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.

Major funding pause threatens Gateway tunnel work; Bronx NYCHA partial collapse; New York construction jobs lag and Manhattan leads global costs

Top line

A federal pause in payments has put the future of a $16 billion Hudson River tunnel project into uncertainty, a boiler-related partial collapse shook a 20-story public housing tower in the Bronx, and city construction employment and project costs show contrasting trends that could reshape hiring and building for years.

Gateway tunnel funding pause

The Trump administration pauses disbursements for Gateway tunnel funding, creating immediate uncertainty for a project meant to add a new rail tunnel under the Hudson River linking New York and New Jersey. The pause came as part of a broader budget dispute and a Department of Transportation review tied to diversity, equity and inclusion rules and a government shutdown. The move was described by officials as a pause in disbursements affecting billions in eventual funding for Gateway and for work on the Second Avenue Subway line.

The Gateway project has an estimated cost of $16 billion and has been under construction after decades of planning and fits of political turmoil dating back to a ceremonial groundbreaking in 2009. Thousands of construction jobs and commuters across the Northeast could be affected by continued funding uncertainty. Work on the tunnel is continuing for the short term because of the way the project is budgeted, but the mere threat of withholding funds could influence future hiring and materials ordering decisions for firms involved in the project.

A bi-state agency overseeing the tunnel said it is focused on keeping the project on scope, schedule, and budget and described the action as a pause in disbursements. The Metropolitan Transportation Authority said it was being asked to immediately review compliance with newly cited rules and that the administration appears to be inventing excuses to delay a major infrastructure project. A Department of Transportation budget proposal earlier in the year set aside roughly $700 million for the tunnel in early phases, but the timing and scale of future disbursements are now unclear.

Bronx NYCHA partial collapse after likely boiler explosion

A partial collapse occurred at a New York City Housing Authority building in the Bronx following a likely boiler explosion in a 20-story building at the Mayor John Purroy Mitchel Houses complex. The brick chimney that ran the 20-story length of the building crumbled after an explosion at 8:10 a.m. No injuries or fatalities were reported.

The boiler room was undergoing a routine test when the explosion occurred, and gas service for all 11 structures in the 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 planned some demolition on the remaining chimney to access the building’s basement.

The Mitchel complex was built in 1966 and will need nearly $717.5 million worth of changes through 2044. Building heating renovations on the Mitchel change list were estimated at almost $116.6 million over the next two decades, with work to include high-efficiency gas boilers. New local rules will phase out fossil fuels in affordable housing under seven stories starting in December of this year and will apply to all affordable housing in 2027.

City construction jobs, spending and the cost of building in Manhattan

New York City’s construction industry remains smaller than it was before the COVID-19 pandemic. In 2024 the city averaged 143,100 construction jobs, an 11% decrease from 161,300 jobs in 2019. The slower recovery in the city left the state 4% below its 2019 construction employment levels, a shortfall that was among the largest in the nation.

Residential spending surpassed 2019 levels by 2023, reaching $22.8 billion, while nonresidential spending was $22.2 billion in 2023, a figure 3% lower than in 2019 and projected to fall further in 2024. Industry analysts expect nonresidential work to rebound in the current year and in 2026, helped in part by lower interest rates and several large public and private projects.

A consultancy found Manhattan to be the most expensive construction market on the planet, with costs averaging $534 per square foot for new buildings. Comparisons included San Francisco at $512 per square foot, Los Angeles at $445, Tokyo at $431, London at $500, and Amsterdam at $296 per square foot. Industry reasons for high costs include higher land and financing costs, difficult logistics to move materials and labor into Manhattan, customized marquee buildings, high union and prevailing wage costs, and complex permitting and code requirements.

Labor remains a key driver: metropolitan area unionization rates are high compared with national averages, and hourly wages are higher than the national rate. The industry also faces an aging workforce, fewer young entrants, and tighter immigration that may reduce the flow of skilled labor.

Other industry and market notes from the supplied materials

• KKR, GrowthCurve and Main Capital are among private-equity firms making investments in the construction software subsector.
• The site offers limited access to industry news, analysis and data, plus regular email updates.
• Nearly there! A verification email is on its way to you. Please check your spam or junk folder just in case.
• Email address not recognised. Don’t have an account? Click here to register.
• Need help signing in? Issues with signing in? Click here.
• Don’t have an account? Register now.
• To register, users must review and accept terms and conditions and a privacy notice.
• Event notices in the materials include an October 29-30, 2025 event at Convene Brookfield Place, 225 Liberty, New York, and a February 22-25, 2026 event at JW Marriott, Orlando Grande Lakes.
• Copyright lines in the provided text included a notice reading Copyright PEI Media and a line reading Not for publication, email or dissemination.

Why this matters now

The pause in federal disbursements for Gateway comes at a sensitive time for workforce planning and materials procurement across the region. The partial collapse at a public housing site highlights aging systems and the scale of capital needs in public housing. High building costs in Manhattan and an uneven job recovery in the city shape what projects get built, who those projects hire, and how fast they move.

What to watch next

• Whether federal disbursements resume and on what schedule for the Gateway tunnel and related projects.
• Inspections and repair progress at the Mitchel Houses complex and system-wide heating upgrades for NYCHA.
• Hiring trends for nonresidential construction in the city and the impact of major public programs and tax incentives on rebuilding and conversions.

FAQ

{
“@context”: “https://schema.org”,
“@type”: “FAQPage”,
“mainEntity”: [
{
“@type”: “Question”,
“name”: “What happened to Gateway tunnel funding?”,
“acceptedAnswer”: {
“@type”: “Answer”,
“text”: “Trump administration pauses disbursements for Gateway tunnel funding”
}
},
{
“@type”: “Question”,
“name”: “How much does the Gateway tunnel cost?”,
“acceptedAnswer”: {
“@type”: “Answer”,
“text”: “The Gateway tunnel project has an estimated cost of $16 billion.”
}
},
{
“@type”: “Question”,
“name”: “Did the pause affect work right away?”,
“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 partial collapse of a residential tower corner in a New York City Housing Authority building in the Bronx was due to a likely boiler explosion.”
}
},
{
“@type”: “Question”,
“name”: “Were there injuries in the Bronx incident?”,
“acceptedAnswer”: {
“@type”: “Answer”,
“text”: “No injuries or fatalities were reported from that partial collapse.”
}
},
{
“@type”: “Question”,
“name”: “What are the key employment figures for city construction?”,
“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 Manhattan?”,
“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 user messages appeared on the supplied site text?”,
“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 registration messages appeared on the supplied site text?”,
“acceptedAnswer”: {
“@type”: “Answer”,
“text”: “Email address not recognised. Don’t have an account? Click here to register.”
}
}
]
}

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 NY News

NEW YORK STAFF WRITER The NEW YORK STAFF WRITER represents the experienced team at constructionnynews.com, your go-to source for actionable local news and information in New York 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 New York Build Expo, infrastructure breakthroughs, and cutting-edge construction technology showcases. Our coverage extends to key organizations like the Associated General Contractors of New York State and the Building Trades Employers' Association, plus leading businesses in construction and real estate that power the local economy such as Turner Construction Company and CMiC Global. As part of the broader network, including constructioncanews.com, constructiontxnews.com, and constructionflnews.com, we provide comprehensive, credible insights into the dynamic construction landscape across multiple states.