The Kansas City Council moved one step forward Thursday toward refining ballot language that would clearly ask voters to approve a new airport terminal, paid for solely with airport revenues.
A joint council committee gave preliminary approval Thursday to proposed ballot language for a November election. The full council could give final approval Aug. 17, although it could also revise the current language. It has until Aug. 24 to meet the deadline for November ballot submissions.
The council has been gearing up for months for a high-stakes public vote in November that could determine the airport’s future for years to come.
The way the ballot is worded is seen as key to garnering voter approval. This vote comes at a time when the airlines and many passengers think the airport desperately needs a new terminal, while many other residents and passengers just want renovations to the existing terminals.
The proposed ballot language asks: Shall the city of Kansas City be authorized to construct a new passenger terminal at Kansas City International Airport and demolish existing terminals as necessary, with all costs paid solely from the revenues derived by the city from the operation of its airports and related facilities?
This ballot is designed to make sure that voters know the project, estimated to cost about $1 billion, is not being paid for with general taxpayer dollars. It’s also designed to allow private financing for the project, as is being contemplated by companies that are submitting airport construction and financing proposals, to be reviewed by a selection committee Monday.
Some council members were concerned that the ballot language does not authorize public airport revenue bonds, which are the way the city has traditionally financed airport improvements.
But the committee also passed out a separate ballot proposal, sponsored by Councilwoman Katheryn Shields, which would authorize up to $990 million in airport revenue bonds for such a project. Aviation Director Pat Klein said that if the council decides to go that route, it will have to amend the cap to $1.3 billion because $990 million won’t cover all the costs.
The council will have to reconcile the two different ballot proposals within the next two weeks to make clear whether the city is pursuing public financing or some sort of private financing for the project. No matter which way it goes, the costs would only be paid for out of airline and airport revenues, not city taxpayer dollars.
Finance Director Randy Landes told the committee Thursday that the airport currently is on very solid financial footing, a “good cash position” and a “highly rated credit,” so it’s an advantageous time to do the project, with relatively low risk regardless of the financing.
He said tax-exempt public revenue bonds would get an estimated interest rate of 4.4 percent, versus an estimated 4.5 percent to 4.6 percent if a conduit agency such as Port KC issued the debt. The interest rate might not be much higher for private financing, depending on if it’s tax-exempt or taxable. It could be 4.75 percent or higher.
“It’s really not that different,” Landes said. “The credit quality is nearly identical.”
Landes said that public financing is usually cheaper, but private financing can, in some cases, be more economical if the project can be built more quickly that way.
He said that until the proposals are unveiled and studied, which will start to happen within days, it’s not yet possible to determine the best approach for the airport.