“I know, I’m a downer,” Christine Maguire told the Council members on the city’s Mobility Committee this past December. “I’m a buzzkill. Nobody invites me to meetings anymore.
“But from the financial services point of view, the city’s risk profile has increased.”
Maguire, a leader of the Austin Financial Services Department and its resident expert on large redevelopment projects, had just shared bad news about the city’s Cap and Stitch project – the partnership between the city and the state of Texas to remake Interstate 35 by burying the part of it that runs through Downtown and capping it with parks, streets, and pedestrian bridges. It’s an idea that social justice advocates and business groups have supported. Our city leaders have also supported it, to varying degrees. City Council approved $104 million in taxpayer money in May of 2025 to get the project rolling.
Maguire told the Council members on the Mobility Committee that the Texas Department of Transportation had decided to break its monumental, multibillion-dollar project to enlarge I-35, called the Capital Express Program, into two phases. The first phase will upgrade I-35’s bridges and frontage roads, breaking ground in 2027 and wrapping up, maybe, in 2031. The second, larger phase of the project – which includes Cap and Stitch and was supposed to begin this year – has been pushed back to 2029. It’s estimated to be complete in 2033.
This has implications for Cap and Stitch, Maguire said. When Council approved the $104 million in May, it was to pay for concrete pillars, called “roadway elements” by TxDOT, that crews will build along the sides of the highway as they dig out its underground path. The pillars are necessary to hold up the caps in Cap and Stitch. The caps and stitches are concrete-and-rebar slabs that would be laid atop the pillars and serve as the foundations for the parks and bridges that will stitch together communities previously divided by the highway. The caps would support “amenities” – green space, playgrounds, bike paths, amphitheatres, and even one- and two-story buildings.
The Council members knew when they committed the $104 million that they would need to approve a second, larger, as-yet-unspecified amount of money to build the caps themselves. Estimates for that expense have shifted over the last few years with changing designs and rising construction costs, but run as high as $900 million. Council was supposed to vote on the caps this November. But Maguire told the Mobility Committee that, even though TxDOT has postponed construction of the concrete pillars, it has not postponed the date by which it wants the city to decide whether to commit more money for the caps. In fact, it has moved that date up. TxDOT now wants the city to make a decision on the caps by May – three months from now.
Looking up into the Council members’ faces, her glasses perched atop her head, Maguire explained why this is a problem. She referred to the tariffs Donald Trump imposed last year, which are driving higher-than-normal inflation and a general financial unease. She told the committee that TxDOT’s delayed timeline meant that the city would have to make a decision on the caps before the highway’s design was even halfway complete. And she said that the $104 million the city has already committed for the concrete pillars – the roadway elements – could very well underestimate their actual cost.
“Those costs that Council approved for the roadway elements were based on 30% design – on very generic examples from other cities in the state of Texas prior to the tariffs, prior to any of the current pricing market,” Maguire said. “We are recommending, from a financial services perspective, that we need to look at the entire deal structure of what Council wants to do before we commit to a civil loan.”
“The city does not have a role in design, in delivery, in permitting, et cetera. It’s a TxDOT project. I don’t want to belabor that point, but I just wanted to highlight, from the financial risk perspective, what this might mean.”
Christine Maguire
Last, and most important, Maguire reminded the Council members of a crucial part of Austin’s agreement with TxDOT: The city will be responsible for all cost overruns associated with Cap and Stitch. If the cost of the concrete pillars winds up being larger than $104 million, the taxpayers of Austin will be on the hook for the difference. It’s the same with the caps, despite the fact that their true cost may not be known until 2029 or later.
“We do have a draft [agreement] from TxDOT which clearly states the city accepts all cost overruns,” Maguire said. “The city does not have a role in design, in delivery, in permitting, et cetera. It’s a TxDOT project. I don’t want to belabor that point, but I just wanted to highlight, from the financial risk perspective, what this might mean.”
Council Member Paige Ellis, who chairs the Mobility Committee and has seen all the ups and downs of Cap and Stitch over the last six years, had no difficulty understanding what that might mean. “I will also be a Debbie Downer,” Ellis said. “This is hugely concerning.”
IMAGINING A DIFFERENT I-35
Even longtime Austinites will struggle to remember a time when I-35 was not under construction. It’s hard to imagine the highway without its work crews, lane closures, and concrete cattle chutes. As for when the construction will end, TxDOT Executive Director Marc Williams clarified that in an opinion shared in 2024 – the work between Austin and San Antonio will “never conclude,” he said.
