includes the cost of a dedicated rail freight tunnel connecting New York City to the continental United States.

The analysis shows the benefits of a hub port development to be the greatest at Brooklyn. Total incremental benefits of a hub port development at Brooklyn are approximately $11 billion. Benefits resulting from a Port Elizabeth/Newark development are estimated to be $10.2 billion. A Staten Island development would result in approximately $7 billion.

The Army Corps of Engineers is also conducting a study to determine the optimal depths of channels in the New York Harbor in order to accommodate the larger vessels of the future. While the focus of the study is the deepening of the channels, the Corps will examine land-side improvements to determine the most beneficial location for deep water terminals. EDC will work closely with the Corps to discuss whi ch channels would provide the greatest economic benefit to the region. The results of the hub port study will be utilized in this analysis.

Giuliani Administration Pursues Ongoing Efforts To Bolster Maritime and Rail Economy

These recent studies are the latest of several efforts by Mayor Giuliani to address the needs of New York City's shipping industry.

The City recently provided $14 million to fund dredging efforts to ensure that the Howland Hook Marine Terminal in Staten Island could accommodate depths of approximately 40 feet. After almost a decade of inactivity, Howland Hook received its first ship in November 1996. The terminal is expected to create 250 jobs in its first year of operation.

Last November, the City reached an agreement with an international shipping line, Zim-American Israeli Shipping Co. (Zim), to add 10,000 containers at the Red Hook Marine Terminal in Brooklyn, enabling the facility not only to surpass past annual volumes but to reach an all-time record of 60,000 containers. The expected increase is a dramatic difference from the all-time low of 18,000 containers in 1993.

This past week the City reached an operating agreement with International Terminal Operating Company, Inc., to manage the City's Passenger Ship Terminal, replacing the Port Authority of New York and New Jersey as the Terminal Manager and saving the City and cruise ship lines millions of dollars annually. The agreement makes the Passenger Ship Terminal the only major cruise ship terminal operated by an entity other than a Port Authority or local government.

EDC, acting on behalf of the City, purchased and is refurbishing the Staten Island Railroad in New York City. Once the railroad is completed, it will provide direct rail service to the Howland Hook Marine Terminal and the Pratt/Visy Recycling Plant.

The hub port study was financed by EDC, ESDC and the Brooklyn Borough President's Office. The total cost for the study was $315,000. The City allocated $175,705.50 in funds toward the project. ESDC contributed $75,705.50 and the Brooklyn Borough President provided $63,589 to specifically examine hub port expansion opportunities on the Brooklyn waterfront.

The Intermodal Goods Movement Study was co-sponsored by the Department of City Planning and the Mayor's Office of Transportation and cost $300,000. The Federal Highway Administration provided $240,000, or 80 percent of the study's funding with New York City providing the remaining $60,000.

EDC is the City's primary vehicle for economic development services. Using its real estate and financial resources, EDC helps develop businesses and create jobs throughout the five boroughs.