Rough water for Waller Creek
Frequent floods along Waller Creek have over the years diminished the development potential of the eastern edge of the central business district, and Austin voters approved $25 million in bonds in May 1998 to build a flood-control bypass tunnel a project discussed for decades that would effectively remove from the creek's 100-year flood plain more than 25 acres of highly valuable downtown land. Development on that land, the city suggests, could add $1 billion to the property tax rolls and boost the amenities around the expanded Austin Convention Center and Hilton Hotel. (The bonds were approved as part of the Convention Center expansion project.) As price estimates for the tunnel itself have rocketed past the $25 million mark, project backers have eyed using that increase in property value through a tax increment financing district to help make up the shortfall.
Last week, the city was presented with its third set of Waller Creek Tunnel financials, these by Kellogg Brown & Root which envision tax revenues half of those projected in a report last year that had brought the moribund project back to life. The latest projections anticipate only $79 million in combined city and county property taxes to be generated as a result of the project. On top of that, construction on the project, from design to finish, is expected to take eight years to complete.
Members of the Downtown Commission heard a presentation by Assistant City Manager John Stephens and Waller Creek Tunnel project manager George Oswald at last week's meeting. Many remain hopeful the project can still be pursued. "Waller Creek has been a top priority for the downtown community for generations," said downtown civic leader Chris Riley, chair of the city Planning Commission. "It's going to be a real challenge until you address the basic infrastructure problem. I don't know of any other way of accomplishing the goals we all have in mind for the area, which is a lively mixed-use destination." Ultimately, the Waller Creek project could provide a "good synergy" with the Convention Center and, on the other side of Downtown, the Second Street Retail District, Stephens said. But the creeping price tag of the tunnel over the last six years has put it almost out of reach.
Currently, three options are on the table for the City Council to consider when they get back from their July break, ranging from a bare-bones $44 million to a barely break-even $70 million. Each option would be funded by a TIF district, which would require the city and county to hand over incremental property tax gains for the next 20 years along Waller Creek including in the Rainey Street neighborhood and on the Vignette tract across from the Convention Center. (The software company's now-abandoned downtown headquarters project included investments in rehab along the creek.) And now, to make the numbers work, including sales tax revenues as well as property tax in the TIF is also being proposed. That was a big no-no when proposed to the council last year.