On November 4, the U.S. Transportation Secretary Pete Buttigieg signed a document promising $3.4 billion in mostly future appropriations to New York City to extend the Second Avenue Subway an additional 1.76 miles, from its existing terminus at 96^th Street up to 125^th Street in East Harlem.

Secretary Buttigieg stated that “Extending New York’s Q line to East Harlem has been a project decades in the making. The new stations we’re funding will make it easier and more affordable for residents in this area to get to work, school, medical appointments, and so much more.”

The document, called a Full Funding Grant Agreement (FFGA), is not legally binding on USDOT because neither the executive branch nor Congress can, constitutionally, promise that future Congresses will make appropriations for particular programs, or allocate those appropriations to specific projects, without creating an “entitlement,” which the executive branch cannot do on its own. But in the past, Congress on a bipartisan basis has treated these agreements as morally binding and has provided the appropriations when needed.

Congress has already appropriated, and the Federal Transit Administration allocated to this project, $450 million of the promised $3.405 billion through the end of fiscal 2023, leaving $2.955 billion of future federal appropriations to go. The document signed by Buttigieg promises $496.8 million in fiscal 2024 appropriations, followed by $307.3 million per year of future appropriations in each of the eight following years (FYs 2025-2032).

Both the $3.405 billion total and the $307.3 million per year annual draw would be, we believe, the largest in the Capital Investment Grant program’s history. But next year, the Administration hopes to dwarf that by signing a $6.88 billion FFGA for the Hudson River Tunnel, the annual draw from which would be well in excess of $307 million.

The project is expected to enter revenue service on September 30, 2032, at which point it will carry 111,500 daily linked passenger trips. Sponsors anticipate that to grow to 123,000 trips per day by the planning horizon year of 2040. Trains would run 24-7, every three minutes during peak periods, every five minutes during weekday off-peak and evenings, and every six minutes on weekends.

As to where the federal $3.4 billion would go, it would pay 44.2 percent of the estimated $7.7 billion cost of the project. The CIG grants would pay for 51.7 percent of all construction costs and all professional services costs, 36.9 percent of the “contingencies” fund (the budgeting for the cost overages that always happen), and none of the finance charges.

Still, the total project cost estimated under this FFGA is $4.37 billion per mile, far above the amount paid for new subway extensions in the rest of the U.S., much less in cities like London, Paris, or Tokyo.

The main culprit appears to be the cost of the stations, which are already 45 percent of the total $7.7 billion cost, and which are far above the average for U.S. rail projects in Eno’s Transit Cost Database.