Burns & McDonnell pushes back on KCI decision as Edgemoor touts local job opportunities

The Maryland-based team recommended for a $1 billion airport terminal project sought Friday to reassure Kansas City that it will provide huge “hometown” workforce and contracting opportunities.

But even as Edgemoor Infrastructure & Real Estate touted its local outreach plans, the hometown proposer, Burns & McDonnell, pushed back against its elimination from the airport selection process and argued that it still deserves fair consideration.

Friday’s developments illustrated the unsettled nature of the airport debate, and came as the Kansas City Council weighs how to proceed with plans for a new single terminal at Kansas City International Airport. The council must decide whether to ratify the Edgemoor recommendation or start the selection process all over. The council is off work next week but hopes to make a decision by the end of this month.

The ultimate decision rests with Kansas City residents, who will vote Nov. 7 on whether to approve a new single terminal to replace the existing horseshoe terminals.

On Wednesday, a KCI selection committee chose the Edgemoor-led team over Burns & McDonnell, AECOM and Jones Lang LaSalle. The committee said it thought Edgemoor’s proposal promised the best value for Kansas City, and that it had eliminated Burns & McDonnell from consideration because its financial proposal was inconsistent with the city’s master bond ordinance.

That occurred after Kansas City’s bond counsel, Kutak Rock, raised concerns that the Burns & McDonnell finance plan would prioritize new private debt for the single terminal over the city’s existing debt from an early 2000s airport improvement project.

On Friday, Burns & McDonnell issued a press release strongly disputing the Kutak Rock conclusion. It said the city had earlier been provided with a legal opinion from the bond counsel firm of Gilmore & Bell, confirming the team’s proposal complied with the master bond ordinance.

Burns & McDonnell said in its release that Wednesday’s selection criteria memo “was the first time we had any indication that the city did not even consider our qualifications due to recommendations from the city’s outside legal and financial consultants.”

“We are baffled by this erroneous technical argument,” Burns & McDonnell vice president Mike Brown said. “This is a prime example as to why we believe the city, led by the city council, must thoroughly review this process and make sure all proposers were properly considered.”

Brown argued “this is the time to ensure this process is fair on behalf of the citizens of Kansas City and thousands of employees represented by the KCI Hometown team.”

The city defended the committee’s decision.

“We realize that the non-recommended proposers may be disappointed. The selection committee’s recommendation memo is posted on the city’s website. It outlines why the selection committee recommends Edgemoor as the best overall proposal for this project,” city spokesman Chris Hernandez said.

Kansas City Council members said they still have numerous unanswered questions following the committee’s recommendation. Some said they were comfortable with the Edgemoor choice but others said they were still very interested in AECOM. And some in Kansas City’s business and labor communities have said they will be very disappointed if Burns & McDonnell is not picked to do the work.

Process questioned

There’s no doubt that Kansas City’s process to choose an airport terminal developer has been unusual, said Diana Parks, a California lawyer and co-chair of the Dorsey & Whitney law firm’s public-private partnership practice.

Parks said a procurement process for a project of KCI’s size would typically last much longer and often happen in two steps: One that establishes bidder qualifications and another that establishes the parameters and design of the airport terminal. Such a process would last several months, Parks said.

Parks said Kansas City handled its procurement in one step that took into account qualifications, project approach and financing.

“That was out of the ordinary,” Parks said. “The fact that they didn’t spend time trying to decide in advance what design would work the best so they could truly get competitive bids, the teams were not really bidding on the same thing whatsoever. That makes it almost impossible to be sure that one team’s proposal was a better value than the others.”

Despite that, Parks said Kansas City was still able to attract strong bidders.

“The teams that submitted, particularly AECOM and the winning team, were very strong teams that were put together very quickly on this,” Parks said. “It’s fortunate for (Kansas City) that they did get that caliber of participants.”

Edgemoor is an affiliate of Clark Construction Group, a large construction firm based in Bethesda, Md. Its co-developer on the KCI project is Meridiam, a Paris-based asset manager and investor in public infrastructure projects.

Edgemoor’s team also includes the Clark Construction Group; the Chicago-based architecture firm of Skidmore, Owings & Merrill; the Des Moines-based Weitz Company, which has an office in Lenexa; and Kansas City-based Clarkson Construction, which has been in business in Kansas City for more than 50 years.

Parks said Clark Construction and Meridiam enjoy strong reputations in the public-private partnership world.

