Paying For New Trains And Buses In Austin Could Involve Joint Venture, New Taxes

Jan 14, 2020

As leaders consider how to fund an expansion of Austin's transit system, they've determined borrowing money through bonds may not be enough. So they're considering whether to ask voters to increase taxes to help pay for it.

At a joint work session between the Austin City Council and Capital Metro on Tuesday, city leaders said they could form a local government corporation that would help finance Project Connect. The plan would be a major expansion of the region’s transit system that could include light rail, bus rapid transit or a combination of the two. The projects could cost anywhere between $3 billion and $10 billion.

Read the entire Project Connect presentation here.

The joint venture would leverage federal funding opportunities and provide transparency for taxpayers, officials say.

“Capital Metro is in great financial shape, but we can’t do it all, not at the scale that is currently needed and being envisioned,” said Reinet Marniwek, the authority’s chief financial officer. “Capital Metro has been working very closely with the city to come up with potential mechanisms that we can utilize to pay for the system.”

Credit Capital Metro

Those mechanisms could also include borrowing money through bonds, a new vehicle emissions tax and a property tax increase. None of those options would go into effect without voter approval in November.

Bonds could pay for the costs of building the expansion, but not for operating and maintaining the expanded system, which is a reason leaders are considering a tax rate election for transit.

RELATED | Cost Vs. Capacity: Capital Metro Crunches The Numbers On Future Transit Plans

The city conceivably could use existing tax revenues, but officials said that using those on transit would require moving money away from other priorities like parks and public safety.

Credit Capital Metro

“We know that whatever route we go would require an investment, an investment that first and foremost would be going to the voters,” said Greg Canally, deputy chief financial officer for the City of Austin. “The idea of funding and financing and the investment will be in essence one conversation, because they are inherently linked in terms of what we will be investing and what we’re getting for that investment.”

Leaders stressed the importance of a dedicated revenue source for the expansion, as it is a requirement to receive federal funding. The plan assumes the Federal Transit Administration kicks in at least 40% of the funding needed for the system.

“What they care about is not only the ability to have a dedicated stream for capital funding, but also for operating the system, and also for having the system in good repair in the long term,” Cannally said.

Buses, Trains and A Tunnel

Project Connect proposes expanding Austin’s transit system to deal with continued growth in the region. The population here is expected to double by 2040. Capital Metro has seen growing ridership for the past 15 months, already straining the capacity on certain routes in the system.

The total cost of the package would depend on the mode selected for the new lines, which would run in dedicated lanes of travel. Bus rapid transit would cost anywhere from $3.2 billion to $5.5 billion, light rail could cost anywhere from $5.9 billion to $10.3 billion. The range accounts for whether the trains or buses run at street level, above ground or underground.

Two new lines, the Blue and Orange would run in dedicated lanes of travel, so they wouldn’t mix with normal traffic. The Blue Line would stretch from Austin-Bergstrom International Airport to the ACC Highland campus. The Orange Line would run from Tech Ridge to Slaughter Lane.

Credit Capital Metro

A third line, the Gold Line, would run between ACC Highland and Republic Square, providing an additional link between the two lines.

The Project Connect vision also includes expanded, limited-stop MetroRapid bus service and another commuter rail line, known as the Green Line that would run through East Austin to Manor and Elgin. Red Line improvements are also on the table, allowing northbound and southbound trains to run at the same time.

“What we’re really for is something that provides that long-term solution, to provide the safe reliable transportation that will transform the City of Austin and provide that future capacity,” said Dave Couch, Project Connect Program manager.

Couch said new analysis found that the bus rapid transit option would be at capacity by 2040, a consideration for leaders as they determine the final plan.

Austinites who have spoken with Project Connect’s community engagement team indicated a strong preference for both rail and a downtown transit tunnel. The Project Connect team is conducting a further analysis of the tunnel idea to see if would be feasible to add to the transit plan.

“A tunnel is challenging but it’s a very, very good construction technique,” Couch said. “And it does give you a tremendous advantage by being able to go ahead and get away from the street network.”

An initial recommendation on what will be included in the expansion, and how to pay for it, is expected in March. A final proposal would come in May, with voters weighing in during the November election.

Got a tip? Email Samuel King at samuel@kut.org. Follow him @SamuelKingNews.

Read the entire Project Connect presentation below