City Eyes $400 Million “Caps” to Build Parks Over the New I-35

A rendering of a cap over I-35 at 11th Street (Image via TxDOT)

City Council has received more bad news about proposed plans to “cap” portions of I-35 in Central Austin ahead of a vote on the project at Council’s May 22 meeting.

The “caps” would enable the city to build a park or other public amenities over the highway, but a consultant with engineering firm Hayat Brown told Council members at their May 6 work session that it will be highly expensive and that whatever revenue the newly created open space generates will not be enough to pay for the project itself.

The consultant’s determination boils down to a few factors: constructing the caps is “significantly more expensive than purchasing land elsewhere in the city,” the cost to maintain the caps annually will exceed revenue they might generate, and the caps are unlikely to spur much new development around them (which could help offset their cost) because most of Downtown Austin has already been redeveloped.

For some CMs, like José Velásquez, the caps project represents more than just a financial investment. It’s an opportunity to address the city’s history of segregation that was facilitated by construction of the highway through Downtown. “This is about making right a division that should never have existed,” Velásquez told his colleagues.

But there are significant financial implications to consider as well. If Council approves the caps, the city will foot the bill for decades to come. The parks can’t be built until the 2040s, at the earliest – a timeline that assumes the Texas Department of Transportation’s I-35 expansion project finishes on time. The bill will now be more expensive, as city staff has more or less abandoned any hope that the city will receive a $105 million federal grant to pay for some of the “roadway elements” necessary to support the caps. (Republicans in Congress are working with President Donald Trump on a budget bill that is likely to cut the grant program the city had been hoping to land.)

As a result, staff has recommended that Council approve funding for caps that would run from Cesar Chavez to Fourth Street and 11th and 12th streets at a total cost of about $401 million. This figure includes a 20% contingency should costs increase, but TxDOT has warned city staff that once construction begins, costs could potentially double.

With the anticipated loss of the federal grant, some CMs are rooting around various city revenue sources for funds that could be used to pay for the caps. This group – CMs José Velásquez, Chito Vela, Ryan Alter, and Zo Qadri – says they have found more than $400 million in taxes, existing bonds, and fees that could be devoted to caps. Staff is studying the feasibility of these funding sources, and they are currently uncertain.

If these funding sources don’t work out, the city will have to find the money through private philanthropy or voter-approved bonds. The Hayat Brown consultant found that, in other cities which have capped highways, philanthropy funded a substantial portion of the project. In Dallas’ Klyde Warren Park, for example, private donors paid for more than 50% of the project’s total cost. City staff noted that, thus far, they’ve seen little interest from Austin’s donor class for paying for highway caps (Assistant City Manager Michael Rogers said stakeholders are expected to convene on May 16 to locate private funding sources).

Funding the caps through a bond presents a costly trade-off for the city. Every dollar the city borrows to pay for the caps is a dollar that can’t be borrowed for affordable housing, parks, libraries, mitigation against climate disaster – and a host of other public infrastructure needs the city will face in the coming decades. That has been a pressing concern for some CMs, including Mike Siegel. “We need to prioritize those projects,” Siegel said, “and not something that may or may not bear fruit in 20 or 30 years.”