Austin city leaders to look at how to pay for CapMetro’s ambitious build-out

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AUSTIN (KXAN) — In the first major city policy meeting of 2020, Austin City Council is scheduled to meet with the Capital Metro Board of Directors for a Joint Work Session at Austin City Hall Tuesday at 2 p.m.

While the exact details of the meeting have not been released yet, local leaders are expected to discuss potential options for fulfilling a vision for high-capacity transit through the Austin area.

CapMetro previously explained to KXAN that Tuesday’s meeting should offer an update on Project Connect, a plan to create high-capacity transit in the Austin area.

“We have spent the better part of the year exploring alternatives and projects, and now it’s time to start talking about how we put this into action and how we pay for it,” said Jackie Nirenberg, CapMetro’s community engagement manager.

A rider gets on a CapMetro bus on Monday, Jan. 13, 2020. (KXAN Photo/Chris Davis)

Last week, CapMetro spokesperson Mariette Hummel explained to KXAN that the establishment of the “Orange” and “Blue” lines — dedicated transit corridors through central and southeast Austin — will definitely be part of the discussion Tuesday. There’s a chance a potential downtown transit tunnel could be part of the discussion too.

The plan, advocates say, would represent a major shift in how people get around the city. John Langmore, chair of the nonprofit coalition Transit for Austin (TFA), likened the change to the construction of Interstate 35.

How to pay for it

At its last joint work session with City Council in October, CapMetro outlined potential Project Connect costs. Depending on the routes and modes (trains or buses) in the final plan, the transit company presented a price tag between $4.7 billion and $9.8 billion.

CapMetro plans to use federal grants to cover about 40% of the cost of Project Connect.

“And then it’s up to the city to come up with their alternative methods for providing some funding for the project,” Nirenberg said. “There’s a number of ways that that can be done.”

A breakdown of potential costs associated with Project Connect presented at the October joint work session. (Courtesy: Capital Metro)

Langmore, who’s familiar with many of the discussions surrounding Project Connect, sees two funding mechanisms as the most feasible options: a transportation bond and a property tax rate increase, both of which would likely go before voters this year.

There have been murmurings in the Austin political scene of a large transportation bond going before voters in November. In fact, Transit for Austin launched in the fall of 2019 with the express purpose of pitching a large November 2020 bond effort which would encompass bus lines, rail lines and transit lines. Additionally, a group of Austin activists has already floated a plan for how they would like to see a 2020 transportation bond play out.

Amid the murmurings about potential transit plans, there have been some rumors, not all of them true. For example, CapMetro explained to KXAN rumors that it will be consolidating into the city of Austin or taken over by the city are incorrect.

Austin City Council, however, has not provided any official direction yet on whether a transportation bond will be on the ballot this year.

“It’s a little too early to be saying specifically this is the thing that we’re going to do in November,” council member Jimmy Flannigan told KXAN.

Flannigan explained Monday that there are only a couple of other methods outside of a transportation bond which the city can put on the ballot to fund a transit measure like this.

“What’s really important is the reason transit systems fail over the long term is that they overfund capital and underfund maintenance,” Flannigan said. “We are not going to make that mistake; we are going to have a funding source that is dedicated and permanent and will last for generations.”

The other most attractive option, Langmore said, is a property tax rate increase, which would provide that dedicated funding source.

A MetroRail train leaves a station. (KXAN Photo)

Project Connect is going to cost a lot of money in operations and maintenance over its entire life, he explained, and a tax rate increase could be earmarked specifically for this purpose, similar to the mechanism used to fund Dell Medical School.

Issuing a bond for a project like this, while more traditional, he explained, would mean the city would have to go back to voters to issue more debt as new costs arose, whereas a property tax increase provides dedicated funding in perpetuity. Additionally, Langmore said, a tax increase would also likely bring with it the creation of an entity to manage the money collected so it doesn’t go to the city without oversight.

There are also other funding options the two entities can consider, Langmore said, and those will likely be discussed Tuesday as well.

Regardless of the funding mechanism they eventually settle on, Flannigan said he expects to put something before voters in November.

“The cost to address the thing the community has avoided to address will never get cheaper than it is today,” he said. “We have to make this decision now.”

Next steps

No decisions or recommendations will come out of Tuesday’s joint session. Instead, both groups will go back to the public to gather feedback.

“The technical team and the city will go back to their respective places to come up with what they think their best method for funding the project will be,” Nirenberg said, “and we will make that recommendation in March.”

Langmore said promoting the benefits of Project Connect will be an important part of those outreach efforts so that people don’t just focus on the costs.

KXAN will bring you in-depth coverage of Tuesday’s Joint Work Session and the transportation information local leaders share then.

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