Bigger price tag, smaller footprint: How Austin’s Project Connect went off the rails
Legal, political challenges continue to threaten Austin’s multibillion-dollar light rail project that voters approved in 2020
By Joshua Fechter – Texas Tribune
May 21, 2026
https://www.bizjournals.com/austin/news/2026/05/21/austin-project-connect-controversy.html
Before landing in Austin, Cathy Cocco lived in both New York City and Tokyo, where she enjoyed the convenience of robust public transit.
So given the chance, she was happy to cast a vote in 2020 for a state-of-the-art, 20-mile light rail system, running through the heart of Austin all the way to the airport — even though the plan didn’t directly serve her neighborhood in northwest Austin.
“You have to vote for what’s good for the city,” Cocco said.
Some 242,000 Austinites agreed with her. In the midst of the Covid-19 pandemic, Austin voters made a bet on the capital city’s future, indefinitely raising their own city property taxes by 20% to fund Project Connect, a $7.1 billion proposal for an electric, urban rail system along with a bevy of other public transit improvements, including new high-frequency bus routes and expanded shuttle pickup service. Construction was slated to begin in late 2024.
Nearly four years after Cocco cast her vote for the rail, she sued the city to stop it.
Today, not a single foot of light-rail track has been laid. The total cost of the light rail alone is now $8.2 billion — up from the initial cost of $5.8 billion — but its footprint has been slashed to less than 10 total miles. The new plan no longer reaches Austin-Bergstrom International Airport and the number of stops was cut from 26 to 15. At less than half the original proposed length, the light rail now costs almost $840 million per mile, three times more than it did in 2020.
Project Connect is now the costliest public transit project per mile in Texas history. It’s also the seventh most expensive light rail project per mile in the U.S., out of 34 compiled by the Marron Institute of Urban Management at New York University and adjusted for inflation.
The massive jumps in cost and shrunken scale left Cocco disenchanted with the project. She and a group of taxpayers sued the city in 2024 to stop it from collecting property taxes to fund the project, arguing that it wasn’t what voters had been promised.
“You said you’re going to do all this, and then you do a fraction, and then you’re still going to make us pay for the whole thing,” Cocco said. “At what point is that illegal?”
From the beginning, Austin officials vastly underestimated the cost of the light rail. A key reason, transit experts say, is that very little of the project was designed before it went to voters. And amid an unprecedented pandemic that created global economic uncertainty, transit officials did not account for rampant inflation and surging real estate prices that would balloon costs over the next few years.
Now even the more modest rail’s future is in doubt.
The project still requires billions in federal dollars, covering half of its costs. It has received none. The final decision to give those dollars rests with the Trump administration, which hasn’t agreed to fund new transit projects since President Donald Trump returned to office. And U.S. Sen. John Cornyn recently said he opposes Austin rail getting any federal funds, adding his voice to the long list of Texas Republicans in power who oppose or are actively fighting the project.
Even the local property tax dollars are in question. While Cocco’s lawsuit is pending, a separate legal battle threatening to gut the light rail project is moving ahead. That fight will determine whether the city’s use of a property tax hike to fund the transit system is legal, and it will ultimately be decided by the Texas Supreme Court.
“It’s a bait and switch on taxpayers,” said Bill Aleshire, an Austin attorney and Travis County’s former top elected official who filed the lawsuit.
Austin officials project confidence in the light rail project, while acknowledging the higher costs and smaller footprint. No major infrastructure project, city and project officials have argued, was immune from cost increases spurred by global inflation.
Officials and transit advocates say that even the smaller light rail plan is necessary to give people more options to move around the state’s fourth-largest urban area as it grows.
Greg Canally, who heads Austin Transit Partnership, the city-backed nonprofit charged with building the light rail, said the system can still be expanded in the future. Officials now refer to the current map as “phase one,” a nod to the fact that they hope to eventually reach the original scope put before voters.
“That’s what we’re focused on delivering for Austin: getting Austin Light Rail phase one built,” Canally said. “That’s an expandable system so that future Austin can keep on growing.”
Austin Transit Partnership officials intend to break ground on the light rail project next year, and don’t expect a decision on whether federal dollars will be made available for the project until sometime after that. ATP won’t say exactly how much of the project they’d be able to build without federal funds.
This all comes as the Texas Department of Transportation — responsible for building highways — has called for more public transportation if the state is going to keep growing. The success or failure of the Austin project could be a bellwether for the rest of the state as places like Tyler and Fort Worth consider similar efforts.
