The City Council has agreed to spend $44,000 on a design study for a long-range plan to build a new, $9.1-million interchange connecting Newport Boulevard with Pacific Coast Highway.
The new interchange would include construction of a new bridge over the highway, which Webb said would be built in three stages over an 18-month construction schedule.
The city is to get $5 million for the project from the Orange County Transportation Authority next year.
Another $2 million is expected to come from assessment districts in new housing tracts. Hoag Memorial Hospital Presbyterian is bound by its development agreement to contribute up to $600,000 for improvements to sidewalks, landscaping and public access to wetlands.
City Engineer Don Webb said the city also would be eligible for $600,000 to $700,000 in federal money.