Watson Pulls Back on I-35 Cap-and-Stitch Amid Council Opposition
Austin Mayor Kirk Watson has withdrawn his scaled-back I-35 Cap and Stitch proposal after failing to secure enough City Council support.
The original Cap and Stitch project, first introduced in 2023, aimed to reconnect East Austin and downtown by building park spaces over I-35 as the highway expands, with the original vision calling for six caps and two pedestrian bridges. But as costs rose and federal funding was pulled, city leaders concluded the full project was no longer financially feasible.
Watson had proposed a compromise: funding one complete cap for $49.8 million — about 160 feet wide near Palm Park at Third Street — rather than partial work on multiple caps costing $104 million. However, that scaled-down proposal was withdrawn from yesterday’s council meeting because there wasn’t enough support from council members.
Five council members — Chito Vela, Ryan Alter, Jose Velasquez, Zo Qadri, and Natasha Harper-Madison — pushed back, arguing Watson’s proposed cap was too small to generate economic development or host meaningful amenities.
Watson has long championed the idea of capping the highway, but the political and financial realities have now forced a retreat — leaving the future of Austin’s Cap and Stitch vision very much in limbo.
Austin City Council Roundup: Massive Yogurt Shop Case Settlement, Major Downtown Density Overhaul, and Infrastructure Bond Planning
The Austin City Council plowed through a massive 111-item agenda during its meeting yesterday, tackling legacy legal issues, reshaping downtown development, and paving the way for a major upcoming public vote on infrastructure spending.
⚖️ Legacy Legal Settlement: $35 Million to Close Yogurt Shop Case Claims
In a historic and somber moment, City Council approved a massive settlement agreement not to exceed $35 million to resolve claims related to the infamous 1991 Yogurt Shop criminal cases.
- Who it impacts: The settlement covers claims brought by Michael James Scott, Robert Springsteen, Forrest Welborn, and the estate and family of the late Maurice Pierce.
- Funding: The city will draw from its Liability Reserve Fund and issue debt obligations to cover the multi-million dollar payout.
🏗️ Housing & Urban Density: Reshaping the Austin Skyline
Affordable housing and land use code overhauls took center stage, highlighted by a major rewrite of downtown density rules.
Downtown Density Bonus (DDB) Expansion
Council held a major public hearing and approved an ordinance creating brand-new high-density zoning districts: Downtown Density Bonus 400 (DDB400) and Downtown Density Bonus 850 (DDB850).
- The Deal: Developers can build significantly higher structures and bypass traditional site restrictions in exchange for providing on-site affordable housing or community benefits.
- The Footprint: Council subsequently approved all three readings of a rezoning ordinance mapping approximately 208 acres of downtown (spanning west of I-35, east of Nueces, north of Lady Bird Lake, and south of East 11th Street) into the new DDB400 combining district.
St. John Neighborhood Redevelopment
A major public-private partnership with Greystar Development Central, LLC and the Housing Authority of the City of Austin (HACA) cleared its final hurdles on consent:
- Bond Defeasance: Approved retiring up to $5 million in outstanding 2025 General Obligation bonds, completely funded upfront by Greystar.
- Land Sale: Authorized selling the city-owned St. John site at 800 E. St. Johns Ave to a HACA affiliate for multifamily housing and retail.
- Neighborhood Reinvestment: Amends the budget to immediately pump $1,079,193 in land sale proceeds directly into infrastructure, connectivity, and amenities for the historic St. John neighborhood.
💰 Finance, Tax Relief & Looking Toward November Bonds
With financial policy updates on the floor, the city locked in tax relief for vulnerable homeowners and set the wheels in motion for a massive winter ballot measure.
- Senior & Disabled Homestead Exemptions: Council approved an ordinance adjusting the property tax exemption for homeowners 65+ and individuals with disabilities. The baseline is set at $192,000, with automatic legal indexing to ensure tax relief matches or exceeds prior years.
- November 2026 Bond Election: Staff was directed to officially build a potential capital bond package. The formal ordinance calling for the November 2026 election is slated to hit the council agenda on July 23, 2026.
- Certificates of Obligation ($156.2M): Council moved forward with a massive $156,265,000 debt notice of intent. The funds will cover emergency medical/fire stations, a family violence shelter, park upgrades, road repairs, and Waller Creek District improvements.
