Edgemoor’s KCI pact sits on the brink in council vote Thursday

As the Kansas City Council prepares for a crucial vote on the $1 billion KCI single terminal project on Thursday, there’s no clear majority for continuing on with Edgemoor Infrastructure & Real Estate.

Some council members described a situation so fluid that they speculated final decisions by undecided members may coalesce as the roll of votes is being called and they see how the vote is going.

A deal with Edgemoor has been shaky ever since a supermajority of council members in December rejected the first version of a memorandum of understanding, just a month after voters overwhelmingly approved the idea of a new terminal at KCI.

At the time, council members questioned Edgemoor’s commitment to minority and labor hiring, among other concerns.

Edgemoor has said it has worked to button up those concerns, but questions have persisted this week about whether it was enough to win over the council.

A second vote against a memorandum of understanding, or MOU, would pose serious trouble for the Maryland developer’s continued involvement.

If Edgemoor goes overboard, some council members think the city could immediately take up negotiations with runner-up bidder AECOM, which has teamed up with local engineering firm Burns & McDonnell. Others have quizzed city lawyers about whether that’s legal.

“There are members of the council who are basing their votes on that,” Councilwoman Jolie Justus said of colleagues who think negotiations can cut away to AECOM and Burns & McDonnell. “I think anybody who is no right now is probably of the belief that we can just pivot, and it’s not that easy.”

Short of going straight to AECOM, the council could re-bid the KCI single terminal project altogether.

There are 13 votes on the city council — 12 council members and the mayor — meaning Edgemoor needs seven.

Several council members have staked out their positions on the MOU, but several others say publicly they’re undecided or don’t want to show their cards.

That leaves a few key swing votes.

“I’m not going to talk about how I’m voting tomorrow,” said 3rd District at-large councilman Quinton Lucas, a co-sponsor of the ordinance carrying the Edgemoor MOU who is widely seen as a critical vote for either side.

Vote-counters both on and off the city council describe voting blocs that could change day-to-day, even hour-to-hour. “Fragile” is a word used to describe any majority lined up for or against Edgemoor. The tenuous nature of the vote illustrates yet again the rocky path the KCI terminal project has traveled for several years.

A set of council members — Mayor Sly James, Jolie Justus and Katheryn Shields, to name a few — appear solidly behind Edgemoor.

“Anybody around here can play games as much as they want,” said Councilman Jermaine Reed. “I am 100 percent yes.”

Lee Barnes said this week he has not budged from his opposition to Edgemoor. Scott Taylor has expressed misgivings about Edgemoor and gave no signals this week that he has changed.

That leaves Teresa Loar, Heather Hall, Kevin McManus and Dan Fowler, who have not publicly committed one way or the other.

Scott Wagner, whom James named Kansas City’s mayor pro tem, appears to be a no-vote.

Wagner said he has concerns about how Clark Construction, part of the Edgemoor team on KCI, has handled a nine-figure project at the Seattle-Tacoma International Airport that has encountered delays and cost increases.

“Pretty damn close,” Wagner said of whether he would vote against Edgemoor. “I’m trying to reconcile here to what they did in Seattle.”

On Wednesday, Wagner wrote a lengthy Facebook post detailing his concerns with Clark Construction’s work at Sea-Tac.

“I am taking it seriously because I want the best for the people of Kansas City, and I am willing to do my homework to make sure Kansas City gets the best airport possible,” Wagner wrote.

Clark Construction, which owns Edgemoor, was selected in 2015 by the Port of Seattle to develop an international arrivals facility at the Sea-Tac airport. Architecture firm SOM, which Edgemoor hired for the KCI project, was also part of the Clark Construction team in Seattle.

The budget has undergone several revisions since 2015 and settled on a target for $608.4 million in 2015, according to Port of Seattle documents. Opening was projected for September 2019.

But cost forecasts have grown to an estimated $790 million to $810 million. Some of that — about $76 million — comes from mutually agreed upon add-ons, including a pathway for international passengers to switch to third-country destinations without going through U.S. customs.

Greg Colevas, a division president with Clark Construction, said the firm presented a $620 million guaranteed maximum price to the Port of Seattle in July 2017.

Port of Seattle spokesman Perry Cooper said negotiations for a guaranteed maximum price — the highest price a contractor will charge a client before paying cost overruns out of its own pocket — are ongoing.

Colevas said that later on in 2017 after the $620 million guaranteed maximum price was offered, environmental contamination from polychlorinated biphenyls, or PCBs, were discovered in the soil at the job site.

“We have cleaned up the PCB situation, it was a foundation from an old aircraft hangar,” Cooper said in an email. “The final cost of that has not been determined.”

Colevas estimated the PCB remediation cost at $30 million.

Colevas also said that the Port of Seattle later requested new elements to the airport’s international arrival facility, including facial recognition software, an emergency generator system and expanded capacity on a baggage handling system. He said those costs added up to $40 million.

Colevas said those two issues should have been better handled by the project’s manager, which is AECOM.

“This is a case where clearly the program manager did not have the stakeholders under control,” Colevas said.

AECOM rejected that contention.

“These characterizations are inaccurate and we refer any inquiries about our performance to the Port of Seattle, whom we continue to successfully serve,” AECOM said in a statement.

Clark Construction and Port of Seattle officials seemed to agree that the construction market in Seattle also contributed to cost increases for the Sea-Tac project. The increase in construction projects means contractors and subcontractors can command higher prices for their services.

A Jan. 25 article in the Seattle Times reported that Seattle had the most construction cranes of any U.S. city in July 2016 and kept that top position ever since.

“It’s pretty crazy overall,” said Cooper, the Sea-Tac spokesman. “Multiple other projects here have also had problems because the construction market is so hot.”

The cost increases and uncertain project schedule has led to some anxiety among some Seattle officials.

“I believe there are some of these concerns,” said Port of Seattle Commissioner Peter Steinbrueck.

Others downplayed the issue.

“It’s part of the process,” Cooper said.

Commissioner Courtney Gregoire, after an August briefing on the latest cost expansions, said she was not yet concerned.

She said project was “absolutely moving in the right direction.” She said it would be wrong to look at the numbers as overruns, “when in reality this is logical in a progressive design-build model.”

But Gregoire, who became commission president last month, added this caveat on future cost growth: “I’m absolutely expecting to hold Clark/SOM’s feet to the fire...I want to deliver this project on time but we have a real challenge here.”

This story was originally published February 7, 2018 at 6:50 PM with the headline "Edgemoor’s KCI pact sits on the brink in council vote Thursday."