A crucial infrastructure deal to fund a multi-billion-dollar rail tunnel under the Hudson River suffered a major setback Friday, after the Trump Administration announced the project relied on a "non-existent" agreement to secure federal funding.

The tunnel is part of the larger Gateway Project and would build a two-track commuter tube for Amtrak and New Jersey Transit trains traveling between New Jersey and New York Penn Station -- among the busiest transit hubs in the country.

But the Federal Transit Administration said Friday it did not recognize the agreement struck under former President Obama that would have the federal government kick in half of the bill, according to a letter sent to New York and New Jersey officials.

"There is no such agreement," FTA Deputy Administrator K. Jane Williams wrote. "We consider it unhelpful to reference a non-existent 'agreement' rather than directly address the responsibility for funding a local project where 9 out of 10 passengers are local transit riders."

A copy of the letter was published online by Crain's New York.

Williams wrote she had "serious concerns" about the first phase of the project that asked for $11.1 billion from the federal government. "Your proposal also overlooks that 50% would be considerably higher than much existing precedent for past 'mega projects,'" she said.

The Gateway project also calls for other infrastructure improvements, including the replacement of the 107-year-old Portal Bridge over the Hackensack River, a Penn Station New York Annex, two extra tracks between Newark and the tunnels and a loop for Bergen County trains to access the tunnels.

Officials involved in with Gateway remained optimistic a new deal could be struck.

"There is no doubt the Administration understands the economic significance of the Hudson Tunnel Project, and the urgency of moving this forward for the Boston-Washington corridor," Christie spokesman Brian Murray said Saturday. "We are confident that, as the White House advances an infrastructure proposal this year, federal funding for the most important transportation project in the United States will be addressed."

Christie has previously expressed confidence that the federal government would follow through on its promise to fund the $30 billion project.

"I am confident this will be one of his (Trump's) priorities. He's lived here ... he knows how important it is," Christie said in October.





Gov. Andrew Cuomo's office deferred comment to the Gateway Program Development Corporation.

"There is no more urgent infrastructure project than Gateway, and posturing aside we are confident that the Trump Administration will engage with us as the President turns to infrastructure in 2018," according to a spokesman for the corporation, which oversees the project.

Karen Yi may be reached at kyi@njadvancemedia.com. Follow her on Twitter at @karen_yi or on Facebook.