The first construction contract for a new rail tunnel under the Hudson River in New York has been awarded to Ferreira Construction by the New Jersey Transit authority.

The $13.6m contract will create a railroad underpass at Tonnelle Avenue in North Bergen, where the new rail tracks will begin their descent under Palisades Mountain and then the Hudson River.

Governor Jon Corzine said that the project was now in an advanced phase.

“When completed, we will have a lasting infrastructure investment that benefits the environment by relieving congested roadways and provides better workforce mobility to stimulate business growth and job opportunities in the region,” he said.

The project, known as Access to the Region’s Core, or ARC, will double rail capacity to Midtown and benefit commuters in Orange and Rockland counties in New York as well as North Jersey.

NJ Transit and its partner, the Port Authority, have committed $5.7bn toward ARC and are seeking $3bn from the Federal Transit Administration.