Analysis finds I‑35 highway "caps" would not pay for themselves; staff recommends limited roadway commitments and private fundraising push

City financial and transportation staff on May 6 told the Austin City Council that highway ‘‘caps’’ — decks over I‑35 intended to reconnect neighborhoods and create public space — are unlikely to generate enough tax or on‑cap revenue to cover their construction and ongoing structural maintenance costs, according to a consultant analysis prepared for the city.

The finding, presented by consultant Mark Gilbert and Finance Director Kim Olivares, framed staff’s May 6 recommendation: to commit only the Phase 1 roadway elements for two downtown segments in the near term while launching an aggressive effort to assemble private, philanthropic and other non‑general‑obligation funding for horizontal decks, on‑cap amenities and long‑term operations. Staff said the council will be asked to make a formal funding commitment on May 22.

Key finding on return on investment

Mark Gilbert, presenting a contracted ROI study, said the core result is blunt: caps “will not produce sufficient revenue to fund their construction and operations.” The analysis modeled on‑cap commercial ground‑lease revenue, projected increases in nearby assessed values (a “park premium” effect) and potential tax increment receipts, and compared those receipts to capital, financing and ongoing structural O&M costs (city payments to TxDOT). For the five primary cap opportunities studied, the modeled on‑cap and near‑cap value increases fell short of the capital plus annual maintenance gap.

Gilbert told council the study found construction costs per acre for deck work that are high relative to typical land costs: an average of roughly $34 million per acre for deck (structure) only, rising to about $43 million per acre if minimum amenity phases are included. He also said structural O&M payments owed to TxDOT over time are large enough to turn projected annual net city revenue negative in the analysis.

Funding stacks and precedent

The presentation emphasized that major cap projects completed elsewhere…