TxDOT began laying the groundwork for the Capital Express Program, Austin’s portion of the highway expansion, in the late 1980s. Crews are currently laboring on the north and south sections of the program, and have been since 2022. The central part of the project – again, it isn’t slated to get under construction until 2029 – will stretch from Ben White Boulevard in the south to Highway 290 up north, 8 miles of road that TxDOT estimates will cost $4.5 billion. The project will add two lanes in each direction and send the highway 30 feet underground from Holly to Airport. It will also remove the highway’s upper deck from Martin Luther King to Airport.
The section of I-35 that slices through Downtown has historically been viewed, to quote Mayor Kirk Watson, as “a screaming monument to racism.” It sits on the former East Avenue, the street city leaders used in their 1928 Master Plan to create a “Negro district.” The plan segregated Black citizens, who then constituted a third of the city’s population and lived in many enclaves within it, coercing them to move to the other side of East Avenue by cutting off their utility services, closing their schools, and denying them permits to build. The Black residents’ homes and properties were sold to whites for pennies on the dollar. They and their Hispanic neighbors lived alongside industrial developments and suffered decades of redlining and neglect on the city’s Eastside, until gentrification came in the 1990s, forcing many to leave.
UT Professor Emeritus Sinclair Black, an architect and urban planner described in these pages as the “original New Urbanist,” began urging TxDOT in the late 1990s to bury I-35 on its run through Austin and cap it with a wide, tree-shaded boulevard lined with commercial and residential buildings that could generate tax revenue to pay for the development. Austin’s progressive community liked the proposal, wanting to erase I-35’s symbol of institutional racism. Business groups such as the Downtown Austin Alliance supported it for the same reason, along with the fact that it promised to increase property values, financial investment, and job growth.
Black co-founded the nonprofit Reconnect Austin in 2012 with his daughter, Heyden Walker, to build support for the idea. The group presented research demonstrating that similar projects had vitalized the downtowns of major cities like Dallas, where the Klyde Warren Park was built over an eight-lane highway in 2012. The park straddles the city’s arts district and features fountains, playgrounds, a restaurant, and a stage for performances.
For over 10 years, Reconnect Austin joined allies like Rethink35 and the neighborhood associations strung alongside I-35 to fight the project. They emphasized that more vehicles traveling through the city’s center meant more releases of petroleum particulates, benzene, and nitrogen oxides. They argued that the project would only ease I-35’s congestion for a year or two before an effect known as “induced demand” – where more drivers begin using a highway once it is enlarged – brought traffic to a standstill again. The classic example of induced demand is the Katy Highway in Houston, which was widened to 26 lanes in 2011. Within three years, congestion was worse than ever.
TxDOT hosted public engagement sessions with Austinites and agreed in 2023 to adopt a design for I-35 that could facilitate Cap and Stitch, as long as the city paid for the caps. However, the agency refused to reduce the highway’s width from its combined 20 lanes, even after the public learned in 2022 that the widening would force over a hundred homes and businesses to be demolished, including the historic headquarters of the Chronicle, which was knocked down in 2024.
Heyden Walker said Reconnect Austin’s 14-year struggle with TxDOT has left her exhausted and demoralized. She continues to feel that routing more traffic through the heart of the city will cause a cascade of bad effects, which TxDOT ought to accept responsibility for by paying for the caps. “They’re pushing that on the city,” Walker said. “But, with that preface, I think Cap and Stitch offers a lot of benefit. It would mitigate a lot of the noise and pollution. It would reconnect the city in a really valuable way that the project, as a big open ditch, does not do. But I find it really frustrating that TxDOT is forcing the city to pay for it.”
COMMITTING THE MONEY
Before the spring of 2025, most city leaders had accepted the idea that Austin would pay for Cap and Stitch, at least to some extent. But as the vote neared that May on the concrete pillars, some began worrying about its cost. A debate over the project arose as a 10-year run of positive cash flow came to an abrupt halt. In early April, City Manager T.C. Broadnax warned that tax revenue was down and Austin was facing its first budget deficit in years. Later that month, Mayor Watson alerted Council that a $105 million federal grant awarded for Cap and Stitch in early 2024 would probably be rescinded.
The Council split into two camps on Cap and Stitch. Council members Chito Vela, Ryan Alter, José Velásquez, Natasha Harper-Madison, and Zo Qadri wanted to stay with an ambitious plan – six caps and two pedestrian bridges. Vela argued that the city had to take the once-in-a-generation opportunity to beautify the city for future residents. He said capping the highway from Cesar Chavez to Seventh Street was particularly important. He reminded his colleagues that there had been doubts about projects like the Pfluger Pedestrian Bridge across Lady Bird Lake and the Q2 soccer stadium in North Austin, but time had proven that these projects bring joy to Austinites.
