KC renews bid for new airport — with Burns & McDonnell’s rare privatized plan

Kansas City launched a new bid for a renovated, single-terminal Kansas City International Airport on Friday, hoping to win public approval with an unusual private proposal from the Burns & McDonnell engineering firm.

“They are the ones who stepped forward,” City Manager Troy Schulte said, standing outside KCI’s Terminal A, where the city announced what it thinks would be the first major airport in the nation to be privately financed.

Public approval, city leaders agreed, will depend on a design that keeps the airport one of the most convenient for passengers, but that can be built quickly and cheaply enough to ease any increases in fees in meeting the higher costs of private financing.

A preliminary memorandum of understanding still has to go before the City Council — with opportunities for public input and discussion — Mayor Sly James said.

And even though a private financing arrangement would not require a public vote, the city will still send any proposal to voters, James said.

“We made a promise,” he said. “…We plan to keep that promise.”

The partnership would be rare, Schulte said, because most airport designers are not willing to take on a $1 billion project whose design and maintenance will remain under the city’s control, and which has to meet pre-structured expectations on rates of return and impacts on user fees.

Under the previous, public-funded financing structure the city had proposed, a rebuilt terminal likely wouldn’t open until 2024, Schulte said. But Burns & McDonnell, in its discussions with the city, Schulte said, is anticipating it could be done in 2022.

“This is a heck of a lift,” Schulte said, saying this proposal from Burns & McDonnell is the first of its kind to come forward in the 10 years that he said he has been researching and courting airport construction options.

Most airport design firms require a 7 percent to 10 percent rate of return on their financial investment. Burns & McDonnell would be working with closer to a 3 percent rate of return, he said.

James gathered outside Terminal A, where the new terminal would be built, under a brilliant sky, occasionally interrupted by the roar of jet engines, with Burns & McDonnell CEO Ray Kowalik and a host of dignitaries to relaunch a campaign he had put on “pause” a year go.

The majority of public sentiment in polling has remained against a single-terminal replacing the existent horseshoe terminals — largely, the mayor said, because of some discomfort that taxpayers and the city’s debt load could ultimately shoulder some of the costs.

That’s not the case, he said.

When the city broke off its plans, James put out a call for the private industry to come forward with a plan that might meet public approval.

With Friday’s announcement, James said, Burns & McDonnell and the city have come forward with “a Kansas City solution for a Kansas City problem.”

Kowalik said Burns & McDonnell is developing plans that would provide 35 gates, two driveway levels for incoming and departing passengers, and 6,500 parking spaces at the terminal, among other ideas that will be “as convenient as we can make it.”

Financially, James said, there would be “zero money from the city,” “zero tax increase” and it would add “not a penny of debt” on the city.

The memorandum of understanding would require that the project’s debt service not exceed $85.2 million annually, which is the amount the airlines agreed to pay under the city’s publicly financed plans.

Private financing is more costly than public financing, so Burns & McDonnell will have to reduce costs through a combination of design and quicker construction, Schulte said.

Some costs would be passed down to passengers, but city officials said they would be kept low by the cost benefits of increased flights and passengers, more money spent on food and other airport amenities.

The privatized plan still meets the previous agreements made with the consortium of KCI airlines that keeps Kansas City below average nationally in passenger fees.

“No one is going to design an airport that’s not convenient,” James said. “…(and) ticket prices have to be competitive.”

This story was originally published May 12, 2017 at 12:57 PM with the headline "KC renews bid for new airport — with Burns & McDonnell’s rare privatized plan."