After first working toward an exclusive deal with Burns & McDonnell for a new single-terminal building at Kansas City International Airport, the city has put the project up for competition.
Kansas City Mayor Sly James joined City Manager Troy Schulte and Councilwoman Jolie Justus on Tuesday to announce that the city has issued a request for qualifications and proposals for firms interested in designing, building and privately financing a new terminal.
James said the decision to open the process for other proposals would result in Kansas Citians getting the best arrangement for a revamped KCI.
“We will only bring them the best deal we can get,” James told reporters gathered in Schulte’s office on the 29th floor of City Hall.
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City Hall faced scrutiny for its unusual proposal to have Burns & McDonnell arrange for designing, building and private financing of a new KCI terminal, along with insurance company Americo Life Inc. as the financing partner.
James said the airlines had put forth the best proposal a year ago, which he then decided not to put to a public vote. Then, James said, Burns & McDonnell proposed a better deal.
“We never thought of the idea of private financing until Burns and Mac came up with the idea,” James said. “Once they came up with the idea of private financing without control, without having an ownership in the airport, that became the best deal.
“Now that’s smoked out other people who want to compete. ... Now, we’ll find out if they’re the best deal.”
The request for proposals comes just days after Los Angeles-based AECOM, a leading engineering firm in the aviation industry, sent a letter to James, Schulte and Kansas City Council members making its interest in getting involved with the KCI project known.
Some council members at the time interpreted AECOM’s overture as a proposal to also manage and maintain KCI — essentially privatizing the airport — which some said was a nonstarter. AECOM followed up Friday with a letter explaining that it could put up a design, build and finance offer that would omit operations and maintenance.
The existence of a second firm with an interest in the KCI proposal prompted the city’s decision to open the project for competition.
“We heard from one firm and we think there may be other firms, and we feel this is the best way to deal with that issue,” Schulte said. “We had an obligation to explore the market.”
Councilwoman Teresa Loar, often a skeptic on the city’s plans for a single terminal at KCI, said she welcomed the decision to put what could be a $1 billion project out for proposals.
“It makes the process more fair,” she said. “As a city government, that’s what we should be doing.”
Councilman Quinton Lucas said this is the best way to determine what the best solution is for the city.
“We should have laid out this process from the beginning,” Lucas said. “I support a new airport, but we need to get the process right before we put another company through the wringer.”
City Hall will give until June 20 for interested parties to submit a proposal, after which a selection committee will evaluate the options and forward its recommendation on to the Kansas City Council. The selection committee will include of Schulte, Justus, Councilman Jermaine Reed and Aviation Director Pat Klein. Lou Salomon, chief operating officer for airline consultant AvAirPros, and Charles Renner, a Husch Blackwell attorney hired by the city earlier this year to vet the Burns & McDonnell proposal, are nonvoting members of the committee.
Companies will be asked to present proposals that involve only design, construction and financing of the new terminal that are around $964 million, the amount that a consortium of airlines that use KCI had agreed to in 2015. Proposals are expected to improve convenience of the current three-terminal design, includes a 6,500 lot parking garage near the terminal, separated curbside pickup and drop-off lanes, and 35 gates for airplanes, expandable to 42.
Some council members questioned whether three weeks was enough time for firms to submit viable proposals.
“I think that’s a very short timeline,” said Katheryn Shields, a 4th District at-large councilwoman, adding that Burns & McDonnell has had more time than that to formulate its idea.
Justus responded that she thought three weeks was enough time for firms with expertise in airport projects.
Burns & McDonnell will also have an opportunity to match or exceed other proposals that the city receives and considers better.
That right of first refusal by Burns & McDonnell is a nuance on the usual procurement process. It’s called a Swiss challenge, where a company making an unsolicited offer earns the opportunity to equal other proposals if it chooses, since it brought the idea to a municipality to begin with.
Once a proposal is chosen, a memorandum of understanding will be negotiated and approved by the council. The deadline for that is about July 15, a month later than the original idea to have a memorandum of understanding approved with Burns & McDonnell on June 15. The city still aims for a November public vote.
Though the city’s request for proposals went out Tuesday, Lucas said the City Council should consider reviewing the document just as it has been reviewing the memorandum of understanding.
“We should make sure we know what the City Council wants,” he said. “We can amend the RFP.”
Justus cautioned against a council review of the RFP.
“That’s not the council’s role,” she said.
The city will continue to work with its outside legal counsel to review of the memorandum of understanding, originally drafted by Burns & McDonnell, to guide the work ahead with whoever wins the evaluation, Justus said.
“At this point, we have instructed our outside legal council to stop all negotiations or communications with Burns and Mac,” Justus said.
Burns & McDonnell said it welcomed competition for the KCI project.
“Burns & McDonnell is grateful that we’ve helped open the door to both a discussion — and an action plan — for the future of KCI. Our number one priority is that KCI gets a new one terminal facility,” said Ray Kowalik, chairman and chief executive of Burns & McDonnell, in a written statement. “We welcome the city’s decision to invite other proposals, because we want the very best plan for Kansas City.
“We’re just as confident today that our innovative plan to design, build and privately finance a new one-terminal airport at KCI is a unique Kansas City solution to a Kansas City challenge and will ultimately prove to be the path chosen,” Kowalik added.
AECOM officials could not immediately be reached for comment.
The public hearings on the new terminal plans will continue as scheduled, though Burns & McDonnell will no longer be presenting its proposal, Justus said.
The next hearing will be 5:30 p.m. Monday at the Bruce R. Watkins Cultural Center, 3700 Blue Parkway. Another hearing will follow at 9:15 a.m. June 8 at City Hall.
The city is banking on the belief that public sentiment is swinging toward support for a new terminal at KCI if the city can secure a privately financed plan.
There isn’t new polling or scientific data to support the feeling, Justus said. And plenty of people speaking at public hearings continue to attack a single-terminal idea and defend the conveniences they see in the current KCI.
“But I firmly believe the public opinion for a new KCI is changing,” Justus said. When people listen to supporters listing out “the things we can’t accomplish without a new terminal, almost universally people change their minds,” she said.
“As we figure out how to do this,” Justus said, “the whether part is starting to sink in.”
If voters turn down the winning proposal at the ballot box in November, James said the city won’t try to proceed with a single terminal anyway.
“Nope, we will not,” James said. “We will honor their vote and their commitment and will simply have to figure out what to do as the airlines make other plans.”
James added that KCI has been a six-year conversation.
“It’s not going to get any better with age,” he said. “This is not a glass of wine.”