Austin riders won’t set foot on a light rail car until 2033 at the earliest.
Austin Mayor Kirk Watson said despite the setbacks, the city cannot afford to wait.
Watson was also Austin’s mayor in 2000, the first year voters were asked to weigh in on a light rail plan. But they rejected it. That would have been the best time to have started work on such an ambitious and long-ranging transit project, he said.
“The second-best time is now. It’s never going to be cheaper,” he said.
A big idea
After Austin voters shot down light-rail proposals at the ballot box in 2000 and 2014, traffic congestion fueled by the city’s continued growth only worsened. Officials with Capital Metropolitan Transportation Authority, the Austin region’s primary transit agency, went back to the drawing board in 2016 — and later came back with the first draft of a sprawling vision for the city’s public transportation system called Project Connect.
The light-rail line would run at least every 10 minutes and include an underground tunnel through downtown with a flashy shopping concourse. Planners sketched out potential future phases that could take light rail further into North and South Austin.
The plan included upgrades to Austin’s existing suburban commuter rail line, which connects downtown Austin to the northern suburb of Leander, aimed at enabling greater frequency and ridership while adding new stations. A new arm of that line would stretch into eastern Travis County. High-frequency, rapid bus routes would criss-cross the city. An existing on-demand service operated by CapMetro would expand to more neighborhoods.
“I think we had a city that was ready to invest in itself,” said Steve Adler, who was mayor at the time of the 2020 vote, in an interview.
The project’s costs were peer reviewed through the American Public Transportation Association. To Roberto Treviño, who sits on the board of the Houston region’s primary transit agency and participated in the review, the overall project’s $7.1 billion price tag was reasonable, given its scale. But that review took place in January 2020 — a couple months before COVID-19 shut down the global economy.
Seven billion dollars “in 2020 got you a lot. And if you do a cost-per-mile basis of that, it seems reasonable,” Treviño said in an interview.
But when officials asked voters to greenlight Project Connect, only 5% of the light rail had been designed, according to an April 2022 agency memo. That initial lack of design meant the project’s costs would almost certainly go up, transit costs experts said — even without historic inflation.
“That’s just not enough design work to really have a solid sense of the numbers,” said Rohan Aras, a senior transportation policy analyst at the Niskanen Center, a nonpartisan think tank.
Major transit projects often go before voters with little design work done, a problem that bedevils public transit in the U.S., transit costs experts said. Fully designing a project takes money localities often don’t have, making cost overruns common.
“What you’re voting on is sort of like a dream rather than an actual constructible plan,” said Eric Goldwyn, who researches public transit costs at the Marron Institute.
There wasn’t a viable way to firm up the project’s costs and design more before going to voters in 2020, said Wade Cooper, an Austin lawyer who chaired the CapMetro board during Project Connect’s formation.
“In a perfect world, sure, you have a bunch of money sitting around to design the project fully,” Cooper said. “But practically speaking, in the time period that we had with a major election, I don’t think we could have squeezed in anything.”
Officials also had to figure out how they would pay for it.
Austin had hit a cap set by state lawmakers on local sales tax rates, a typical way cities and transit agencies elsewhere pay for new transit. Bonds could be issued to fund the construction and capital costs, but they couldn’t be used for the system’s day-to-day operations, planners deemed. Unlike places like California, New York and Washington, Texas largely doesn’t help pay for public transit in its major urban areas. Texas spends significantly less per capita on public transit than other large states including Florida, according to a report from the nonprofit Transportation for America and the National Campaign for Transit Justice.
Austin officials settled on a 20% permanent hike in the city’s property tax rate. For the owner of a $325,000 home, that meant a $284 increase on their annual city tax bill.
In November 2020, voters said yes by a 15.8-point margin.
“I really do think that part of it was showing a huge vision package,” said Susan Somers, former board president of AURA, an Austin group that pushes for better public transit. “I think that was really inspiring to people.”
Critics call the hike a blank check.
“There is no budget, and there is no limit, because this tax is forever,” Aleshire said.
Bigger price tag, smaller footprint
As the project’s design progressed, unforeseen costs added up — tacking on billions.
The light rail’s land acquisition costs nearly quadrupled amid a surge in Austin land values. Planners also discovered they’d have to buy more properties along the line than they previously expected, according to an April 2022 agency memo.
Inflation drove up the price of construction materials, while a tighter job market increased labor costs.
Planners encountered the steepest overruns when designing the downtown tunnel, the centerpiece of the project.
