I-35 Common Sense Caps Plan from CM Ellis, Siegel, Laine, Duchen, and MPT Fuentes

[Paige Ellis]

Colleagues:

As a subquorum, Mayor Pro Tem Fuentes, Council Members Siegel, Laine, Duchen, and I propose we start with the staff recommendation as our base motion on Thursday.

Base Motion: Fund Phase 1 Roadway Elements for Cesar Chavez to 4th St and 11th to 12th St.

This morning, the TxDOT Austin District informed us that the deadline for the City to commit funding for the Phase 2 Caps has been pushed back from the end of this month until November 2026. As we are all feeling the pinch of our local financial forecast, there are opportunities for the voters to decide on their priorities. Pending additional staff and Bond Election Advisory Task Force research and evaluation, we may be able to allow Austinites to vote on potential funding mechanisms for the caps, including General Obligation Public Improvement Bonds and the Motor Vehicle Rental Tax.

We understand that the staff recommendation for Thursday’s decision will require a $49M commitment. Given our overall debt capacity of $750M, Council can commit this sum towards building the support structures for two important caps and still have $701M remaining for the 2026 Comprehensive Bond package to address our community’s wide range of needs – from parks to housing to mobility to libraries to climate resilience – or caps. This is a balance we can support.

We thank City staff for the hard work they have been doing to equip us with the information we need to make an informed decision, and we look forward to moving their recommendation on Thursday.

CM Paige Ellis
MPT Vanessa Fuentes
CM Krista Laine
CM Mike Siegel
CM Marc Duchen

[Jose Chito Vela]

Colleagues,

I appreciate the suggestion but the decision we have to make on Thursday is different than the one you describe. We have to decide which of the roadway elements we will fund on Thursday. TxDOT is about to ask for bids on the first phase of construction for the highway. TxDOT needs to know where we want to build the roadway elements on Thursday so they can include them in their bid. We have to decide where we will build the roadway elements on Thursday. If we don't ask TxDOT to build the roadway elements for a certain section, we can never cap that section in the future.

We do NOT have to decide which caps we will build on Thursday. That is a decision TxDOT will ask for bids on years from now - in 2030 or even longer into the future. We have plenty of time to decide which caps we want to build and how to fund them. Unfortunately, we have very little time left to decide which roadway elements we want to build. The roadway elements decision has to be made on Thursday to be included in TxDOT's bid.

However, TxDOT did inform us today that we do not need to pay for the roadway elements until they actually begin construction of the roadway elements for the highway, which will be until 2029 or so. We have time to figure out how to pay for any roadway elements we ask TxDOT to build. There is no need to have any of this on the 2026 bond. The money for the roadway elements will not be needed until 2029 or so. The money for the caps will likely not be needed until past 2030. A bond vote on these issues can and should wait until November 2028.

I also reject the idea of $750 million as a cap on the amount of bonds the city can issue in 2026. Voters approved $925 million worth of bonds in 2018. Our population and economy has grown substantially since 2018, and we have had only two bonds since - $460 million in 2020 and $350 million in 2022. I hope our 2026 bond is at least the size of our 2018 bond.

Chito

[Ryan Alter]

Colleagues,

After listening to the thoughtful comments of the public and our colleagues, we would like to explore a compromise approach as mentioned by CM Duchen. Delivering caps for our community should be something that brings us together, not divides us. Austinites deserve for us to work collaboratively to find the best solutions that meet their needs today, tomorrow, and for future generations.

To that end, we want to adopt the $49 million limit on utilizing any debt that impacts our 2026 bond capacity offered by our colleagues. Based on the Monday post and the backup materials, this debt would be paid for with $41 million from the State Infrastructure Bank loan and $8 million in certificates of obligation. It also seems like there is broad interest in utilizing the car rental tax and exploring other funding options that might be available for this purpose.

In the spirit of compromise, we plan to offer the following proposal that not only adheres to the principles outlined above, but actually utilizes less debt capacity. This plan is fully paid for, preserves more ability to spend on other priorities like housing, parks, and the environment than the staff recommendation, and ensures our ability to get the most public good out of this project.

In summary, we propose funding the roadway elements for the three downtown cap sections (Cesar Chavez – 4th, 4th – 7th, and 11th-12th) as well as one northern cap. This plan utilizes sources that staff has identified as feasible with low risk, including a TIRZ for the northern cap, which was identified in a previous memo as a potential funding source (https://services.austintexas.gov/edims/ ... ?id=449783).


