Federal transit officials last week gave Austin Light Rail a key vote of confidence, issuing a “medium-high’’ rating in an annual funding recommendation report that keeps the project on track for a 2027 groundbreaking. The rating positions Austin to compete for a federal Capital Investment Grant expected to cover roughly half the system’s cost.
The federal mark is the latest sign of momentum for a transit plan that has struggled through years of redesigns, cost escalations and political blowback. Since Austin voters approved Project Connect in 2020 — signing off on a generational $7 billion transit overhaul and an ongoing 20% property tax increase — the light rail component has repeatedly been scaled back as projected costs ballooned. The initial 27-mile vision shrank to fewer than 10 miles, even as the price tag grew and questions mounted about how far local dollars would stretch. The Austin Transit Partnership, the entity created to build the system, has also spent years recalibrating designs amid lawsuits, legislative pushback, inflation, right-of-way challenges and pressure to deliver something close to what voters were promised.
Even with those complications, November’s rating brings ATP closer to securing about $4 billion in federal funding. The rating, the strongest overall grade FTA assigned for the 2026 fiscal year, signals that federal staff view the project as financially and technically viable.
Greg Canally, ATP’s CEO, said the rating is one stage of a multistep, highly competitive funding gauntlet.
“It’s about five steps to get your federal funding,” he said. “It doesn’t all happen in one fell swoop, and this is a key step to be able to continue to advance through the federal funding process.”
Once a project is accepted into the grant pipeline, sponsors must complete an environmental review, commit non-federal funding, advance engineering and design work, and pass multiple rounds of federal scrutiny before the FTA agrees to a long-term funding contract.
“When they decide to invest, they look at all aspects of the project and all aspects of how we are organized to deliver the project,” Canally said. “That rating is a reflection of how they’re thinking about us right now.”
The evaluation includes several components, each scored separately, including financial capacity, mobility benefits and economic development. Canally said he is especially encouraged by the medium-high economic development rating.
“That rating… is a really strong reflection of all the hard work we’ve done in Austin, together with our partners at the city, to make sure that we can give Austinites more choices about how to get around, more choices about where to live and ultimately create a better economic opportunity,” he said.
As currently designed, the starter light rail system would run north–south between 38th Street and Oltorf Street, with an eastern spur from near Lady Bird Lake to just inside State Highway 71 toward Austin-Bergstrom International Airport. Later extensions could eventually reach the airport terminal and the Crestview area.
The next major hurdle is completing the federal environmental review, which Canally said remains on schedule to finish early next year. ATP also plans to select three major contractors in 2026 as it pushes toward breaking ground.