Guide to Funding our Rail Project

Big shifts in State and Federal funding have resulted in more money for rail than ever before.

The Need Is Clear

The levels of traffic congestion and commute times are unbearable. GHG emissions from transportation account for the majority of our emissions and continue to rise. People and the planet are suffering. It's time to get started building rail service in Santa Cruz County.

Getting started: Transportation Funding Basics

All transportation projects (highway, roads, sidewalks, and transit) are funded with a mix of local, state and federal grants. It's common that for every dollar we put into a project locally, we can get an additional 3 to 5 dollars for each project by leveraging state and federal grants.

In Santa Cruz County we use our local transportation sales tax as a local match to ensure our grant applications are competative. It's a winning strategy, we've been able to score the largest ever California Active Transportation Grant for constructing the Mid-County Rail Trail from Live Oak to Aptos.

State and Federal Rail Funding is Increasing

The State of California and the Federal Govenment have recently increased the amount of funding available for rail projects. While there are many different rail grant programs that we can apply for, these three programs offer the largest grants, and greatest opportunity to fund our project.

State Funding: California - the Transit and Intercity Rail Capital Program (TIRCP)

TIRCP funding was recently increased in California's 23/24 budget. TIRCP funds transformative capital improvements that modernize California’s intercity, commuter and urban rail, bus and ferry transit systems. The focus of the program is on projects that reduce greenhouse gasses, expand and improve transit service and increase transit ridership, integrate the rail service of various operations, and improve transit safety, especially for those serving disadvantaged communities. 

Funding is available for planning, construction, operations and vehicle procurement components of the project. Our project currently meets all the requirements to get funding from all state grants given its alignment with CAPTI and the state’s shift towards a multi-modal/rail transport preference. 

Federal Funding: the Federal Capital Investment Grant 5309 - New Starts

This FTA discretionary grant program funds transit capital investments, including heavy rail, commuter rail, light rail, streetcars, and bus rapid transit. Federal transit law requires transit agencies seeking CIG funding to complete a series of steps over several years.

What’s New? On January 12, 2023, FTA released Initial CIG Policy Guidance updates reflecting changes made to project eligibility in the Bipartisan Infrastructure Law. 

Our rail project would qualify’s as a ‘New Start’ Project and is well placed to score well in the grant criteria for funding. 

Federal Funding: the Corridor ID Program (CID)

In December 2023 the Santa Cruz to San Jose route was accepted into the Federal Corridor ID program (CID), a Federal sponsorship program to fast track and fund new intercity rail projects. The CID Program identifies projects that will be eligible for federal funding under other FRA and U.S. Department of Transportation (USDOT) grant programs. The CID Program funds all the work necessary to bring each selected corridor from concept to being ready for construction.

The CID Program is intended to become the primary means for directing federal financial support and technical assistance toward the development of proposals for both new and improved intercity passenger rail services throughout the U.S.

Many ways to fund our future Rail System

We explored some of the state and federal grant programs that we are most likely to be good candidates for above, but that's by no means and exaustive list of rail funding possibilities. Let's take a look at what some other communities have done to fund their new rail projects in the United States.

Case Study - New Rail Systems: Finding the Right Combination of Local, State and Federal Grants

Building new rail systems is being recognized as essential to reducing VMT and increasing our quality of life, so it's no surprise that we can see examples of it happening all over the United States. This chart from the Coast Rail Corridor Study shows the different paths these rail systems have taken.

We can see in the above, there are many possible and available state and federal funding options for us to take advantage of as we move forward with planning our rail project.

Case Study - Portland, Oregon: Finding Equitable Local Transportation Funding Sources

Proactive communities are leading the way in finding the equitable “how” to fund expansions of public transit. One of the most successful strategies is the “collaborative” model utilized by the City of Portland in its Pricing Options for Equitable Mobility (POEM) project, grounded in a commitment to Transportation Justice.

​One of the most amazing things about Portland's community-wide effort is that its final report outlines seven near-term and three long-term funding strategies and of these strategies. It should come as no surprise; the final report was unanimously adopted by the Portland City Council with direction to staff to implement the recommendations. ​ When the time comes for us to take a look at new local funding sources for public transportation, let’s take advantage of the tremendously creative energy in our community and go to work on a “POEM” project of our own.

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1. https://www.portland.gov/transportation/planning/pricing-options-equitable-mobility-poe

2. https://www.portland.gov/sites/default/files/2021/poem_final_report.pdf

3. https://bikeportland.org/2021/10/13/portland-leaders-unanimous-in-support-of-plan-for-higher-transportation-fees-339879