CC-4th St. Roadway Elements
- Cost:$40,000,000
- Source: Car Rental Tax Bonds: $40,000,000

4th-7th St. Roadway Elements
- Cost: $29,000,000
- Source: SIB Loan: $29,000,000

11th-12th Roadway Elements
- Cost: $9,000,000
- Source: SIB Loan: $9,000,000

Northern Cap Roadway Elements
- Cost: $65,000,000
- Source: TIRZ: $40,000,000
- Source: Temporary Use of ROW Fees $25,000,000

To achieve this compromise plan, we will also be offering a version 2 of Item 105 (http://assets.austintexas.gov/austincou ... 124010.pdf), which directs staff to generate a funding plan for the roadway elements and future caps that can incorporate the sources we have offered here or come up with additional ideas, but which does not rely on any additional debt that limits the City’s ability to issue GO debt, beyond the $49 million amount we all seem to agree on.

This item utilizes the years we have until we need to make payments on the roadway elements. As displayed in the table below, we will have until 2030 before we would need to tap any funding source beyond the State Infrastructure Bank loan, which means a new presidential administration that might reissue the NAE grant, a completed convention center, updated hotel occupancy tax revenues, and other vital information that can unlock additional revenue sources.

Year Amount Due
2026 15% $21,450,000
2027 0% $0
2028 0% $0
2029 10% $11,400,000
2030 25% $44,750,000
2031 35% $39,900,000
2032 15% $17,100,000
2033 0% $0

This proposal represents a responsible, forward-looking compromise that reflects the best of what we can achieve when we work together. It’s time to move past division and focus on building solutions that serve all of Austin—today and for generations to come.

Natasha Harper-Madison
Jose Velásquez
Chito Vela
Ryan Alter
Zo Qadri

[Marc Duchen]

Colleagues,

I appreciate the earnestness of all of my fellow council members as we determine the best path forward. I know there are strong beliefs in the value of these projects and a great deal of thought has gone into offering creative approaches to fund this work in light of our current financial situation.

However, some of the proposed payment methods appear to have been deemed impractical based on the in-depth analysis provided by COA Financial Services in their May 17, 2024 document found here: https://services.austintexas.gov/edims/ ... ?id=451893

We understand that TxDOT needs us to identify the Phase 1 funding this month, which means we will authorize the COs and appropriate the debt on Thursday and that impacts the debt capacity for the 2026 bond cycle.

For example, the proposal to use "Car Rental Tax Bonds available from car rental taxes once the remaining debt is retired" would require an election to approve the bonds, and this would not help until 2029 or 2030 because the remaining debt does not retire until then. The staff memo says: “The city would need to go to the voters to approve that re-authorization of the tax including that venue project in the scope of the uses approved by the voters. Per Chapter 334, a municipal park and any of its included features/ structures are not an eligible venue project for Motor Vehicle Rental Tax,” and, “Finally, if the designation of a venue was possible in this scenario, the motor vehicle rental tax funds would likely remain unviable for current needs because they would not be available until after FY 2031."

The use of Temporary Right of Way (ROW) fees looks a bit more plausible as a viable source of additional revenue but still appears to carry significant challenges, including legal, timing, and funding source volatility issues.

In the spirit of compromise I mentioned during Tuesday's work session and CM Alter acknowledged in his recent post, I am open to data-informed ideas to help us move from our stalemate. And I truly do applaud being as creative as possible when considering our funding sources and options. Here are a couple of ideas I have not heard us discuss that I was planning to float tomorrow:
1. The Austin Transit Partnership has roughly $400 million dollars on hand that are already intended for transit-related projects. As with some of the stalled bond projects proposed in an earlier message post, we could include some or all of those dollars in the mix if we are truly looking for ways to prioritize funding these projects – especially a way that may limit impacting our 2026 bonding capacity.
2. In a recent reply to my question about the cost of funding stitches instead of costly caps, we received this document and could discuss funding more areas if we elected to fund smaller stitches instead of larger caps: https://www.austintexas.gov/sites/defau ... Duchen.pdf
(Interactive spreadsheet here with stitch/cap/other options: https://app.box.com/s/xugsude9pe1skargcj9qf5vg2iaylzh7)

It's important for me to note that the overwhelming feedback I have received from hundreds of constituents is that they prefer using our precious tax dollars to fund essential city projects. Parks, libraries, wildfire mitigation and preparedness, flood control, public safety and emergency services, affordable housing, public health, and other priorities impact the daily safety, services, and quality of life for our residents. Community members are asking me to be a responsible steward of taxpayer dollars and invest in projects that will address our current dire needs. They are urging me to oppose all spending on caps and stitches. If their perspective is my starting point, I have already compromised to accept and support the staff position of funding the roadway elements for the CC-4th and 11th St. caps.

I believe that compromise represents a pragmatic mix of priorities. Alongside UT’s 10-12 acres of caps, Austin would be investing in the largest initial freeway cap project in the country. We’d be acknowledging and addressing longstanding East/West access and transit divisions. And most importantly to both my district and our precarious city financial forecast, we’d minimize the financial impact relative to nearly every other cap scenario available - outside of investing in zero caps, which lacks support.

