Austin Weighs I-35 Cap Pause, Airport Shift, and New East Side Housing
Austin, TX – March 31, 2026 – City leaders revisit I-35 cap funding, the airport closes its South Terminal, and new mixed-income housing breaks ground.
Austin’s growth story took a few notable turns this week, with big decisions on transportation, housing and public education unfolding across the city.
I-35 Cap Project Faces Budget Reality
Austin city staff are recommending a pause on advancing the planned ‘cap and stitch’ parks over Interstate 35 downtown. The project, intended to build park space above portions of the expanded highway, was initially backed with $104 million from City Council last year.
Now, amid updated cost projections and broader budget pressures, staff say the city should hold off on committing additional funds. Supporters argue the caps would reconnect neighborhoods long divided by I-35 and add much-needed green space. Skeptics point to long-term financial risk as the freeway expansion moves forward.
Council is expected to weigh whether to delay further investment, with the possibility of revisiting expanded caps later in the decade at potentially higher costs.
Airport Consolidates as South Terminal Closes
As of March 31, Austin-Bergstrom International Airport has officially closed its South Terminal. All commercial flights are now operating out of the Barbara Jordan Terminal.
The move is part of a broader airport expansion strategy aimed at increasing gate capacity and streamlining passenger operations. With Austin’s passenger traffic continuing to grow, city leaders say consolidating operations will help support long-term infrastructure upgrades and future international service.
Mixed-Income Housing Breaks Ground in East Austin
A new mixed-income apartment development has broken ground in East Austin near Gonzales Street. The project, a partnership involving Austin ISD and a private developer, will transform a former school site into housing designed to serve a range of income levels.
City and district officials say the redevelopment aligns with broader efforts to address housing affordability while repurposing underused public land. The project also reflects Austin ISD’s ongoing strategy to stabilize finances amid enrollment declines by leveraging real estate assets.
Education Policy in Focus
In a separate move, Austin ISD’s board approved a new partnership aimed at improving outcomes at struggling campuses. The district continues to navigate budget constraints, school consolidations and academic performance goals as it reshapes its footprint.
Together, these developments highlight Austin’s balancing act: investing in long-term infrastructure and housing solutions while managing fiscal limits in a fast-growing city.
Sources
https://www.planetizen.com/news/2026/03/137238-austin-officials-pump-brakes-i-35-cap-stitch-project
https://austinpost.com/news/2026/03/30/austin-airport-south-terminal-closes-march-31
https://www.costar.com/article/811486164/mixed-income-apartment-development-planned-for-east-austin-texas-breaks-ground
https://www.kxan.com/news/local/austin/austin-isd-approves-partnership-to-improve-failing-schools/