“That’s exactly what we’re trying to do here with the area surrounding I-35,” Vela said. “Those seven contiguous blocks from Cesar Chavez to Seventh Street, once they are capped you will have a stretch of parkland that may be the best park in Texas, hosting festivals and events and families with everybody enjoying that area. To pass up on that opportunity just really captures the old saying about being penny-wise and pound-foolish. We have to seize this moment. If we pass up this moment we cannot get it back.”
Council members Paige Ellis, Vanessa Fuentes, Marc Duchen, Krista Laine, and Mike Siegel worried about what the commitment would mean for future infrastructure needs. They proposed cutting the plan in half, to two caps and two stitches.
Laine said she was tired of hearing that Cap and Stitch was a once-in-a-generation opportunity, even if it was true. “The city of Austin is holding all of the financial risk of cost overruns, when we all know they are coming,” she said. Siegel agreed that history was watching, yet said he was more worried about the near future than the far future. “I’m concerned that five years from now, we won’t have enough money to fund our housing needs,” he said. “We won’t have enough money to fund adequate parks, to fund our public health programs.”
Two days before the May 2025 vote, Mayor Watson backed the more modest plan. The final vote was a compromise. It committed enough money to build the concrete pillars for three large caps and two 300-foot-wide stitches. Pillars would be built for caps from Cesar Chavez Street to Fourth Street; from Fourth Street to Seventh Street; and from 11th Street to 12th Street. They would also be built for the two stitches, which would be placed between 41st Street and the area where the Red Line’s tracks cross I-35, near Hancock Center. The vote was not unanimous. Duchen and Laine voted no. Siegel abstained.
Three months after the commitment, Republicans in Washington, D.C., did indeed pull back the $105 million grant for Cap and Stitch. The next week, Council passed a 2025-26 budget that depended on Austinites agreeing to raise their property taxes at an election in November. The tax hike, known as Proposition Q, would have generated $110 million a year – almost the same figure Council had approved six months earlier for the concrete pillars. During the Prop Q campaign, voters learned that they would be paying hundreds of dollars more for county taxes and utility fees in 2026. They rejected Prop Q decisively.
As Austinites educated themselves about Prop Q, some began asking how the large infrastructure projects that Council has approved over the last five years will impact the city’s budget in the coming decade. These projects include not just Cap and Stitch but the even more expensive plans to build a new convention center and to bring a system of light rail, called Project Connect, to the city. At a Nov. 17 town hall held after Prop Q’s defeat, city resident and environmentalist activist Robin Rather asked CMs Mike Siegel and Vanessa Fuentes whether they supported scrapping the large projects.
Siegel explained that the money already committed to the projects comes from funding sources devoted strictly for building things – it can’t, by law, be used for the ongoing city expenses at the center of the Prop Q debate, things like paying police officers and providing services for the homeless. However, Siegel continued, that didn’t mean Council wasn’t thinking differently about the money it had pledged for the projects. “Even though, technically, we can’t cancel these programs to pay for what Prop Q was going to pay for, I do think we need to reprioritize our investments as a Council,” he said. “I would support reopening the Cap and Stitch conversation. So far, we’ve only authorized $104 million. I want to see if my peers on Council will be open to reconsidering that, if it’s legally possible.”
Fuentes had a slightly different take. She said that Council’s commitment for the concrete pillars would guarantee that the caps could be built in the future – and that was enough for now. “I don’t feel comfortable putting one dollar more towards Cap and Stitch until we have a fully funded EMS system, until we’re able to ensure that our essential services are intact,” she said. “I do think, moving forward, it is going to be a matter of priorities.”
CAN WE PULL BACK? SHOULD WE?
And now, the city gets to have the Cap and Stitch debate all over again.
Earlier this month, the city manager’s office sent a memo to the mayor and Council members outlining what comes next for the project. The memo summarized the information from the Dec. 4 Mobility Committee meeting. It made suggestions for how to proceed on the two stitches across from Hancock Center, now estimated to cost $69 million. It said staff will present a strategy for funding the caps in March, which will include ways to protect the city from cost overruns. That presentation will detail possible private, philanthropic donations to Cap and Stitch, when they could materialize, and how much money they might provide.
But as the city prepares to address funding for the caps, some Council members want to reconsider the May 2025 commitment for the concrete pillars. Scaling back that commitment is apparently possible. In her remarks on Dec. 4, Christine Maguire told the Mobility Committee, “I don’t believe that we have solidified the execution date of the AFA for the roadway elements.”
