A lawsuit filed Monday seeks to prevent the city of Austin from collecting tens of millions of dollars in fiscal year 2024 for Project Connect, a multi-billion-dollar investment by the city in local transportation infrastructure that centers on the planning of miles of light rail lines.
The class action lawsuit, filed in Travis County’s 126th District Court, relies on a “relatively new and untested provision” of Texas tax law that allows a taxpayer to ask a court to stop collecting property taxes if a tax rate has been “improperly calculated.”
In this case, the lawsuit alleges, the 2024 Project Connect tax rate approved by the Austin City Council on Aug. 14 was miscalculated “because the ‘purpose’ of the Project Connect tax increase is no longer feasible in 2020, nor will the tax be used as promised.” The lawsuit also alleges that the city will not spend the roughly $187 million it will raise this year for transit investments.
This year, property tax bills are expected to be sent out after the general election on November 5, as voters in the region will have two tax rate choices to choose from.
Project Connect was approved by voters in 2020 with an increase in the city’s property tax rate for maintenance and operations. It was to include several transportation projects and several miles of light rail. Plans for light rail have since been scaled back to less than 10 miles, and construction is estimated to cost more, said city officials and the Austin Transit Partnership. The Austin Transit Partnership is a local government corporation formed by the city and Capital Metro to plan and build the light rail system.
The lawsuit alleges that the money raised through taxes this year will not be spent because hundreds of millions of tax dollars have been “hoarded unused” since the city began collecting taxes in 2020. Because of this, the lawsuit alleges, the money raised in fiscal year 2024 “will simply be piled on top and not even spent on Project Connect this fiscal year.”
“Obviously, Austin taxpayers will get nothing, absolutely nothing, from this Project Connect tax ‘annual appropriation’ this year,” the lawsuit states.
In a written statement, Austin city spokeswoman Memi Cárdenas said, “We are aware of the recent lawsuit that again challenges the city’s authority to defer property taxes for the voter-approved Project Connect. We will respond to the lawsuit through the appropriate legal channels.”
The lawsuit is another in a long line of challenges faced by Project Connect. The attorneys in the case are Bill Aleshire, a former Travis County judge, and attorney Rick Fine.
Plaintiffs in the lawsuit filed Monday include those in a lawsuit also filed in 2023 by Aleshire and Fine, alleging that the city misled voters about the investments and property tax increases, and also attempted to stop the collection of related property taxes and the issuance of municipal bonds for Project Connect without voter approval.
That lawsuit was joined to a bond validation lawsuit filed in February by the city of Austin, which seeks to determine whether the light rail financing model is legal under state law. The jurisdictional issue is currently before the 3rd Circuit Court of Appeals after Texas Attorney General Ken Paxton’s office filed an interlocutory appeal in June that halted the lower court process.
In addition to the original plaintiffs in the 2023 lawsuit – the restaurant Dirty Martin’s Place, Gonzalo Barrientos, a former Democratic state senator, Ora Houston, a former city council member, Margaret Gomez, the current Democratic county commissioner of Travis County, and Susana Almanza, a founding director of the social welfare organization PODER – there are two new plaintiffs in the lawsuit filed Monday: Austin taxpayers Cathy Cocco and Barbara Epstein.
The lawsuit was also filed on behalf of “all Austin property taxpayers.”
“The light rail and Project Connect solution is an unaffordable, outdated idea from yesterday,” said Cocco, who said she originally supported Project Connect in 2020, at a news conference Tuesday afternoon at Dirty Martin’s Place.
The latest lawsuit contains many of the same allegations as the lawsuit filed in 2023, saying the scope of Project Connect has changed drastically since voters approved it in 2020.
“The big difference is that this lawsuit directly attacks the Project Connect tax itself for this year and says, ‘You can no longer collect a Project Connect tax because you no longer have permission … from the voters,'” Aleshire said at the press conference.
