Federal pause snarls Gateway tunnel funding and pressures NYC construction

New York City, October 3, 2025

News Summary

Federal officials have paused disbursements tied to the $16 billion Gateway tunnel amid budget disputes and an administrative review of DEI-related spending, leaving billions held and threatening schedules and thousands of construction jobs. Work continues in the short term but mounting uncertainty could delay the Hudson River rail link and ripple through procurement and hiring. Separately, a 20-story Bronx public housing tower partially collapsed after a suspected boiler explosion with no reported injuries. New York City’s construction sector remains below pre-pandemic employment levels and Manhattan is the world’s most expensive building market, adding cost and timeline pressure.

Federal pause clouds Gateway tunnel, Bronx public housing damaged, and New York construction faces cost and job pressures

Major federal actions have created immediate uncertainty for a key rail project linking New York and New Jersey. The Trump administration paused disbursements for the Gateway tunnel project, a new Hudson River tunnel linking New York and New Jersey with an estimated cost of $16 billion. The pause stems from a broader federal funding dispute and a Department of Transportation review tied to diversity, equity and inclusion rules and a government shutdown, creating a hold on billions that will eventually be needed to finish Gateway and another large transit project in New York.

Work on the tunnel is continuing for the short term because of the way it is budgeted, but the pause in disbursements has added another obstacle to a project that has been in planning and partial construction for decades. Thousands of construction jobs and commuters across the Northeast could be affected if federal payments remain uncertain. The bi-state agency overseeing the tunnel said it is focused on keeping the project on scope, schedule, and budget and described the federal move as a pause in disbursements.

What the funding pause means now

The Department of Transportation outlined that it was reviewing spending because of DEI issues and because of the shutdown, and that review was being paused, creating a holdup for billions eventually needed to finish Gateway and the Second Avenue Subway. A short-term work continuation is possible because of current budgeting, but the timeline and long-term funding remain unclear. Industry groups and labor leaders warn that the mere threat of withholding funds could prompt firms to change hiring and materials-ordering decisions, which could ripple through schedules and costs.

History and context

The new Gateway tunnel is meant to supplement an existing tunnel beneath the Hudson River that is over a century old and already slows trains between New York and New Jersey. The tunnel idea was ceremonially advanced in 2009, then stalled when New Jersey pulled funding in 2010. The project was revived after Hurricane Sandy flooded the old tunnel and prompted renewed federal-state cooperation. A Department of Transportation budget proposal earlier in the year had set aside $700 million for the tunnel in early phases of construction.

Bronx NYCHA partial collapse tied to boiler test

A partial collapse at a public housing building in the Bronx occurred after a likely boiler explosion during a routine test. The brick chimney running the 20-story length of the Bronx building crumbled after an explosion at 8:10 a.m. No injuries or fatalities were reported. Gas service for all 11 structures in the Mayor John Purroy Mitchel Houses complex was turned off on the morning of the incident. Inspectors examined the foundation and went door-to-door in the damaged building to ensure apartments were structurally sound. Teams will perform some demolition on what remained of the chimney to access the building’s basement.

The Mitchel complex was built in 1966 and is among many New York City Housing Authority properties that face significant capital needs. The Mitchel complex will need nearly $717.5 million worth of changes through 2044, and planned building heating renovations are on the Mitchel change list and will cost almost $116.6 million over the next two decades. Local Law 154 will prevent affordable housing under seven stories from using fossil fuels for heating, cooking, or cleaning starting in December of this year and will apply to all affordable housing in 2027.

City construction jobs lag and Manhattan remains the world’s costliest market

The construction industry in New York City remains smaller than it was before the COVID-19 pandemic. In 2024 New York City averaged 143,100 construction jobs, an 11% decrease from 161,300 jobs in 2019. While residential spending surpassed 2019 levels by 2023, reaching $22.8 billion, nonresidential spending was $22.2 billion in 2023, which is 3% lower than in 2019. The nonresidential sector was projected to fall further in 2024 by another $572 million, though industry groups expect a rebound in the current year and growth in 2026 as interest rates ease.

A consultancy report found New York City is the most expensive construction market on the planet, with cost per square foot for new buildings averaging $534. Comparable figures include San Francisco at $512 per square foot, Los Angeles at $445, Tokyo at $431, London at $500, and Amsterdam at $296. Industry explanations for the high costs include higher land and financing costs, the difficulty of moving materials and manpower into Manhattan, complex marquee projects, strong union agreements, and specialized labor requirements driven by sustainability and code mandates.

Local labor characteristics amplify costs: the metro area’s construction unionization rate is 24.7%, compared with a national rate of 13.7%. Hourly wages for the construction industry in the New York City area averaged $39.44 versus $30.73 nationwide in a recent survey. A sizable share of the skilled workforce is aging, with over one-third of workers 50 or older and only 6% under 25. Federal immigration policy shifts that reduce immigration could further constrain the labor pipeline.

Operational and permitting pressures

Permitting delays and reductions in staffing are cited as practical bottlenecks. Construction-related employees at the Department of Buildings fell from 662 in March 2021 to 519 in March 2024, and it was taking the city 70% longer to approve permits in June 2024 compared to June 2021. These delays add financing and overhead costs and can slow projects that would create jobs.

