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Lone Star Rail not in city budget but still on track

Wednesday, August 12, 2015 by Tyler Whitson

Although there is no funding for the Lone Star Regional Rail Project in the proposed city budget, the Georgetown-to-San-Antonio passenger rail plan can still get up to speed in due time.

Lone Star Rail District Rail Director Joe Black told the Austin Monitor on Monday that his organization is not overly concerned about the omission.

“It won’t have much of an effect because, frankly, the tax increment amount in the first few years is not huge,” Black said. “It’s not a make-or-break for the project.”

City Council amended an existing interlocal agreement with the rail district in December, effectively promising that the city will set aside half of the tax revenue increases above a predetermined baseline from properties within a half-mile of the eight proposed stations.

That type of funding is known as tax increment financing, and it is one of the main ways that the rail district hopes to fund operations and maintenance for the rail project in the future.

The rail district has also agreed that the city doesn’t have to start setting the money aside until the district makes a good faith effort to convince the Texas Legislature to pass legislation that would allow cities to exclude tax increment financing zones from certain tax rate calculations.

“It’s a way for the city to recapture some of the revenue that it would potentially lose with the tax increment finance agreement,” Black explained.

That legislation did not make it through this year’s 84th Legislative Session, but Black said that the rail district is hoping to get it passed in 2017 or 2019.

City of Austin spokesperson Bryce Bencivengo confirmed with the Monitor on Monday that the stall in the legislation this year prompted city management to remove funding for the rail project in the proposed Fiscal Year 2015-16 budget.

Council could choose to add the funding into the budget before adopting it in September, however, although an April budget discussion revealed some hesitancy about funding the project.

More recently, Council Member Ellen Troxclair submitted a budget question to city staff, asking whether funding for the project was included in the proposed budget. She told the Monitor on Tuesday that she did so to make sure that it was not included.

Black said that the rail district will also not likely push the city to include the funding in its FY 2016-17 budget. “Most likely, we’ll work out the same deal with city staff,” he said.

Opting not to set aside revenue for the next two years, Black added, will not likely cost the city more in the long run. “Basically, we’re going to forgo that revenue,” he said.

“If we waited until 10 years out or so, that might be a problem,” Black continued. “We’re not planning to come back to the city to ask for that money at this time. Maybe, some day, it will make sense, but I just don’t see that small amount of money making a big difference in the project.”

The city’s interlocal agreement also specifies certain performance criteria and deadlines for the rail district to meet. Failing to meet these deadlines would give the city the option to release any funding it has set aside for the rail project and use it for its own purposes.

Austin is, of course, not the only entity from which the rail district is hoping to secure future funding. So far, the rail district has inked interlocal agreements with San Marcos and Austin Community College that are similar to the one it has with Austin.

“All of the remaining cities in the corridor, we are in the process of negotiating agreements with them that are based very closely on the Austin agreement,” Black said. These cities are Georgetown, Round Rock, Buda, Kyle, New Braunfels, Schertz and San Antonio.

The rail district also hopes to sign agreements with the counties through which the proposed rail line will pass.

The project would use the existing Union Pacific freight line that runs through central Austin from Georgetown to South San Antonio, contingent on the company moving its operations east of Austin.

There are currently eight stations proposed in Austin in the long term. “All eight most likely won’t come online at the same time, but we’ll obviously have stations serving North Austin, the downtown station and at least two stations serving South Austin,” Black explained.

The rail district kicked off the Environmental Impact Study for the project in January.

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