RTC commissioners bristle at ‘daunting’ price tag for passenger train, sparking concerns about who will pay for it

Several regional transit commissioners balked Thursday at the price tag and ridership projections of a proposed passenger rail project that could require local taxpayers to shoulder up to $148 million in annual costs and potentially trigger a sales tax hike to pay for it.

“In my mind, the primary goal with this entire study was to determine whether or not the project is feasible,” District 1 County Supervisor Manu Koenig said during a Santa Cruz County Regional Transportation Commission meeting at which commission staff outlined details of the planned Zero Emission Passenger Rail and Trail project. “I think we have an answer. It’s not.”

Last week, RTC staff published a draft executive summary of its project concept report that pegged the cost of building a rail service at $4.283 billion. The plan envisions hydrogen trains running 22 miles between Santa Cruz and Pajaro, stopping at nine stations and serving 3,500 to 6,000 riders a day. It could cost between $34 million and $41 million a year to operate, the report said. 

RTC executive director Sarah Christensen said the county should plan to cover at least 20% of the $4.283 billion price tag, or more than $850 million. 

Koenig, plugging the figures into ChatGPT, and assuming 5% interest over a 30-year payback period, said the county would need to come up with $70 million per year just for the capital cost on the low end and $148 million on the high end. He said that would mean introducing a 2% or a 2.75% sales tax increase in an area with already high sales taxes.

“This takes all the oxygen out of the room for funding any other service, pretty much ever again,” he said. “So that’s pretty daunting.”

Commissioner and District 2 County Supervisor Kim De Serpa questioned the likelihood of securing federal grants in the current political climate, and also pushed back on the idea of introducing another sales tax. She said that improving roads should be prioritized and advocated for railbanking — or ripping up the tracks with the possibility of reinstalling them at a future date for train use.

De Serpa asked Christensen if she thought the project was feasible.

“I will not say this project is infeasible, I will say any project is feasible with enough money and community support,” said Christensen. “This is an ambitious project, you are correct. But if we prioritize this project over other needs, and we are serious about delivering this project, our team is going to figure out how to get it done.”

Commissioner and Scotts Valley City Councilmember Steve Clark estimated that for a 234-passenger train similar to the one mentioned in the draft report to carry 3,500 daily riders, it would have to be filled to capacity 15 times a day, and 25 times a day to reach 6,000 daily riders. 

Chris Breiland of San Jose-based firm Fehr & Peers said he wouldn’t expect the train to be full at all times, but argued that the ridership projections “are within the range of similar systems around the country.”

Santa Cruz Mayor Fred Keeley, who sits on the commission, requested that RTC staff prepare a report estimating how much of the cost of building and operating the train local taxpayers would have to shoulder under different funding scenarios – from taxpayers being on the hook for 20% of the costs up to half the costs of building the train, along with paying for the full costs of operating the rail service. He also requested that staff identify taxes that would fit those models. Koenig added an amendment for staff to research how competitive the county’s train proposal would be in securing grants compared to other systems that have recently received grant funding. Commissioners unanimously approved the motion. 

Commissioner and District 3 County Supervisor Justin Cummings was more optimistic. He said the agency had been very successful in securing funding in the past, even when some said it wouldn’t happen. However, he asked that staff factor population growth into its projections when possible, as Santa Cruz and Watsonville expect to see more homes and residents in the coming years. Cummings also asked if there was a way to plan for any cost savings, should they be necessary.

Mark McLaren of Nebraska-based engineering firm HDR, Inc. said that as the project advances, the team would actively pursue ways to do things more efficiently if possible. He said the team working on the project will continue exploring ways to “refine the cost,” but added that the estimates are reasonable considering all the elements of both the rail and trail projects.

Public comment brought both supporters and detractors. Those against the project also cited the big price tag as a reason to not move forward, with some residents calling the train a waste of public funds. Supporters acknowledged the daunting cost figures, but said they believe that the long-term benefits outweigh any short-term drawbacks, and that the commission should at least complete the study with a full financial analysis to get a true picture of the project. 

The train has been extremely divisive within the community for years now. A 2022 ballot initiative, Measure D, sought to ditch the plans for a train and solely pursue a paved bike and walking path on the Santa Cruz Branch Rail Line, while advocating for railbanking. It lost, with more than 70% of voters opting to keep language in the county’s general plan that included planning for a passenger train service on the rail line.

More than two years later, the divide persists and has bled into the Coastal Rail Trail planned to run alongside the rail line. In 2024, the county board of supervisors initially voted against two sections of the trail, citing environmental and project cost concerns, much to the dismay of train proponents, who said that accumulating delays would only add to the cost in the long run. The sections were ultimately approved later that year. Meanwhile, residents of two mobile home parks that lie adjacent to the rail line have threatened legal action over the RTC’s request that they move their homes or other features encroaching along the line.

A finalized project concept report is expected in the fall.

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