Edgemoor’s public pitch

On Friday, representatives of the Edgemoor team came to Kansas City and pledged they would provide substantial opportunities for local design and construction firms and workers, as well as minority and women-owned companies, to help build a new airport terminal.

“All projects are local. It’s critical to us to have local partners,” Edgemoor managing partner Geoffrey Stricker said at a news conference.

“But great projects balance the local community with the thought leaders in national and international design and construction and development,” he said. “So what our team brings to Kansas City is experts from the local community as well as nationally and internationally.”

Bill Clarkson Jr. of Clarkson Construction said his firm was approached about two months ago to be part of the team’s airport proposal and determined it was a great fit.

But he also said he realizes there are more hurdles with the city council and the Kansas City public.

“We’re not at the finish line yet,” he said. “We know that.”

The team was chosen based on its qualifications, airport design approach and financing. But there’s not yet a lot of specifics to give the public about what the new airport terminal might look like. There is no rendering yet.

“We bring everybody together to work collaboratively to come up with a great design that will deliver and meet the community needs from a convenience, customer experience and airlines operations perspective,” Stricker said.

Derek Moore, with Skidmore, Owings and Merrill, said the team is well aware that the existing KCI is “beloved for its convenience.” The new design, he said, would aim to build on that but also provide a highly sustainable, environmentally progressive building that is flexible enough to adapt to changing aviation industry requirements with updated security, technology, baggage systems, parking, concessions and other amenities.

Stricker and Clark Construction representatives said they have an 11-year track record of working extensively with small businesses, including minority and women-owned firms and labor groups, to maximize opportunities not only with their projects but to grow those small businesses for the long-term.

Stricker said the team hopes to win the council’s endorsement by the end of September, and then would help with community outreach to try to get a positive vote in November. That would include providing more information about how a new airport terminal can be as convenient as the existing KCI

If the council and public votes are successful, Stricker said the team would hope to have a finalized contract to develop the airport terminal by June 2018. Much of the design and construction work would be bid out to local architecture, engineering and contracting firms, creating an estimated 3,500 to 4,500 construction-related jobs. The goal would be to complete construction by November 2021.

Edgemoor received generally high marks from government, civic and industry leaders who attended Friday’s presentation.

Ed DeSoignie, recently retired executive director of the Heavy Constructors Association of Kansas City, said Clarkson’s presence on the Edgemoor team leaves him feeling assured that there will be fair local participation.

“Clarkson vouches for Edgemoor, Clark and Weitz,” he said.

Councilwoman Teresa Loar said she liked the promises of inclusion for local firms, women and minorities. That said, she wants to hear more about their specific plans for the terminal. “We want to make sure it fits Kansas City,” she said.

Edgemoor is wholly-owned by Clark, a national construction giant whose airport portfolio includes work in Los Angeles, Houston, San Antonio, Washington, D.C., and Seattle. Some of its non-aviation work includes Washington D.C.’s two major sports venues, Nationals Park and the Verizon Center.

Clark created Edgemoor in 2001 to handle complex public-private partnerships, or P3s, which often involve private equity and long-term lease back arrangements. For example, Edgemoor is working on KU’s Central District project, which includes a new residence hall, science building, student union and parking garage. Clark partnered with a local construction firm, McCownGordon, to build the $350 million project.

Edgemoor and Clark are partnering with Plenary, an international P3 specialist, to build a new civic center for the city of Long Beach, Calif. The $300 million project, which broke ground last year, will deliver a new City Hall, Port of Long Beach headquarters, library and a private retail and residential development. Plenary and Edgemoor will finance, build, operate and maintain the center under a 40-year agreement with the city. The city will pay rent to the partnership, called Plenary Edgemoor Civic Partners.

Long Beach Public Works director Craig Beck said in an email Friday that work was proceeding about 90 days ahead of schedule, with occupancy scheduled for June 2019. Beck said the partnership was required to enter into an agreement with building trades for local hiring.

In Seattle, Clark was the winning bidder for a $470 million contract to build a new international arrival terminal at Sea-Tac Airport. Plans call for what Clark calls an “iconic bridge” above taxiing airplanes that will connect the new facility with the existing south terminal. Ground was broken last month with completion scheduled for late 2019. Airport spokesman Perry Cooper said the work is proceeding on time and on budget.

“The project is moving right along,” Cooper said.

This story was originally published September 8, 2017 at 6:33 PM with the headline "Burns & McDonnell pushes back on KCI decision as Edgemoor touts local job opportunities."