Carmageddon: Fred Keeley and Manu Koenig believe they’ve found a ‘peace deal’ on rail and trail

Santa Cruz Mayor Fred Keeley and District 1 County Supervisor Manu Koenig have held opposing views on passenger rail for some time now. But with the Coastal Rail Trail project facing serious cost overruns and time constraints, the two say they have come to a “peace deal” that provides a way forward for both the rail and the trail.

Both Koenig and Keeley sit on the Santa Cruz County Regional Transportation Commission, which faces escalating costs and long delays on construction of a roughly 8-mile stretch of the rail trail from the Santa Cruz Municipal Wharf to State Park Drive in Aptos. The project’s price tag has ballooned to $228 million. Even after the RTC gave the project over $8 million in funding in November, that section of the trail still faces a shortfall of more than $70 million.

MORE RAIL & TRAIL: Lookout news coverage | Community Voices opinion

Any delays or changes to the project caused by the funding issue could jeopardize at least some of a $96.6 million grant from the state for the rail trail, the largest active transportation program grant ever awarded by the California Transportation Commission. The grant requires those stretches of the trail, segments 8 to 11, to start construction in 2027. If the project misses that deadline, the entire grant could be taken away. Commissioners and staff had also previously discussed changing the project to cut costs, but that would likely require building less trail, which could also potentially cause the state agency to take back some of the grant funding.

Koenig and Keeley’s proposal to get out of the sticky situation? Build those stretches of trail on top of the railroad tracks, a design known as the “interim trail,” instead of the option that the county and the commission had committed to: the “ultimate trail” design, which would construct the trail alongside the rail line. 

Building over the tracks would likely keep the project within budget, as county planner Rob Tidmore told a September RTC meeting. What’s more, Keeley and Koenig say the RTC can pursue the interim trail without railbanking — a controversial issue that some fear could kill plans for a passenger rail. The two politicians plan to introduce their idea at the Dec. 4 RTC meeting.

Railbanking is theoretically the practice of taking a rail line out of service while still preserving the rail corridor for possible future train use. But it usually happens alongside abandonment of a rail line, and there have been very few cases where rails that have been abandoned and banked and actually returned to rail service.

Instead of railbanking, under Koenig and Keeley’s plan, the commission could use other bureaucratic maneuvers — processes with names like embargo, affirmative order, or discontinuance — that essentially allow the RTC to take part of the rail line out of service temporarily. Those processes are often used when a section of a rail line needs repairs or upgrades. 

Although these designations sound a lot like railbanking, Keeley and Koenig say there are meaningful differences. Most important, Keeley said, is that railbanking usually turns out to be permanent while the other processes are designed to be temporary, even if they end up being used long term.

Beyond being considered a way to permanently get rid of a rail line, railbanking is typically a lengthy process, Koenig added. Designating a line that’s out of service as embargoed or discontinued, meanwhile, would be much quicker — probably months rather than years. 

While Keeley knows that raising the prospect of the interim trail might concern rail supporters, he said that the very real possibility of losing the $96.6 million state grant has changed the landscape of rail vs. trail debate.

If that were to happen, both rail supporters and trail-only proponents would end up losing, Keeley said, because the state would likely not trust the county with future grants due to its failure to deliver this project. That could include funding for a train. He argues this option “allows everybody to get a win, even if it’s not the win they were looking for, because the alternative is everybody gets a permanent loss.”

The two believe their “peace deal” is a sensible strategy to continue studying the feasibility of passenger rail while building the trail within the budget and timeline of the state grant.

“It allows us to meet that deadline without requesting additional time extensions,” Keeley said. “You can certainly request time extensions from the California Transportation Commission, but it doesn’t have to grant them.”

Keeley thinks the five major players in this issue — the RTC; rail operator Progressive Rail; Roaring Camp, which runs trains along the same line; and pro- and anti-rail advocacy groups Friends of the Rail and Trail and Greenway — will agree with the proposal.

“There may be one or more of these parties who can’t support that, but they understand that among the options available and what’s at risk, this is way better than losing all the funding for the rail and being in a huge fight that clarifies nothing going forward on the rail,” he said. “If we can get as many of them to support as we can, or at least not oppose, we think that a peace treaty that people of goodwill can see is the best path.”

