Facing rising costs, RTC moves to issue bonds to finance highway, rail trail projects

The Santa Cruz County Regional Transportation Commission approved the issuance of up to $75 million in bonds to finance both a Highway 1 expansion project and the Coastal Rail Trail as costs continue to rise, with the condition that the transit agency will pay them back with future Measure D sales tax revenues.

The $75 million in bonds is split into two categories: $50 million for the highway category and $20 million for the active transportation category – in this case, the rail trail. 

Measure D is a half-cent sales tax over 30 years that county voters approved in 2016. It brings in about $27 million annually for various transportation needs.

The Highway 1 expansion project involves new auxiliary lanes — lanes that connect highway on- and off-ramps, allowing vehicles more space to merge. Some of those auxiliary lanes will also do double duty as bus-on-shoulder lanes, which allow buses to use the auxiliary lanes to bypass traffic. The project is split into three phases, the first stretching from Soquel Drive in Live Oak to 41st Avenue in Capitola, the second running from Bay Avenue/Porter Street in Soquel to State Park Drive in Aptos and the third going from State Park Drive to Freedom Boulevard. The bonds are mostly aimed at financing the latter phase.

The 32-mile Coastal Rail Trail is a bicycle and pedestrian path envisioned to stretch from Davenport through Watsonville. While always a hot topic locally, the commission made a major design reversal in December 2025. Due to soaring costs of building next to the tracks as originally planned, it decided to build trail segments 9 through 11 directly over the Santa Cruz Branch Rail Line.

Commissioner Andy Schiffrin, County Supervisor Justin Cummings’ alternate, expressed his general dislike of bonding, due to interest payments, and said he wasn’t sure why the commission would need to bond for the rail trail segments.

“I don’t think we should bond unless we need to bond,” he said. “Having a bunch of money sitting in the bank that we’re paying interest on that we’re not using is not necessarily the best way forward.”

The fact that the commission approved the drastic cost-saving change to build the segments over the rail line did not rectify all of the financial complications, RTC planner Grace Blakeslee said.

“We want to stick to the schedule that we have for delivery of those segments,” she said. “We do not have the pay-as-you-go capacity in these early years to advance the [Segments 9 through 11] project, and that’s why we’re pursuing bonding.”

Several public commenters were critical of the proposed bonds, mostly because they disapprove of the Highway 1 expansion project. Throughout its development, the effort has been criticized for failing to address traffic effectively. In 2024, the Sierra Club and local transit advocacy group Campaign for Sustainable Transportation sued state agency Caltrans over the project, citing an inadequate environmental impact report.

“I came from Los Angeles when they built the 14-lane Santa Monica freeway, and within 10 years, it was a parking lot at rush hour,” said one public commenter. “I think folks are earnest in trying to do something that’ll help, but this is proven not to be the way to go.”

County resident Brett Garrett pointed to comments submitted by former RTC executive director Linda Wilshusen that similarly argue that the project will not provide meaningful traffic relief, that Phase 3 of the project was not included in the original Measure D, and that the move will take away funds from other potential highway projects in the future.

Resident Debbie Bulger shared the same criticism.

“Taxpayers cannot afford this enormous expenditure,” she said. “Measure D money should be used for road repair, neighborhood safety projects, transit and active transportation. Not for widening the highway that we did not vote for.”

Have something to say? Lookout welcomes letters to the editor, within our policies, from readers. Guidelines here.