The AFA Maguire referred to is the Advance Funding Agreement – the contract between the city of Austin and TxDOT specifying how much money the city will pay for the pillars and where the money will come from. The AFA states that $63 million of the $104 million will come from certificates of obligation – a type of funding instrument that Texas cities use to construct big things like buildings or roads, but without having to hold an election on the specific project.
The remaining $41 million would come from a loan from Texas’ State Infrastructure Bank, which finances transportation projects. The loan would be repaid by the city over a term of 20 years, beginning this year, if the city finalizes the AFA, a city spokesperson told us. The spokesperson clarified that the city has not yet executed the AFA. They said the deadline for doing so won’t come until 2028.
The upcoming May deadline for a decision on the caps is also more of a suggestion than an actual deadline, according to Richard Mendoza, the director of Transportation and Public Works. Mendoza spoke after Maguire at the Mobility Committee meeting on Dec. 4, telling the Council members that they can make “change orders” on the caps all the way until construction begins in 2029.
“This May decision point that TxDOT has made available to us is not the final opportunity for us as a city to make a decision,” Mendoza said. “It’s only if we want to have this included with the present designer and in this original bid package. We can always wait. We don’t have to be pressured into a decision.”
The Chronicle asked city leaders in December where they stood on financing Cap and Stitch. A majority wants to reduce the commitment to one degree or another. Mayor Watson, the swing vote in the May 2025 compromise that chose three caps and two stitches, told us, “It is likely that we will need to ‘skinny down’ and maybe eliminate some goals.” Duchen told us, “If it were up to me, I’d probably put a pause on the whole project at this moment.” Ellis told us, “I’m not inclined to support any idea with unknown costs that we will be on the hook for.” Siegel told us he wants the city to reduce its commitment to the project. Laine concurred. Fuentes reiterated that she doesn’t want to spend another dollar on Cap and Stitch for the time being.
Chito Vela, on the other hand, told us he does not want to pull back from the full proposal. José Velásquez and Zo Qadri did not respond to questions on where they stand. Ryan Alter simply acknowledged that there doesn’t seem to be enough support presently to fund all the caps. Natasha Harper-Madison said she is “not opposed to necessary change orders” and is hopeful the city can find private partners to help to pay for the project.
Duchen and Laine said they continue to doubt that Cap and Stitch can proceed without incurring cost overruns. Siegel pointed out a little-discussed detail from the Dec. 4 meeting that speaks to that concern. The 10th slide of the city’s presentation, titled “TxDOT’s Timeline,” states that the estimated cost to design the caps rose from $19 million in May of last year to $25 million in December – an increase of over 30% in seven months.
Duchen and Laine also emphasized that city officials told Council in the spring of 2025 that they were optimistic that private partners like Opportunity Austin, the Downtown Austin Alliance, and the Chamber of Commerce would come forward to help foot the bill for Cap and Stitch. “We’re six months out, and more funding hasn’t been found, as far as I know,” Laine said. Duchen provided the Chronicle with data showing that private philanthropy covered roughly half of the costs of Klyde Warren Park in Dallas and other cap projects in Denver, Seattle, and Boston. “In most cities, these kinds of projects are largely philanthropically funded or community funded with federal and state grant dollars,” Duchen said. “We are the exception. We’re always the exception in that way. We’ve got to change the way that we think about these big projects.”
Siegel told us he wants to explore the idea of funding concrete pillars for only the first cap, the one between Cesar Chavez and Fourth Street. He said the city’s estimates show that doing so could save about $40 million. Alter agreed that the cap from Cesar Chavez to Fourth Street is the most important of the potential caps. “It is fully connected east to west, which is a huge element of why we should be doing Cap and Stitch,” Alter said. “It is also located in an area where it’s going to have a positive economic impact. The convention center is there, one of the greenways is there, Palm Park is there. So there’s a lot of synergy with doing that one.”
Alter added, however, that he believes Austin must “future proof” I-35 – making sure that all the concrete pillars approved in the May 2025 vote get built, so that the caps can be added at a later date, when the economy improves. He also pointed out that the city does not have to make the first payment for the caps until 2032, by which point there may be different leadership in Washington, D.C., that would support federal grants to help pay for Cap and Stitch.
Fuentes agreed that it’s important to future proof the project. And she emphasized that if Austin’s business community wants a more beautiful and economically vibrant Downtown, now is the time to get involved. “We would like to be able to have a park over I-35, instead of looking at expanded highway lanes,” Fuentes said. “But at this point, the business community and the philanthropic sector will have to step up to help fund the project. I think the city has done its part.”
This article appears in January 30 • 2026.