Money Flows to Waller Creek

Waller Creek – seen here at Sixth & Sabine – will carry steady waters (and increased development) once the city's tunnel project is completed. (Photo by Jana Birchum)

With the passage of a suite of items and approval of a special tax financing district, work is finally set to commence on the Waller Creek Tunnel, a longstanding goal of the city's redevelopment efforts Downtown. However, questions surrounding the financing of the project and differing cost estimates continue to swirl around the ambitious project.

Threading through Downtown and north through the University of Texas campus, Waller Creek has long been a conundrum to city leaders, subject to a series of development stops and starts. The last major expenditure came in 1998, when voters approved infrastructure such as walkways and bypass tunnels along the creek. Despite spending on such improvements, the creek – which has a prominent walkway entrance opposite the Austin Convention Center – never blossomed into the tourist attraction and growth-driver the city hoped for; instead, its overgrown and hidden trails became a watering hole of sorts for Austin's homeless, surrounded by odious, stagnant waters.

A large part of the reason for this lack of success was Waller Creek's inability to handle major flooding events, which stymied redevelopment along its banks. But with Item 12 on City Council's agenda last week approving a $49.9 million contract with firm S.J. Louis Construction of Texas, that will all be changing. Per the contract, S.J. Louis, going in near Fourth Street and the I-35 access road, will excavate a 26-foot-diameter, mile-long tunnel with storm-water-intake inlets at Fourth and Eighth Streets; a main inlet in Waterloo Park; and an outlet at Lady Bird Lake. The result will equalize water flow along the creek, making sure Waller never rises above its banks while diverting flooding from other parts of Downtown and pulling 28 acres of developable land out of the city's 100-year floodplain in the process.

Since 2006, when Council Members Sheryl Cole and Betty Dun­ker­ley renewed the city's interest in the project, Waller Creek has been the subject of much discussion – everything from whether pulling Red River out of the floodplain would shutter the doors of nearby indie-rock venues to a proposal to configure the creek for competitive white-water rafting. But most discussion last week revolved around funding mechanisms for the plan.

In addition to funding a start on the project, the city amended its tax increment financing district agreement with the county. In a TIF, the additionally taxed property value of improvements to a region are captured to offset the cost of said improvements; under the agreement, both the city and the county are taking part. But the council also agreed to help fund the project via a small "drainage" increase on Austin Water utility bills, an approximate 40-cent increase expected to ultimately collect more than $50 million.

The city has justified the additional funding by pointing to the general, recession-led decrease in construction. But developer and ChangeAustin.org co-founder Brian Rodgers has called the fee a sign of trouble in the city's projections for the project. "Why should all utility customers be required to subsidize Waller Creek landowners with $55 million from a regressive new drainage rate hike?" asked Rodgers in a letter to council. "Why aren't the Waller Creek TIF property owners asked to contribute to the shortfall through other means like a Public Improvement Dis­trict?" Rodgers has also questioned the city's optimistic predictions for property value increases, noting, "Hiding future losses by inflating revenues won't make them go away."

With the items' passage, the city says "project completion" is scheduled for 2014.