Building a tunnel is expensive in part because it requires specialized labor as well as pricey boring equipment and techniques. A transit project with any amount of tunnel tends to be more costly than those that run at street level, transit costs experts said.
As its design progressed, planners found the tunnel would have to plunge deeper underground and run a longer distance. That finding significantly drove up the tunnel’s costs — which doubled from $2 billion to $4.1 billion, roughly $978.5 million per mile.
Overall, the total cost of just the light rail component of Project Connect ballooned by nearly 80% to $10.3 billion.
Following public input, Austin officials settled on a pared-down version of the light-rail line in summer 2023, stripping out the tunnel and slashing the system in half.
Under the new plan, the rail stops just short of the Austin airport, though officials have said a future airport extension is a high priority.
“You have three choices when the cost of infrastructure goes up,” Canally said. “You can just stop, you can go back and ask for additional funds or you can reframe the project and size it to live within your budget.”
The project’s costs remain puzzlingly high for a project that has no tunnel, transit costs experts said. It’s the second most expensive light rail project per mile, when compared to 21 U.S. light rail projects that don’t tunnel, according to Marron Institute data.
As the project shrank, so did its ridership estimates. Austin officials initially projected that within two decades at least 70,000 riders would take the line, including future extensions, each weekday. The smaller line would see 34,000 daily riders under new projections. That means the cost per rider for the light rail is around $200,000, enough that Austin could buy every rider an Aston Martin luxury sportscar.
Goldwyn said the project’s per-rider costs are alarmingly high, and it might make more sense to serve the project’s expected demand with bus rather than light rail. It used to be that U.S. rail projects cost between $50,000 to $75,000 per rider, Goldwyn said, high compared with other countries. The Austin project is among an emerging group of rail projects with per-rider costs exceeding $100,000, he said.
“Look, I’m a New Yorker, I don’t drive, I’m as pro-transit as it gets,” Goldwyn said. “But the people of Austin voted for something, and maybe they were sold a bill of goods that could not be delivered. I don’t know, but that’s not good.”
While critics cast the shrunken version as a “bait-and-switch,” Austin officials have argued they had the authority to reconfigure the line in the face of higher costs.
Voters asked for a light rail system funded with property taxes — and that’s what they’re getting, Watson said.
“The purpose was to get a rail system in Austin,” said Watson, who took office in 2023. “This is a meaningful phase one, and part of that purpose was to do it within a very specific monetary amount…and we’re doing that.”
Project officials have defended the light rail’s costs.
For one, they’re building a brand new system on some of the most expensive real estate in Austin — and retrofitting an already built urban environment to accommodate new rail.
“It’s connecting the university with the government district, with downtown across the lake,” said Veronica Castro de Barrera, an architect who chairs the ATP board. “It takes you through a route that is very pricey per real estate in its context. It also has the oldest infrastructure underground.”
A new system comes with high upfront costs, ATP officials said, like a fleet of light rail cars, along with a 62-acre facility to store and maintain them.
“Those are all sort of those one-time costs,” said Bryan Rivera, ATP chief financial officer.
The project also calls for a new bridge over Lady Bird Lake, as well as elevated track southeast of downtown, both of which are significant cost drivers. The costs also include $1.1 billion in financing, which ATP expects will be eligible for reimbursement from the feds.
ATP officials said costs have stabilized and they’re doing what they can to contain them going forward. Canally said he cut the agency’s staffing plan by about 25% after he became CEO. The project’s builders are now more involved in the design process so they can advise designers on how to contain costs, he said.
The project is still catching flak. Earlier this year, ATP officials proposed moving the agency into high-end downtown office space with views of Lady Bird Lake – for $32 million. The proposal drew fierce online backlash, and officials backed off the idea.
And while the project’s future is in the balance, Canally, the top official, secured considerable pay bumps along the way. The ATP board hired Canally, then the project’s chief financial officer, as interim CEO in 2022, after ousting his predecessor, at an annual base salary of $310,000. The following year, the board gave Canally a nearly 18% bump to $365,000 when they hired him as full-time CEO. Last year, the board bumped up Canally’s pay once more — to nearly $405,000, about an 11% increase.
Stiff headwinds
Moving forward, Project Connect still faces significant headwinds.
Republican lawmakers have sought to sap the lifeblood of the project, pushing proposals in 2023 and 2025 to cut off the project from its voter-approved property tax funding mechanism. Those bills died after lobbying from Austin officials.