Other industry notes and events

Private-equity firms such as KKR, GrowthCurve and Main Capital are among investors in the construction software subsector. The industry calendar includes an event scheduled for October 29-30, 2025 at Convene Brookfield Place, 225 Liberty, New York, and another scheduled for February 22-25, 2026 at JW Marriott, Orlando Grande Lakes. The site where some of these items were pulled together offers limited access to industry news, analysis and data, plus regular email updates. To register, users must review and accept terms and conditions and a privacy notice.

The content collection also included typical web UI messages for users: Email address not recognised. Don’t have an account? Click here to register. and Nearly there! A verification email is on its way to you. Please check your spam or junk folder just in case. The material carried a copyright notice referencing PEI Media and a line reading Not for publication, email or dissemination.

FAQ

{
“@context”: “https://schema.org”,
“@type”: “FAQPage”,
“mainEntity”: [
{
“@type”: “Question”,
“name”: “What happened to the Gateway tunnel funding?”,
“acceptedAnswer”: {
“@type”: “Answer”,
“text”: “The Trump administration paused disbursements for the Gateway tunnel project, a new Hudson River tunnel linking New York and New Jersey with an estimated cost of $16 billion.”
}
},
{
“@type”: “Question”,
“name”: “Is work on the Gateway tunnel continuing now?”,
“acceptedAnswer”: {
“@type”: “Answer”,
“text”: “Work on the tunnel was continuing for the short term because of the way it is budgeted.”
}
},
{
“@type”: “Question”,
“name”: “What caused the partial collapse at the Bronx NYCHA building?”,
“acceptedAnswer”: {
“@type”: “Answer”,
“text”: “The brick chimney running the 20-story length of the Bronx building crumbled after an explosion at 8:10 a.m.”
}
},
{
“@type”: “Question”,
“name”: “Were there injuries from the Bronx incident?”,
“acceptedAnswer”: {
“@type”: “Answer”,
“text”: “No injuries or fatalities were reported from that partial collapse.”
}
},
{
“@type”: “Question”,
“name”: “How many construction jobs does New York City have now compared to before the pandemic?”,
“acceptedAnswer”: {
“@type”: “Answer”,
“text”: “In 2024 New York City averaged 143,100 construction jobs, an 11% decrease from 161,300 jobs in 2019.”
}
},
{
“@type”: “Question”,
“name”: “How expensive is building in New York City?”,
“acceptedAnswer”: {
“@type”: “Answer”,
“text”: “Turner & Townsend consultancy report found New York City is the most expensive construction market on the planet, with cost per square foot for new buildings averaging $534.”
}
},
{
“@type”: “Question”,
“name”: “What are the upcoming industry events listed?”,
“acceptedAnswer”: {
“@type”: “Answer”,
“text”: “An event is scheduled for October 29-30, 2025 at Convene Brookfield Place, 225 Liberty, New York. An event is scheduled for February 22-25, 2026 at JW Marriott, Orlando Grande Lakes.”
}
},
{
“@type”: “Question”,
“name”: “What do users see on the registration UI?”,
“acceptedAnswer”: {
“@type”: “Answer”,
“text”: “Email address not recognised. Don’t have an account? Click here to register.”
}
},
{
“@type”: “Question”,
“name”: “What happens after signing up on the site?”,
“acceptedAnswer”: {
“@type”: “Answer”,
“text”: “Nearly there! A verification email is on its way to you. Please check your spam or junk folder just in case.”
}
},
{
“@type”: “Question”,
“name”: “What is required to register on the site?”,
“acceptedAnswer”: {
“@type”: “Answer”,
“text”: “To register, users must review and accept terms and conditions and a privacy notice.”
}
}
]
}

Key features at a glance

Deeper Dive: News & Info About This Topic

Additional Resources

• Politico: Federal pause snarls funding for Gateway tunnel
• Wikipedia: Gateway Program
• ENR: Partial apartment building collapse in NYC possibly triggered by boiler
• Google News: Bronx Mitchel Houses boiler explosion
• Crain’s New York: NYC construction jobs still below pre-pandemic levels
• Encyclopaedia Britannica: New York City construction (search)
• Commercial Observer: New York City construction labor costs 2025
• Google Scholar: Manhattan construction costs
• Syracuse.com: New York’s ban on gas equipment in new homes is coming
• Google Search: New York ban on gas in new homes

Author: Construction CA News

CALIFORNIA STAFF WRITER The CALIFORNIA STAFF WRITER represents the experienced team at constructioncanews.com, your go-to source for actionable local news and information in California and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as the Rose Parade, Coachella, Comic-Con, and the California State Fair. Our coverage extends to key organizations like the California Building Industry Association and Associated General Contractors of California, plus leading businesses in technology and entertainment that power the local economy such as Apple and Alphabet. As part of the broader network, including constructionnynews.com, constructiontxnews.com, and constructionflnews.com, we provide comprehensive, credible insights into the dynamic landscape across multiple states.