The Austin Transit Partnership—the government entity tasked with building the Project Connect light rail system—took legal action Feb. 20 seeking official approval of the rail project’s funding structure and in hopes of resolving a resident lawsuit contesting the plan.

That action means that lawsuit aiming to thwart the transit plan may resolve sooner than expected.

Officials also moved to issue the ATP’s first chunk of bonds, totaling $150 million, for the design and engineering of the project.


The ATP filed a bond validation petition, which allows for an expedited review of its bond funding process without direct approval from the attorney general. In Texas, all government bonds must typically pass attorney general review.

The move follows a May 2023 opinion by Attorney General Ken Paxton that identified issues with the ATP using city maintenance and operations taxes for issuing debt and building the rail.

The opinion also argued the ATP's funding structure, which allows it to receive a stream of cash from the Project Connect tax rate hike approved by voters in 2020 without annual oversight, violates the state constitution.

Quote of note

“We’re just following state law like we have been all along and just trying to expedite this. It’s one of many steps to our bond issuance process; it’s not the only step. ... So that’s what this is doing today because what we’re hearing loud and clear from the public is they want us to get moving on this project,” ATP Executive Director Greg Canally told Community Impact.

Dig deeper

Concerns regarding the ATP’s funding structure were later outlined in a lawsuit filed against the ATP last November by five plaintiffs: Travis County Commissioner Margaret Gomez, Dirty Martin’s owner Mark Nemir, former state Sen. Gonzalo Barrientos, former Austin City Council member Ora Houston and East Austin activist Susana Almanza.

The lawsuit argued the ATP’s funding structure, wherein property tax dollars are collected by the city and later redirected to the ATP, could impact the ATP’s ability to repay debt.

“I don't even know what person in their right mind would go buy a $150 million bond and know that its repayment is subject to the politics of the Austin City Council for the next 40 years,” the plaintiff’s lead attorney Bill Aleshire said.

The lawsuit also argued the ATP pulled a “bait and switch” on Austin voters after the scope of the light rail network was significantly scaled back last year.

“We argue that having now adopted the replacement plan in June of last year, that they no longer have the permission that the tax code requires them to have. They can’t just keep that tax increase, going every year after year after year for something the voters have not approved,” Aleshire said.

The bond validation process could resolve the lawsuit filed by those five plaintiffs and begin as early as mid-March.

The backstory

In 2020, plans to build the light rail system with a property tax rate increase of $0.0875 to fund the project were approved with 58% of voters' support. Early plans included 28 miles of light rail that would go to Austin-Bergstrom International Airport, move through a downtown subway and cross Lady Bird Lake on two elevated bridges.

In 2022, the ATP revealed the project costs had risen 77% and later settled on a scaled back plan with less mileage, no line to the airport and no downtown subway.

What they’re saying

“Our job here at Austin Transit Partnership is to work day in, day out advancing the project,” Canally said. “We do have a vocal few in this community that have tried to try to stop it, and over this past year they have not been successful in that.”

What else?

The ATP has community meetings scheduled through early March to share details on the rail plan’s progress and hear feedback.

The most recent update shared by the ATP revealed a two-block stretch of Guadalupe Street near The University of Texas campus could become a carless corridor with only rail transit and sidewalks for pedestrians, and that several proposed stops could be relocated or nixed.

What’s next

Approval of the ATP’s funding structure and resolution to the lawsuit filed against them could wrap up by this spring.

If the ATP gets the green light, they hope to break ground on the rail in just over two years, Canally said.

Ben Thompson contributed to this report.