⚡ Energy & Climate: Peaker Plant Impact Policies
Austin Energy’s fossil-fuel infrastructure faced fresh scrutiny as council passed a trio of environmentally focused initiatives directing the City Manager to:
- Propose formal policy options to dramatically restrict emissions from city-owned gas peaker units.
- Establish a mitigation and benefit program specifically targeted at helping neighborhoods historically impacted by proximity to fossil-fuel generation facilities.
- Establish equitable geographic distribution guidelines for where any future gas peaker plants can be built.
Additionally, council directed a review of national best practices for EV managed charging and home battery storage incentives to boost grid flexibility.
🛣️ Major Infrastructure & Contract Awards
The city locked down several heavy-duty infrastructure, utility, and tech commitments totaling tens of millions of dollars.
| Department | Project / Vendor | Max Value | Details / Scope |
|---|---|---|---|
| Austin Water | HDR Engineering, Inc. | $21,726,269 (+$15.7M amendment) | Engineering and program management for the Aquifer Storage and Recovery Pilot. |
| Austin Water | Keeley Construction Group | $16,633,300 | Crosstown Tunnel Centralized Odor Control Facility Project. |
| Austin Aviation | WSP USA Inc. | $67,000,000 (+$27M amendment) | Extended program management support for the ongoing Airport Expansion. |
| Austin Aviation | ARUP US, Inc. | $34,000,000 (+$10M amendment) | Building commissioning services scaling up for airport expansion layout. |
| Austin Water | Schneider Electric Systems | $7,274,151 | Maintenance and software support for critical OASyS SCADA control hardware. |
| Financial Services | CGI Technologies | $22,138,227 (+$4.8M amendment) | Core financial management system (Advantage) support extension. |
| Public Works | Rucoba & Maya Construction | $2,304,803 | High-crash intersection safety improvements at Burleson Rd and Stassney Lane. |
| Austin Water | TxDOT Interlocal | $5,006,763 | Utility line capacity improvements and adjustments conflicting with the massive I-35 Capital Express University Roadway Project. |
City Council has approved a resolution to crack down on the use of electric motorcycles, known as e-motos.
🏡 Real Estate, Parks & Eminent Domain
- South Lamar Wastewater Upgrades: Council greenlit eminent domain proceedings against LP Barton Creek, LLC to secure eight permanent and temporary easements at 3816 S. Lamar Blvd for the Barton Creek Lift Station project, backed by a $472,983 appraisal allocation.
- South First Loop Interconnection: Approved eminent domain for a temporary workspace easement at 1503 S. First St to complete a core downtown reclaimed water loop ($266,104 appraisal).
- Guitarland Park Expansion: Authorized spending $467,000 to purchase 0.281 acres at 7508 Shadywood Drive, expanding the existing neighborhood park footprint.
- Daniel Llanes Wildlife Sanctuary: Passed an ordinance renaming the Colorado River Park Wildlife Sanctuary to honor local community activist Daniel Llanes, explicitly waiving standard waiting periods and naming requirements.
🗓️ High-Profile Postponements
Several controversial zoning decisions and large-scale master-planned projects were kicked down the road to the July 23, 2026 voting session:
- The South Shore / East Riverside PUD Overhauls: Items regarding the massive regulatory plan removals and Planned Unit Development rezonings for 1317, 1404, and 1705 E. Riverside Drive/S. Lakeshore Blvd were uniformly postponed.
- Montopolis Rezoning (Saxon Acres 2): A contentious fight to turn an SF-6 neighborhood lot into an MF-2 multifamily complex was delayed at the applicant’s request.
- Circuit of the Americas PUD (Item 81): Second and third readings regarding zoning condition changes for the COTA property were pushed back.
📈 Austin Housing Finance Corporation (AHFC)
Briefly recessing general council, the AHFC board met to authorize an additional $1,419,448 (bringing the total to $2.83M) to the Housing Authority of the City of Austin for the Tenant-Based Rental Assistance Program, ensuring continued rapid-rehousing rental subsidies for individuals escaping homelessness.
The Austin City Council will reconvene for its next voting session following its summer break.
The Texas Education Agency on Thursday denied Austin Independent School District’s request for an accountability pause and additional state funding for three of its academically struggling middle schools.
The trial for Shane James, the man accused of killing six people in 2023, is set to begin in October.