Koenig said that it isn’t clear which option the commission will choose if the two politicians’ proposal is accepted, but he and Keeley expect whatever temporary option the commission goes for will likely last for at least 20 years, because the state grant requires the constructed trail to have a 20-year lifespan. 

Keeley said that, if the commissioners approve the proposal, it will be the commission’s responsibility to convince the public that this idea is different from railbanking and abandoning the rail line.

“The public should ask the question of what the difference is, because it’s our job to help them understand that,” Keeley said. “People weren’t born with that knowledge.”

Progressive Rail, the Minnesota-based company that operates the rail line, has consistently opposed railbanking. It isn’t entirely clear how the company would respond to a more temporary option, both Koenig and Keeley said. However, the two agreed that if Progressive opposes the idea, the RTC could move to scrap its contract with the rail company and step in to become the rail operator. Not because it wants to, but because the commission would rather do that than lose the grant.

Koenig alleged that Progressive is already violating its contract with the RTC. Under the agreement, the company is required to deliver 200 or 300 cars of freight each year, he said, but is currently delivering fewer than 100.

“It makes no sense to me to allow a railroad company in Minnesota who is very difficult to work with to be in a position to blow up a vision this community has,” Keeley said. “I’m not eager to have the RTC be a rail administrator, but I’m less eager to lose everything.”

Trail segments 13 through 20 are still under development from State Park Drive in Aptos all the way to Watsonville, but are still a ways out from breaking ground. Could Keeley and Koenig’s proposal open the door for the RTC to build the interim trail all the way to Watsonville? They can’t say for sure, but it’s not entirely out of the question.

“This is a predicate to getting to those questions later on, since they aren’t even in design,” said Keeley. “I think it’s at least possible that’s where it goes.”

Despite how divisive the issue has been for the community in recent years, Keeley and Koenig say they hope that they’ve found a way to bring together both sides of the trail and train debate as much as possible.

“I think it’s been clear over recent months there’s an opportunity to settle this issue with a compromise that I think works for, if not everyone, at least most people,” said Koenig.

Latest news

Check out our Carmageddon road project list here. This week, pay particular attention to:

• Roadway improvements are shutting down one lane of Highway 9 between Willow Brook Drive and the northern junction of Highway 236 starting on Monday and lasting through May 20, 2026. Work hours are between 8 p.m. to 6 a.m. and 9 a.m. to 3 p.m. on Mondays through Thursdays.

• Striping is shutting down northbound Highway 17 off-ramps at Pasatiempo Drive and Mount Hermon/Glen Canyon Road and the southbound Highway 17 off-ramp at Pasatiempo Drive from 9 p.m. to 6 a.m. on Monday and Tuesday.

• Emergency sewer work in Soquel Village could occasionally block access to driveways, sidewalks, on-street parking and interrupt sewer service on weekdays until June 30, 2026, on Soquel Drive, Porter Street and Main Street. Work on Soquel Drive will be overnight from 8:30 p.m. to 5:30 a.m. and from 9 a.m. to 3 p.m. on Porter and Main streets. Other, shorter-duration potholing on Porter, Main and Center streets, along with Daubenbiss Avenue, will take place from 8:30 a.m. to 4:30 p.m.

• Paving and electrical work is shutting down the northbound Highway 1 on-ramp at Main Street and the off-ramp at Airport Boulevard overnight between 9 p.m. and 6 a.m. from Monday through Friday.

• Drainage, striping work and guardrail repair are shutting down the northbound and southbound Highway 17 off-ramps at Pasatiempo Drive and Mount Hermon Road overnight from Monday through Friday between 8:30 p.m. to 6 a.m. 

• A full closure of the Murray Street Bridge will run until February 2026. It is closed to vehicles, bicycles and pedestrians. Vehicle traffic detours are along Soquel Avenue and Capitola Road via Seabright Avenue and 7th Avenue. Bicycles are being detoured across Arana Gulch and along Broadway via Seabright Avenue and 7th Avenue. Pedestrians are being detoured around the north harbor.

• The installation of the Newell Creek Pipeline on Graham Hill Road between Summit Avenue and Lockewood Lane is taking place on weekdays from 8:30 a.m. to 4 p.m. and could cause delays of up to five minutes.

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