Federal grant provides $105M for Chavez-Fourth Street cap over rebuilt I-35

The city received a boost in its plan to construct broad, plaza-like caps over sunken portions of Interstate 35, with the announcement of a $105 million federal grant to fund a portion of the construction.

On Monday, the U.S. Department of Transportation named Austin as a recipient of a Capital Construction Grant that is part of the Neighborhood Access and Equity Grant Program. The grant, which was included in the Inflation Reduction Act, will pay for much of the cost of a 5.3-acre cap over I-35 stretching from Cesar Chavez Street to Fourth Street.

The federal money was seen as an essential piece of the cap-and-stitch efforts, which are expected to cost the city more than $500 million and would include 30-foot east-west “stitch” roadway crossings throughout the project. The September application for the grant touted the impact the cap could have on restoring connections for East Austin residents who have been, in effect, cordoned off from the rest of the city for generations.

“A primary goal of pushing and pushing to get I-35 lowered was so that we could have the potential for not only reducing the divide it created and continues to perpetuate, but so that we might have caps and stitches that allow for far better connections,” Mayor Kirk Watson said in a prepared statement.

“This federal award will better enable Austin to realize that vision, and I’m really excited about the opportunities that lie ahead to work together to create a more complete city. And thank you to our congressional delegation who worked to bring home this critical funding.”

City Council Member Zo Qadri, whose district includes much of downtown Austin, said he hopes the federal aid will be the first of more funding announced for the cap-and-stitch program.

“Austin receiving this federal grant for the Cesar Chavez-4th Street cap is an important step in mitigating the harm that I-35 has done in the past, and that the expansion will do in the future, in dividing our city,” he said via text. “I am very grateful that we are receiving this much needed federal funding, and I am hopeful that this is just the first tranche of funding and grants for this project, as the caps and stitches can help us work toward bridging the gaps in a divided city.”

Late last year, Council approved spending $15.4 million to pay for the initial design work for the caps and stitches, as part of the state’s preparation for its work on the $4.5 billion highway reconstruction. By the end of this year, the city will have to pay for the remainder of the design work and decide on how to pay for the estimated $543 million cost to construct the eight caps and stitches.

It is estimated it will cost another $336 million to pay for the parks, buildings and another amenities that will sit atop the caps, with development rights and philanthropy seen as two likely funding sources.

The federal grant will require the city to contribute $45 million to pay for the amenities on the Cesar Chavez-Fourth Street cap.

U.S. Rep. Lloyd Doggett said the cap funded by federal money is needed to remedy a long-standing divide in the city.

“I previously obtained an appropriation for preliminary engineering for this project to reunite two long-divided parts of Austin,” Doggett said in a prepared statement. “Today’s investment represents a very hopeful development regarding a troubling highway expansion. It offers important opportunities for our community. These are the first three blocks of what could eventually be additional benefits through additional capping along I-35 with help from UT, the City and other interested parties.”

Related to mobility efforts, Watson spoke at a South by Southwest panel on Monday about the city’s difficulties in regulating and managing self-driving cars that are proliferating around Austin. He also said ongoing legal challenges are threatening the funding plans for the Project Connect light-rail plan approved by voters in 2020.

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