SANTA CRUZ, Calif. — A proposal to delay construction on a key stretch of the Coastal Rail Trail has raised alarms among state regulators, who are warning that millions in state funding could be withdrawn if the project doesn’t move forward as planned.
On Thursday, the Santa Cruz County Regional Transportation Commission (RTC) will take up the issue as part of a broader discussion on the project’s financial challenges and the need to identify cost-saving strategies.
The trail, designed to run 32 miles along the county’s rail corridor from Davenport to Watsonville, received significant state support in 2022, including a major grant from the California Transportation Commission to build seven miles from Santa Cruz to Aptos (Segments 8–11). But cost estimates have since surged due to inflation, engineering complexities and construction requirements in dense coastal neighborhoods.
The project now faces a multi-million dollar funding gap, putting schedule and scope at risk.
In an Oct. 28 letter to the commission, Santa Cruz County Regional Transportation Commissioners Manu Koenig, Fred Keeley and Eduardo Montesino said state grant managers warned that part of the funding could be rescinded if the current delay proposal moves forward.
The state requires a completed design and secured right-of-way by the end of 2025. Any phase reduction may be viewed as noncompliance with the original agreement.
The commission previously rejected a lower-cost proposal to build the trail directly on the railroad tracks, instead choosing a coastal trail alongside rail to preserve future passenger transit.
But officials acknowledged that the design-on-tracks approach:
Commission staff noted in a report that the threat of lost funding “could revive a past proposal to construct a trail atop the tracks.”
This design change would trigger railbanking, a lengthy legal process requiring state approval and threatening long-term plans for passenger rail.
At Thursday’s meeting, commissioners are expected to:
However, no immediate decision on redesign is expected.
Trail alignment has long been one of Santa Cruz County’s most politically divisive transportation issues, pitting:
1. Trail-first advocates who want cost and safety prioritization
2. Rail supporters aiming to reduce highway congestion and emissions
The latest funding setback could reignite those debates.
Commission member David King previously described the city’s limited leverage in federal development battles, saying:
“We have very limited options as a city … at the end of the day, our legal options are limited.”
Though unrelated, his sentiment reflects how infrastructure decisions are often made under major financial and political pressure.
The RTC must determine whether:
1️⃣ It can fully fund and deliver the project as designed, or
2️⃣ Begin exploring alternative alignments to meet grant deadlines
A final decision is expected later this winter, as the project approaches critical compliance milestones.
Originally reported by Jesse Kathan in Santa Cruz Local.