My experience in life has led to me to a different conclusion than what often appears to be the prevailing attitude on the dais, which is that we – the City - can “do it all.” Juggling professional, civic, family, financial, and health challenges for decades has instead led me to operate from a place of thoughtful restraint, where I make difficult decisions between competing priorities and limited resources. I can’t do it all; in this case, under these financial constraints, with no ready partners and funding sources, on a project that feeds and houses no one, educates no one, and doesn’t protect them from crime or flood or fire, I don’t believe the city can “do it all” either.

I am hopeful that we can amicably reach an agreement on how to proceed tomorrow.

-Marc

[Julie Montgomery]

On behalf of CM Ellis: Please see below our motion sheets for tomorrow, which reflect the staff recommendation and were prepared with Law and reviewed by Financial Services.

Item 41: http://assets.austintexas.gov/austincou ... 220439.pdf
Item 42: http://assets.austintexas.gov/austincou ... 220814.pdf
Item 43: http://assets.austintexas.gov/austincou ... 220843.pdf

[Melissa Beeler]

On Behalf of CM Qadri:

Colleagues,

Thank you all for your feedback and thoughtful comments at Tuesday’s Work Session and beyond. I want to share with you all an amendment I plan to bring for Item 42: http://assets.austintexas.gov/austincou ... 224839.pdf

Building off of staff’s recommendation to fund the roadway elements for Cesar Chavez to 4th Street and 11th to 12th Street caps, my amendment expands that investment to include the 4th to 7th Street caps and incorporates a promising new community-led proposal to maximize connection, placemaking, and revenue potential in the northern cap area.

The value created on the proposed 4th and 7th Street caps cannot be ignored, from honoring and celebrating our Mexican American Heritage Corridor, to mending the divide caused by the original highway placement, to creating more opportunities to celebrate and entertain along Historic Old 6th.

The value of the northern caps also cannot be understated, with key connections for bicyclists, pedestrians, and, eventually, transit users, along with robust redevelopment opportunities. After several conversations this week with TxDOT, our subquorum, and community representatives, we have identified an option from 41st Street to the Red Line to create a space, potentially smaller than an 800-foot cap but larger than a stitch, with the goal of connecting the Red Line Parkway, potential future Red Line Station, 41st Street and nearby destinations. A key element of the idea enhances pedestrian and bicycle connectivity across the highway at the Red Line crossing, meaning people can easily access this space via the Red Line crossing. The access roads have to go under the rail crossing here, which allows for relatively wide crossings over the access roads adjacent to the Red Line.

This locally driven idea achieves the goals of a cap at about the cost of two 300-foot stitches. The revised funding in my amendment reflects this smart tradeoff and community input. I believe this is a responsible, forward-looking strategy that expands public benefit, centers community values, and protects our bond capacity for other vital citywide needs.

I recognize that this item has brought a robust discussion about the opportunity for expanded connection in our city, and I'm especially grateful for the comments shared by the Mayor and Council Members Ellis, Siegel, and Duchen to help arrive at this amendment. I hope this can unite us in maximizing future connections both across the highway and between each other as neighbors.

Best,
Zo

[Paige Ellis]

CM Qadri -

Thank you for this proposal. After meeting with our subquorum, I’d like to propose another compromise.

Roadway elements (supports) for the potential caps at:
Cesar Chavez to 4th Street
11th-12th Street

As well as roadway elements (supports) for:
1 stitch at the Redline Parkway north
1 stitch around 5th Street

The estimated amount for these items would come in at around $71-72M

We believe this strikes the best balance between the requests of the community as well as the costs we are being asked to commit to today.

Thank you,
Paige Ellis

[Paige Ellis]

Colleagues -

Here is my amendment to CM Qadri’s amendment.

http://assets.austintexas.gov/austincou ... 115016.pdf

Thank you,
Paige Ellis

[Krista Laine]

Colleagues,

I want to extend my sincere thanks to the City staff for their extensive time and effort on this, and to my colleagues for their thoughtful dialogue. This is a significant decision, and I believe it is essential that the process remains inclusive and participatory, with as much input as possible from those involved in the bond process given the potential consequences of today's discussion.

For that reason, I am bringing forward an amendment (http://assets.austintexas.gov/austincou ... 115309.pdf) requesting that the City Manager present the range of funding options, including general obligation debt and other sources, for the I-35 caps and stitches to the Bond Election Advisory Task Force, and ensure their recommendations are reviewed by Council before any funding is dedicated, so that the proposal can be weighed alongside other citywide capital project needs.

Thank you for your attention and thoughtful consideration. We have many important needs across the city, so it’s important to carefully weigh the trade-offs as we consider dedicating funds to this project.

In service,

Krista