NEW YORK (CBSNewYork/AP) — The Hudson River Rail Tunnel Project is one step closer to reality.

Officials in New York and New Jersey announced an agreement Thursday to create a corporation to oversee plans to build the tunnels under the Hudson River, a project that is part of a major initiative that could wind up costing more than $20 billion. The target completion date is 2030, CBS2’s Marcia Kramer reported.

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The plan is to build renovate the two current tunnels and build two new tracks between New York City and Newark, doubling the capacity.

Federal officials and Amtrak said they will be responsible for financing half of the project.

New York and New Jersey will cover the rest.

“It’s not good news; it’s great news,” New York Gov. Andrew Cuomo told Kramer. “It’s going to happen.”

Federal and state officials said the entity will be created within the Port Authority of New York and New Jersey. The Gateway Development Corp. will coordinate the project and be controlled by a four-member board with representatives from both states, Amtrak and the U.S. Department of Transportation. A Port Authority member will chair the board, and an Amtrak representative will serve as vice chair.

“This is a pretty major announcement, and it exceeded our expectations,” Tom Wright, head of the Regional Plan Association, told WCBS 880’s Sean Adams. “We’re really pleased about this.”

Cuomo and New Jersey Gov. Chris Christie had sent a letter to Transportation Secretary Anthony Foxx in September pledging their states’ commitment if the federal government picked up half the cost. Sen. Cory Booker (D-N.J.) and Sen. Chuck Schumer (D-N.Y.) have been working with Foxx, and joined in Thursday’s announcement.

“We’ve finally got everybody working together toward a plan. And now we have commitments from both the federal government as well as the two state governments to make this investment and to form an entity that can begin to govern us,” Booker told WCBS 880. “So for a long time, people talking at each other and not really much progress. We are, pun intended, now on the right track.”

“This is a serious problem,” Schumer said. “If we do nothing, in seven to 10 years, the only tunnels that carry rails under the Hudson would collapse. Should these tunnels collapse, there will be a recession, hundreds of thousands will lose their jobs in the Metropolitan area, and there could be a recession in the whole country.”

New York and New Jersey can raise their half of the money by selling bonds or tapping into a federal low-cost loan fund, which charges interest of less than 2 percent.

Schumer had suggested establishing a development corporation in August.

“This agreement marks the first inning of a long game, but it’s a big change that has the federal and state players on the field on the same team, instead of in opposing dugouts,” Schumer said.

The Port Authority will provide primary support staff for the new corporation as well as office space, administrative, technological and logistical support.

“As soon as the federal government delivers the funding we will proceed – because our shovels are ready,” Cuomo said in a statement.

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Thursday’s announcement represents significant progress in the project, which is considered critical for the New York area and for the corridor between Washington, D.C. and Boston, a region that produces about 20 percent of the nation’s gross domestic product.

The existing Hudson tunnel, built more than a century ago, is already at capacity and is a source of regular delays. Additionally, Amtrak officials said last year that the tunnel’s two tubes will eventually have to be taken out of service to repair saltwater damage from Superstorm Sandy in 2012.

“Building this new tunnel is absolutely critical to the long-term vitality of New York and the entire northeast region,”Cuomo said. “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.”

The Hudson River tunnels join a list of a whole reconstruction of the fundamental infrastructure of New York, Cuomo said.

“Second Avenue subway, cross Hudson tunnels, LaGuardia, Tappan Zee, that is the infrastructure of New York and that’s government’s responsibility,” Cuomo said. “It was stalled for a long, long time and now it’s happening.”

Commuters hope the plan pans out.

“It’ll be a miracle if it happens,” one woman told 1010 WINS’ Glenn Schuck. “I’m looking forward to it happening.”

“It’s a big step forward, but I think as a lot of folks know we’ve heard this before, we’ve heard a lot of promises,” one man said. “I think we need to say, ‘OK, where’s the money?’ Then let’s see how that money is used. Let’s see how the construction schedule holds as well.”

“It’s about time. We’ve been waiting for years,” Millburn, New Jersey, resident Jim Kaston said. “Christie blew it when he didn’t do it six years ago.

“I think that’s awesome. The situation right now is really, really difficult,” Red Bank, New Jersey, resident Mike Minor said. “If a wire goes down in the tunnel, it disrupts traffic in both directions.”

A new tunnel is part of Amtrak’s Gateway program, developed after Christie pulled the plug on a previous tunnel project in 2010 over fears of cost overruns. In addition to the tunnel, Gateway envisions an expansion of Penn Station in New York, a new bridge in New Jersey to replace a 105-year-old bridge that is a frequent source of delays, and expand track capacity, among other improvements.

Amtrak has estimated it would take roughly 10 years to finish a new tunnel, and longer to finish all the other elements. NJ TRANSIT has already committed to overseeing an environmental analysis of the project, a process that is expected to take about three years.

Since NJ TRANSIT already did the review for the ARC tunnel project that was scrapped five years ago, it’s too early to know if they’ll follow the same general path for the new project.

“It’s too early to tell,” NJ TRANSIT Executive Director Ronnie Hakim said. “The whole point of the environmental review program is to review alternatives…and to come up with a preferred alternative.”

Hakim said while they value their review on the ARC tunnel, they will try to figure what’s best for Gateway.

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