Inflation and design changes push the cost of Project Connect to over $10 billion

Less than two years after the biggest transit expansion in Austin’s history, costs have already ballooned by at least 40% and are now somewhere above the $10 billion mark.

Transit planners commit to completing Project Connect plan voters approved in November 2020 and have a “working expectation” of no further tax increases, according to an internal memo from Project Connect’s Dave Couch, but the possibility has not been entirely ruled out.

The local portion of Project Connect, just over half the cost, is funded by a voter-approved 20% increase in the city’s property tax rate.

The planners intend to complete the project by adjusting the schedule; some parts could take longer to build, as planners expect more tax revenue to come from the 8.75 cents per $100 of land value spent on expanding transit.

“The Project Connect team remains fully committed to delivering on the promise to build the voter-approved program in November 2020,” spokesperson Tawaun Cole said in a statement.

The transit expansion, when completed, will significantly increase the capacity of Austin’s major streets by allowing people to frequently ride light rail and electric buses capable of carrying hundreds more people per hour than cars and trucks. The project will require reshaping of main streets to prioritize transit over cars.

Austin Transit Partnership

A light rail transit travels down a fictional street in Austin to show how Project Connect will transform the streetscape in parts of the city.

What drives up costs? Two major factors: price inflation on everything from building materials to real estate to design changes.

Let’s start with the basics.

Project Connect includes two light rail routes. The Orange Line will connect North and South Austin. The Blue Line will depart from Austin-Bergstrom International Airport through southeast Austin and into downtown.

A downtown subway tunnel, a new commuter rail line to East Austin’s Colony Park, an extension of the existing commuter rail, and four new high-frequency bus lines also make up the project.

The light rail and subway tunnel, the costliest components of the plan, drive costs to the highest level.

The cost of the tunnel was first estimated at $2 billion, but has now more than doubled to $4.1 billion. This is because the length has more than doubled.

Flood hazard, the slope of the hill leading to South Austin and other technical factors prompted the designers to increase the length of the tunnel from 1.56 miles to 4.19 miles.

A slide from an Austin Transit Partnership presentation showing how the City's Capital View Corridor affects subway tunnel length, one of many factors leading to a longer and more expensive tunnel.

Austin Transit Partnership

A slide from an Austin Transit Partnership presentation shows how the City’s Capital View Corridor affects subway tunnel length, one of many factors leading to a longer and more expensive tunnel.

The extension of the subway tunnel from Third Street downtown to Live Oak Street at South Congress requires putting two additional stations underground: the Orange Line station at Auditorium Shores and the station at South Congress will be underground.

In addition to this, the Blue Line tunnel planned to run along Fourth Street in downtown Austin now includes a subway station at Congress Avenue and a crosswalk that would allow people to walk underground along the tunnel.

Downtown Transit Tunnel Illustration

Austin Transit Partnership

The Project Connect plan includes a subway tunnel running down Fourth Street. The addition of the pedestrian lobby made it more expensive.

Other costly changes to Project Connect include extending Dean Keaton Street to San Antonio Street, so cars have a place to turn when traffic is restricted from Guadalupe. That, plus changes to the design of a bridge over Lady Bird Lake, drainage and water management requirements, and other adjustments, added another $450 million to the total.

This map shows the proposed extension of Dean Keeton Street.  The map is oriented so that west is at the top.

This map shows the proposed extension of Dean Keeton Street. The map is oriented so that west is at the top.

The cost of moving utilities alone has increased by $260 million.

“Many of these increases come from the community input process and collaborating on technical design and requirements with all three parties,” Couch explained in the memo.

Inflation also weighed on Project Connect’s budget.

A spike in real estate prices drives up the cost of seizing land through eminent domain for right of way. The median selling price of a home in Austin rose 15% last year to $565,000, according to the Austin Board of Realtors.

Early estimates called for $250 million for land acquisition for the Orange and Blue Lines. This amount has now increased to $1.19 billion.

A chart showing cost increases for Project Connect

This chart included in Dave Couch’s memo to local authorities outlines Project Connect’s cost increases.

The less expensive parts of Project Connect are still on budget, according to Couch’s note. High-frequency bus lines, MetroRapid, received an additional $500,000 in federal grants. This money goes back into the main Project Connect fund.

The expansion of the MetroRail commuter rail line is on schedule and on budget, Couch said. The next big step is the grand opening of a new MetroRail station scheduled for July at McKalla Place, near the Q2 stadium.

Abdul J. Gaspar