The LINE Hotel on East Cesar Chavez is set for foreclosure.
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A natural gas explosion tore through a two-story apartment building in Dallas’s Oak Cliff neighborhood Thursday afternoon, killing two women and a child and injuring at least five others.
The blast erupted just before 1 p.m. at the Clyde apartment complex, when a contractor struck a gas line, triggering the explosion. The blast shook nearby homes and sent a towering plume of black smoke visible for miles, while firefighters who had been rushing to a reported gas leak arrived to find the building destroyed. This morning, recovery crews are still combing through the charred wreckage — with officials warning that some areas will require excavation — as authorities work to account for all residents.
LIVE UPDATES via Dallas Morning News.
The Texas Hemp Business Council tries to sort out confusion over the sale of Delta-8 products in Texas.
Texans will soon have a major new place to experience the rugged beauty of the Hill Country — just about 150 miles west of San Antonio. (KUT 90.5)
Fort Bend County officials are investigating why a widespread technical problem at polling locations during Tuesday’s primary runoff elections led to a period of more than two hours when voters were unable to cast ballots without doing so provisionally. (Houston Public Media)
Cornyn’s loss signals a total break from the Bush-style conservative politics in Texas. (Texas Standard)
In the wake of run-off wins by GOP candidates like Ken Paxton, Mayes Middleton, and Bo French, James Henson and Joshua Blank talk about dynamics in both parties, and what’s comes next in the general election and governing circles in Texas.
(Episode from May 28, 2026)
Many out in punditville are calling the ignominious defeat of old guard Senator John Cornyn by MAGA miscreant Ken Paxton “the death of the Republican Party” – but what does that mean exactly? We take a deep dive on the final 2026 midterm battle lines in Texas, and the possible path forward for Democratic nominee James Talarico – turns out we, too, are Talafreakoes.
(Episode from May 28, 2026)
TribCast is joined by D.C. correspondent Gabby Birenbaum and James Barragán, host of Capitol Tonight, to unpack the raucous runoffs.
(Episode from May 27, 2026)
A Texas man is facing felony charges after authorities say he threatened to bomb an upcoming Turning Point USA summit and kill CEO Erika Kirk.
Passengers on the ‘Iron Shark’ at Galveston’s Pleasure Pier were trapped when the coaster got stuck on the tracks.
SPORTS
COLLEGE SOFTBALL: No. 3 Texas Softball (47-12) opened the 2026 Women’s College World Series with a 6-3 loss to No. 8 Tennessee (48-10) Thursday afternoon at Devon Park.
Texas will play No. 20 Mississippi State at 6 p.m. CT Friday, May 29, in an elimination game at Devon Park. (Texas Longhorns)
COLLEGE BASEBALL: THE AUSTIN REGIONAL — Coming off its second consecutive 40-win regular season, the Texas Longhorns were awarded the No. 6 national seed for the NCAA postseason. Texas will welcome No. 2 seed UC Santa Barbara, No. 3 seed Tarleton State and No. 4 seed Holy Cross.
The Longhorns are hosting for the 39th time in program history and making their 65th postseason appearance overall. Texas is 153-60-1 (.721) all-time in regional games, including a 110-33-1 (.783) ledger in Austin.
The Austin Regional is paired with the Eugene Regional, hosted by 11th-overall seed Oregon. (Texas Longhorns)
MLB: Just what the Houston Astros needed.
Jeremy Peña and Isaac Paredes homered in the first inning, and Spencer Arrighetti pitched the Houston Astros past the Texas Rangers 5-1 on Thursday night.
The Astros took three of four games in the series from their in-state rivals, finishing a 7-3 trip with six wins in the last seven games. (Associated Press)
ON THE SCHEDULE
AL WEST STANDINGS
NBA PLAYOFFS: The San Antonio Spurs crushed the Oklahoma City Thunder, 118-91, in Game 6 to force a Game 7 in the NBA Western Conference Finals.
Victor Wembanyama led the Spurs with 28 points as San Antonio took off to a strong start and held on to force the decider.
The winner of this series will take on the New York Knicks, who swept the Cleveland Cavaliers in the East to make the Finals. (Associated Press)
Universal Kids Resort is almost here!
Tour the latest construction progress, explore newly revealed concept art and ride details, and discuss what to expect as the resort prepares to open within the next few months.
