I-35 caps plan reconsidered as cost estimates soar by 61%

Austin’s transformational plan to cover parts of Interstate 35 with parks and public spaces, intended to bridge the divide between east and west neighborhoods, is facing a financial reckoning as estimated costs soar and city staff warn the project could drain cash from other priorities.

Refined plans show the estimated price tag of the full 26-acre build ballooning from $868 million to $1.4 billion — an increase of 61 percent. These designs outline more detail than earlier schematics and were completed by the Texas Department of Transportation (TxDOT). $15 million in city funds paid for the updated plans.

Much of the cost increase was driven by inflation and increasing the size of a cap next to the Hancock Center, said Heather Ashley-Nguyen, a TxDOT highway engineer overseeing the I-35 expansion in Austin. She spoke to City Council members at a public work session on Tuesday.

The city has not conducted an independent audit of the TxDOT estimates.

The $1.4 billion price tag does not include the city’s recurring maintenance and operations expenses. Those are projected to total $47 million per year, a decrease of $2 million from earlier estimates.

Given the soaring costs of the highway caps, city staff are now offering City Council members scaled-back scenarios to consider, including options that would reduce the number and size of the caps, significantly diminishing the envisioned green spaces.

But the staff recommendation of a half-billion-dollar, 12.5-acre project would still be more than double the size of Klyde Warren Park over the Woodall Rodgers Freeway in Dallas, the first major highway park in Texas.

“There are innumerable scenarios you could consider. This really could be considered a starting point, a starting menu for you,” Michelle Marx, a senior official in the Transportation and Public Works Department, told Council members.

Austin is contemplating the I-35 decks only because TxDOT is widening the highway through Travis County and sinking the main lanes up to 40 feet below ground level from Holly Street to Airport Boulevard.

The maximum cap build being considered by City Council would include eight highway decks totaling 26.6 acres:

1. South of Holly Street: 0.96 acres
2. South of Cesar Chavez: 0.27 acres
3. Cesar Chavez to Fourth Street: 5.37 acres
4. Fourth Street to Seventh Street: 3.28 acres
5. 11th to 12th Street: 2.17 acres
6. 38 1/2 Street to 41st Street: 5.21 acres
7. 41st Street to Red Line: 4.76 acres
8. Red Line to Airport Boulevard: 4.24 acres

UT Austin is separately contemplating spending hundreds of millions of dollars to add up to 17 acres of caps from 15th Street to Dean Keeton Street.

TxDOT’s timeline requires City Council to vote by Dec. 12 on which caps it wants to proceed with, so the state can integrate the project into the I-35 plan.

The Council vote will be on where to build the roadway elements, which are the underlying structures necessary to support the highway decks. The roadway elements for all eight caps would cost $284 million, according to TxDOT estimates.

This leaves Council members with less than four weeks to make a decision that could shape the character of Central Austin for generations.

A scorecard from city staff ranks the proposed highway parks on factors including pedestrian access, redevelopment opportunities, on-cap revenue and equity benefits. The top scoring caps were those from Cesar Chavez to Fourth Street and Fourth Street to Seventh Street. The 11th Street to 12th Street cap was close behind. Others scored significantly lower in the ranking.

The menu of possibilities presented to Council members included the option build fewer caps and shrink the length of each deck to 800 feet or less.

For example, reducing the length of the Cesar Chavez to Fourth Street cap from 1,050 feet to 800 feet would lower the cap’s estimated construction costs — including amenities — from $225 million to $168 million. The size would go from 5.4 acres to 3.95 acres.

The prospect of downsized caps left some City Council members underwhelmed.

“I feel like we’re being penny-wise and pound-foolish on the 800-foot caps,” District 4 Council Member Chito Vela said. “My sense would be to do full caps and do it right.”

Other Council members were willing to ditch lower-scoring caps, like the northernmost deck proposed to run from the Red Line to Airport Boulevard, as long as the downtown deck parks would remain as is.

“I feel strongly that the downtown caps should be full-sized,” District 2 Council Member Vanessa Fuentes said, suggesting their central location would also be more likely to win support of voters in a bond election.

Such a bond election is expected in 2026. Voters would be asked to approve higher property taxes to pay down debt used to build the caps.

Issuing bonds for highway decks would eat into the city’s ability to borrow money for competing priorities like libraries, parks, fire stations and affordable housing, the city’s deputy CFO Kim Olivares told Council members.

Meanwhile, the city’s budget is growing at such a pace that an election to increase local tax revenue beyond the state-mandated annual limit of 3.5 percent is expected within the next few years. Borrowing money for caps would likely mean a tax rate election would be held sooner, Olivares said.

Construction has already begun on the I-35 expansion through Central Austin. But the highway decks wouldn’t be completed till 2032 at the earliest.

This story was produced as part of the Austin Monitor’s reporting partnership with KUT.

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