'Yes, and approach': Council members combing through alternate funding options for I-35 covers
AUSTIN (KXAN) — In a final scramble to fund park decks over the Texas Department of Transportation’s I-35 expansion project, some Austin city council members are combing through possible funding options that wouldn’t take away from the city’s borrowing power for its proposed comprehensive bond package next year.
“We have identified additional funding mechanisms that would allow us to do a ‘yes, and’ approach,” Austin City Council Member Ryan Alter said.
Alter is one of the council members pushing for the building of those highway spaces, called “caps and stitches” — alongside council members Zo Qadri, ‘Chito’ Vela and Mayor Pro Tem Vanessa Fuentes — and are asking staff to look at funding options like looping a cap into the convention center project, using increased temporary right-of-way fees and pulling from eligible transportation bonds.
“Looking at previous bond projects that are so over their original cost estimates that we can’t even build them, so how about we use those funds for something else? Looking at a car rental tax, which is something that allows for us to spend on a project like the caps, but once again couldn’t be used to spend on homelessness or parks,” Alter said.
If city staff can swing that funding puzzle, the Austin City Council will still need a majority vote when it commits funding to TxDOT later this month. Some council members, like District 6’s Krista Laine, have questioned whether the city should really be the main investor for this project at all.
“The diversity of funders beyond the city of Austin has shrunk considerably,” Austin City Council Member Krista Laine said. District 6, in northwest Austin, is one of the farthest from where the caps will be built near downtown.
In an analysis of caps in six other cities, a group called Hayat Brown found similar projects relied much more heavily on philanthropy or federal and state funds. In none of the examples Hayat Brown brought forward to city council earlier this week did the city fund more than 25% of the total cost of caps in those other projects.
“The city taking that on entirely, I have very significant concerns about whether that’s a smart financial thing to do,” Laine said.
What are ‘caps and stitches’?
Caps and stitches would look like deck plazas, parks and community spaces over the Texas Department of Transportation’s (TxDOT’s) I-35 expansion project near downtown. The deadline for Austin to commit funding to TxDOT for the roadway elements of the project is May 31.
“Talking about the 1928 plan, where black and brown Austin was pushed to the east side, I really do believe this is a way to do right,” Austin City Council Member Zohaib Qadri said. He represents the downtown district where these caps would be built.
In a November 2024 council work session, city staff said they believe building out the full cap and stitch vision plan would cost more than $1.4 billion.
Advocacy groups have pushed the city to fund at least the roadway elements for all of the caps and stitches in Austin’s initial vision plan.
City staff’s recommendation
City of Austin staff released an updated recommendation for which ‘caps and stitches’ the city may want to commit funding to this week.
While a vision plan placed highway covers with parks and community spaces over the highway in a handful of locations, the city is now recommending only funding the roadway elements for a cap spanning from Cesar Chavez to Fourth Street and another project from 11th to 12th.
The city of Austin only has so much money it can borrow if it doesn’t want to hurt its credit rating. City staff said Tuesday that, assuming there is no change in state law, the city should not exceed $750 million in additional bond debt between caps and stitches and anything the city opts to put into its 2026 comprehensive bond package.
“I’m also looking at November of ’26 with a comprehensive bond package that meets things like parks and affordable housing and other needs that we might have. It reduces, in my head, what I think we can afford,” Austin Mayor Kirk Watson said in a sit-down interview with KXAN Monday.
Analysis: Return on investment
Austin city council members previously asked staff to look at whether the return on investment from the caps — increases in property values nearby, amenities on top of the caps, etc. — would significantly help offset the cost of constructing the structures.
City staff brought Hayat Brown on to help with that analysis. That group found Austin would be well short of offsetting the cost of building all of the caps and stitches in the vision plan.
“Caps will not produce sufficient revenue to fund their construction and operations, but constructing caps will produce unquantifiable social benefits,” Hayat Brown wrote in their presentation to the council.
“City parks don’t bring return on investment. They bring joy, they bring happiness, they bring quality of life. But they don’t bring additional revenue to the city,” Austin City Council Member Chito Vela responded.
$105 million federal grant still in limbo
The city of Austin is still waiting to see if it will have $105 million to build one of those key caps, but a recent move by the U.S. House Transportation and Infrastructure Committee makes that likelihood seem smaller.
Austin was previously awarded that grant by the federal government, but with a new administration working through a budget reconciliation process, Austin leaders will have to operate on the notion that the funding will no longer be available for now.
“There’s always hope,” Watson said. “This has a couple of hurdles before it ends up passing. And how they get to reconciliation, they’re gonna have to talk about Medicare, they’re gonna talk about food stamps, they’re gonna have to talk about some of the hard votes. But I think it’s probably smart on our part to be making our decisions with the anticipation that that kind of grant won’t be there.”
