In Review - Austin City Council’s First Half of 2024 (Part 2)
In Review - Austin City Council’s First Half of 2024 (Part 2)
FALLING REVENUES, ARPA EXPIRATION BRING BUDGET CHALLENGES
Ahead of next month’s expected budget work, Austin City Council learned earlier this year of significant budget challenges, driven by an anticipated decline in sales tax revenue and the looming end of federal funding from the American Rescue Plan Act (ARPA).
City CFO Ed Van Eenoo told Council early in the year that the 4 percent sales tax growth anticipated in this year's budget could lead to a shortfall of around $15 million if the current trend of flat sales taxes persists. That financial strain will be compounded by the end of ARPA funds, which have provided a critical, though temporary, boost to the city’s finances.
The city’s various programs related to tenant rental assistance and housing stability are under scrutiny. Council members have expressed concerns about the continuity of these programs, including the end of tenant stabilization funds. Council member Chito Vela and Vanessa Funetes stressed the need for consistent funding to avoid disruptions for both recipients and contractors, advocating for a permanent emergency rental assistance fund to continue efforts to reduce homelessness.
Another significant concern is the Austin Police Department’s overtime costs, which have exceeded budgeted amounts due to a shortage of approximately 350 officers. Van Eenoo explained that this shortage has resulted in savings on the normal staffing budget, but additional overtime pay is necessary to ensure proper shift coverage.
As the council prepares to tackle the 2025 fiscal year budget later this summer, they must navigate these financial challenges while ensuring the sustainability of critical programs and services. The decisions made will need to balance immediate needs with long-term financial stability, particularly in light of the city's changing economic landscape.
CAPS AND STITCH GET EARLY APPROVALS FOR I-35 RECONSTRUCTION
The plan to put caps and stitches over a reconstructed Interstate 35 is moving forward, with Council voting to to fund the construction as part of a major redevelopment project. The effort, estimated to cost over $500 million, aims to reconnect East and West Austin by creating large plaza-like areas over the sunken freeway, which will support soil, trees, people, and buildings, as well as an east-west roadway crossing.
To fund part of the cost, Council decided to apply for up to $191 million from Texas' State Infrastructure Bank (SIB) loan fund to finance part of the project. That decision came after bypassing a federal Transportation Infrastructure Finance and Innovation Act (TIFIA) loan, which would have required a bond election. The SIB loan offers advantages such as no closing costs and an interest rate around 3.5 percent. Although this request is significantly larger than any previous SIB loan, state officials have shown a positive attitude toward the cap-and-stitch program, encouraging Austin to think big.
The project includes several key components:
A solid cap over the roadway from Cesar Chavez Street to Fourth Street
A series of three caps from Fourth Street to Seventh Street
Caps at 11th and 12th streets
A mostly solid cap from 38 1/2 Street to Airport Boulevard
An enhanced pedestrian stitch at Holly Street
The total cost for these enhancements is about $525 million, with the city recently receiving a $99 million federal grant, reducing the amount needed from the SIB loan and other sources. The city must provide $19 million for the remaining design work by December.
In a briefing with Council Richard Mendoza, director of the Transportation and Public Works Department, said the city is exploring additional federal grants and other funding options to cover any shortfall.
The city plans to move forward with the construction, with the timeline and funding options being closely monitored. Upcoming agenda items include a budget amendment for the initial design costs, a notice of intent to recoup these costs with future tax-exempt obligations, and an amendment to an existing funding agreement.
COUNCIL CONSIDERS DEVELOPMENT PLANS SOUTH OF BRIDGE
City Council is leaning towards supporting staff’s recommendations for revising the planning and density bonus programs for the South Central Waterfront District, rejecting several substantial ideas from the Planning Commission. This spring, principal planner April Geruso highlighted staff concerns about the Planning Commission's 13 amendments to the district plan, covering fee-in-lieu payment structures, floor area ratio calculations, and extending the Downtown Density Bonus Program.
Staff opposed four amendments outright and found three beyond the plan's scope, while six others are being acted upon or completed. The item that attracted the most opposition was the proposal to extend the Downtown Density Bonus Program to all four subdistricts south of the Colorado River.
Geruso argued that the Downtown Density Bonus Program does not meet the specific needs of the South Central Waterfront, which includes on-site affordable housing, pedestrian transit infrastructure, and incentivizing open spaces and parks. She emphasized that a more tailored approach is necessary for the district's predominantly residential areas.
Staff's stance mirrors that of the South Central Waterfront Advisory Board, which also opposed several Planning Commission amendments. Geruso explained to the Mobility Committee and the Housing and Planning Committee that incorporating the Downtown Density Bonus Program across the district would be too broad and would not address the unique needs of the area.
The city is preparing to move forward with the revised plan for the South Central Waterfront District, which will be considered for adoption by the Council next month. This plan is seen as a vital tool to guide the development of one of Austin’s most prized real estate areas while balancing the need for affordable housing, parkland, and other public benefits.
Continue to Part 3 (Link)