Santa Cruz Passenger Rail
Show Me the Money
By Sebastion “Seb” Frey
Normally in this space I write about our local real estate market – but this month’s column focuses on what has become one of the most contentious pieces of real estate in Santa Cruz County: the Santa Cruz Branch Line Rail Corridor.
Nine years ago, in October of 2012, the Santa Cruz County Regional Transportation Commission (the RTC) completed the purchase of the rail corridor from Union Pacific Railroad. The corridor had fallen into disuse after the rail line’s sole significant customer, the Cemex cement factory in Davenport, shut down in May of 2010.
The tussle over the future of the corridor began even before the ink was dry on the final paperwork. The Santa Cruz RTC’s vision for the corridor is to provide passenger rail service alongside the Monterey Bay Scenic Sanctuary Trail (MBSST) – the “rail and trail” which is fervently pushed by both RTC staff and local supporters such as FORT, the Friends of Rail and Trail. There’s an alternative vision for the corridor as a “trail only,” where it would be used only as a multi-modal walking/bicycling trail. The groups most actively supporting “trail only” include Santa Cruz County Greenway and Trail Now.
This past April, rail-and-trail advocates were dealt a major setback when the RTC failed to approve the business plan for the design, construction, and operation of a passenger rail system. At the same time, the commission rejected a motion to move forward with even a $17.1 million environmental review.
So why, after nine years of study, did the RTC suddenly slam the brakes on the project? While I am sure each of the commissioners has their own reasoning, in the end, it came down to funding.
Trail advocates, led by FORT, have repeatedly made public statements that the project will be paid for primarily through state and federal grants. In fact, numerous claims on social media have been made which state that the project is already fully funded! However, in fact, the project is far from fully funded and the RTC has not been able to clearly identify sufficient potential funding sources.
And therein lies the rub: there simply is not enough money to build and operate a passenger rail system in Santa Cruz County.
I have no doubt that the passenger rail project would indeed be funded in large part by federal and state grants – because there is no other way it could be built. However, “in large part” does not mean wholly funded. To obtain any such grant money, there would need to be local matching funds.
These local matching funds would need to come from a new tax or bond measure. Passing a tax or bond measure is a high bar, requiring a 2/3rds majority of voters. In the case of a passenger rail project in Santa Cruz County, there simply is not that level of community support.
For perspective, it’s helpful to look at the most recent effort to raise local funds for transportation projects: Santa Cruz Measure D. This sales tax measure was approved by voters in 2016, with 67.78% of voters saying yes. Measure D added a half-cent sales tax for thirty years, raising about $17 million annually for county-wide transportation infrastructure projects and maintenance improvements.
Measure D barely squeaked by, even though it provided and paved the way for urgently needed funding across the entirety of Santa Cruz County. Passenger rail, on the other hand, would be used by, at most, a few thousand riders per day and would only be practical for about 50% of the county’s population to ever consider using for transportation.
Given recent history, and the limited reach of the proposed rail system, it seems unlikely at best that 2/3rds of all county voters would approve funding for a project which will not serve county-wide needs.
Everyone agrees that Santa Cruz County has a transportation crisis, but there is no consensus on what to do about it. However, the RTC’s own studies show that establishing passenger rail service would do little to improve transportation in the county. Their research shows that passenger rail service would have a negligible impact on freeway commute times, vehicle miles traveled, and greenhouse gas emissions.
One question we’re always trying to solve for in real estate is to determine the “highest and best use” of property. The Appraisal of Real Estate, 13th Edition, defines highest and best use as:
The reasonably probable and legal use of vacant land or an improved property that is physically possible, appropriately supported, and financially feasible and that results in the highest value.
Whatever someone may feel about the merits of passenger rail in Santa Cruz, we simply cannot escape the fact that passenger rail is not a financially viable proposition. There is, at present and for the foreseeable future, no credible way to pay for it. Given this stubborn fact, nobody should expect to see passenger rail in Santa Cruz County any time soon.
◊ Seb Frey was the 2019 President of the Santa Cruz County Association of REALTORS. He’s been selling homes locally since 2003 and is the author of Get It Sold! (available at TheSoldBook.com) and stars on his own YouTube channel on SebFrey.TV