Conceptual rendering of a capped I-35 in Austin between 4th and 7th streets.
City of Austin
A city-led vision to cap Interstate 35 with parkland and community amenities in Austin could shrink yet again as the Capital City struggles to secure funding for the project.
In a Thursday, May 14, post on the Austin City Council message board, Austin Mayor Kirk Watson proposed some alterations to the Cap and Stitch vision that would allow residents and visitors to reap the benefits sooner and enable the city and the Texas Department of Transportation (TxDOT) to be more strategic in their funding investments.
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The revamped vision presented by Watson outlined funding the construction of a 160-foot-wide finished cap, or a large deck-like plaza that would be built over the highway, that would extend from Palm Park across I-35 to East Austin. Under preliminary timelines, that cap would be completed alongside the conclusion of construction on the I-35 Capital Express Central Project.
“This proposal, unlike the other cap proposals previously, would go over the top of the frontage roads on the West side, creating a complete land bridge from the park to the East side,” Watson wrote.
Watson also outlined “future proof[ing]” caps via investing in roadway elements at 11th and 12th streets to reconnect East Austin with downtown at a historic site. That possible cap could link the Texas State Capitol to East Austin’s historic cultural and business neighborhood.
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The estimated total cost of the two-part proposal is $49.8 million, including a $41 million State Infrastructure Bank loan alongside a city commitment of $8.8 million from CO bond dollars.
“The majority of the city payments would not be due until after 2028, which would make a difference in our debt capacity as we are having discussions regarding a future bond election,” Watson said, adding he’d bring this reimagined funding plan to the council’s meeting on Thursday, May 28.
In response to Watson’s message, Council Members Krista Laine and Mike Siegel indicated their support for the proposal as a “fiscally responsible path” forward.
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TxDOT timeline changes, funding woes for Austin I-35 project
In May 2025, the Austin City Council approved a $104 million funding package with the Texas Department of Transportation to construct roadway elements that could one day support the elevated green space, art and vendor opportunities. That $104 million co-sign was already a reduction in scope and scale for the I-35 “Cap and Stitch vision,” which ballooned up to more than $1 billion in estimated costs based on the initial blueprint.
Instead, that $104 million funding package covered roadway elements for future caps from Cesar Chavez to Fourth streets, Fourth to Seventh streets, 11th to 12th streets as well as two 300-foot stitches, or widened east-west crossings, between 41st Street and the Red Line in North Austin.
Conceptual rendering of a capped I-35 in Austin between Cesar Chavez and 4th streets.
City of Austin
However, come January, a change in TxDOT’s construction timeline put that $104 million cost figure in jeopardy. TxDOT informed city officials that its I-35 Capital Express Central Project — a massive $4.5 billion, eight-mile expansion of the interstate near downtown — would now be divvied up into two bid packages. The first advance construction package is slated to run from 2027 to 2031, while an ultimate construction package is earmarked for 2029 to 2033.
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Based on those timeline changes, the final design of the city’s roadway elements won’t be finalized until 2028, delaying construction work on those enhancements to 2029.
“Because the City is responsible for all cost overruns, the delay in design, associated cost estimates, and construction bids present some risk,” the January city memo read in part. “However, the current Phase 1 cost estimate provided by TxDOT, based on 30% design completion, includes a $17.33 million line-item contingency (20%) as part of the $104 million City commitment to account for potential cost escalation.”
During a March 23 city council work session, city staff recommended that the Austin City Council not move forward with any funding commitments in May to cover Phase 2 I-35 highway caps. The city urged the council to stick with the $104 million investment in roadway elements and focus its energy on finding outside funding partners to finance additional caps in the future.
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As of late March, city officials said no private and philanthropic partners had come forward to offer financial assistance since the council approved that $104 million down payment last May. City staff also noted they are seeing even higher cost projections for some of the future build highway caps, with the 11th to 12th streets cap soaring from an estimated $50 million investment to $86 million based on design changes.
Austin City Council is working against a May deadline from TxDOT to decide where the city wants to commit to building highway decks atop those roadway elements, and the dais has until November to come up with the funding to commit to building those caps.