Seven miles of the planned 32-mile rail trail were largely funded by a grant from the California Transportation Commission. But cost estimates have since soared, and the project now has a multi-million dollar shortfall. (Nik Altenberg — Santa Cruz Local file)

SANTA CRUZ >> Following a proposed plan to put off construction for part of the Coastal Rail trail from Santa Cruz to Aptos, state regulators signaled that they may take back some of the money granted for the project in 2022.

On Thursday, the Santa Cruz County Regional Transportation Commission is set to discuss the threat of losing funding and consider cost-cutting measures for construction.

Seven miles of the planned 32-mile rail trail were largely funded by a grant from the California Transportation Commission. But cost estimates have since soared, and the project, which includes Segments 8 to 11 of the trail, now has a multi-million dollar shortfall. 

In October, the commission considered plans to initially construct only part of the stretch as a possible solution to avoid losing part of the $96.6 million grant. The grant requires a final design and right of way by the end of this year.

In an Oct. 28 letter to the commission, Regional Transportation Commissioners Manu Koenig, Fred Keeley and Eduardo Montesino wrote that they met with members of the state commission, and that the grantors signaled that they may rescind part of the grant if the full trail is not built. 

The prospect of losing money could revive a past proposal to construct a trail atop the tracks, rather than beside them. That design would halve costs by eliminating some retaining walls and viaducts, and eliminating the need to buy additional land, commission staff wrote in a report.

At its Thursday meeting, the regional transportation commission is set to discuss the letter, but is not expected to make a decision about the trail design. They will also review a spending plan for a state grant that would dedicate $2.8 million for the rail project.

In 2024, the Santa Cruz County Board of Supervisors and the regional transportation commission both voted to construct the trail alongside the tracks. Reversing that decision would require railbanking the trail, a lengthy process that removes the legal requirement to keep the tracks in place, and requires state approval. It would also disrupt plans for passenger rail service on the rail corridor.

Some members of the regional transportation commission have recommended against pursuing plans for rail, following reports from commission staff that a train could cost $4.3 billion and would likely require a sales tax hike. 

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