“Whatever one’s position on light rail, it is simply inaccurate to say voters approved the project as it exists today,” said state Rep. Ellen Troxclair, an Austin-area Republican who tried to kill the project.
Still, Republicans helped lay the groundwork for the project to be challenged in court. In 2023, state Sen. Paul Bettencourt, a Houston Republican, asked Attorney General Ken Paxton to weigh in on whether Project Connect’s financing mechanism is legal.
The measure voters enacted raised the portion of the city’s tax rate that funds maintenance and operations, such as city employee salaries. The city then gives that revenue to ATP, which it intends to use in part to finance bonds crucial to the project’s construction.
That May, Paxton issued a nonbinding legal opinion calling that arrangement illegal — which ATP officials contest.
Paxton’s opinion gave a group of taxpayers part of the blueprint to challenge the project in court in November 2023.
That group, represented by Aleshire, includes Dirty Martin’s Place, a 100-year-old hamburger joint neighboring the UT-Austin campus that would have been demolished to make way for an earlier iteration of the line. An online petition to save Dirty Martin’s from destruction garnered nearly 25,000 signatures, and the latest version of the light rail path appears to preserve the restaurant.
Mark Nemir, who’s owned Dirty Martin’s since 1989 but whose family history with the restaurant runs longer, said that’s not enough.
“What I would like to see happen is this thing go away,” Nemir said.
Austin Transit Partnership countered that lawsuit with its own, asking a judge to allow the entity to issue bonds for construction. The two lawsuits were combined into one legal proceeding, which is slowly making its way through the courts.
Meanwhile, Austin light rail officials are seeking $4.1 billion in federal money.
But the Federal Transit Administration hasn’t awarded funds to any new transit project in Trump’s second term, a break with past administrations dating back to President Bill Clinton, according to an Urban Institute analysis.
The project has found itself without a vocal champion at the federal level — a departure from the Biden years, when then-Transportation Secretary Pete Buttigieg lauded the project.
That lack of support suggests that few of Texas’ Trump allies are using their political capital to help get the federal funds.
“While Austin leaders keep pushing higher property taxes, the State of Texas is keeping Texans moving,” said Andrew Mahaleris, spokesperson for Gov. Greg Abbott, in a statement when asked about Abbott’s stance on Project Connect. “Smart infrastructure grows our economy and moves people efficiently — without more local tax increases.”
ATP officials say they think the feds will come through. So far, the project has cleared every hurdle to gaining federal dollars, they note, including a key go-ahead earlier this year when the administration signed off on the project’s environmental review. The light rail project also scored good marks from the FTA in a process that made it eligible for federal funds.
“We’ve been really successful working with this administration,” Canally said.
To woo the feds, ATP officials have argued the light rail line will be a boon that spurs jobs and economic development along the line.
Austin could be banking on a later infusion of federal dollars from a more public transit-friendly administration to take office after Trump. Waiting to break ground would come with a cost.
“It’s very true that time is money, and so the longer you extend these things out, the more expensive they actually are going to be,” Goldwyn said.
What’s next?
The agency’s putting on an optimistic face, enlisting various Austin celebrities — including Austin FC player Brad Stuver, singer Ben Kweller and Olympic gold medalist Gabby Thomas — to sell the line in a digital ad.
This year will be a busy one for the light rail project, ATP officials say.
Already, they’ve locked in a contract with an outside joint venture to do final design, engineering and construction of the 9.8-mile line — and another to build the operations and maintenance facility for those cars. The board also aims to issue a contract to purchase the system’s fleet of light rail cars.
The federal environmental go-ahead has allowed ATP to begin acquiring land, locking in final design work and making plans to relocate utilities.
Other aspects of the project are up-and-running, like CapMetro’s expanded on-demand shuttle service and a new commuter rail station at Q2 Stadium.
Two of the four rapid bus routes initially promised to voters opened two years behind schedule in 2025 — but not using electric buses or the 10-minute frequencies as first promised. Starting this summer, those routes will operate at those frequencies using electric buses, CapMetro CEO Dottie Watkins said.
ATP plans to break ground on the light-rail line next year — with or without federal dollars.
Officials haven’t said how far they’d get without them.
Castro de Barrera, the board chair, said ATP officials are “doing everything that we can” to make their case to the feds and secure federal dollars.
But asked about the wisdom of beginning construction before federal dollars are in hand, she demurred.
“I think we have to be very cautious to make sure that we are not going to start breaking ground on something that we don’t have guarantees on how to finance it,” Castro de Barrera said. “Because we have to make sure we do this right.”
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