Just a few hours after city officials outlined plans for a single terminal in Kansas City International Airport, misinformation began to circulate.
“It won’t cost you a dime!” one television anchor said. “Citizens aren’t paying for a new airport,” tweeted a local media consultant.
Let’s clear this up now: If you use the airport, you will help pay for the new terminal. You will pay more to fly if the proposal passes.
That’s true today, it was true a week ago and will be true next year. You can’t build a $1 billion facility for free.
The confusion, while frustrating, is understandable. When local engineering firm Burns & McDonnell said it would “privately finance” the project, some thought that meant the company would pay for the terminal out of its own pocket.
No. It means the company will borrow most of the money, like you might for a house. It will pay the lenders back with airport charges, parking fees and other spending at KCI. The airlines will add charges to your ticket, too.
Why would Burns & McDonnell agree to replace the city as the borrower for a new terminal? Because the city agreed to let the company design and build the facility — without bids, without competition. That means serious money.
Why would the city agree to the deal? So it can tell voters — before a planned November election — that no taxpayer dollars are at risk at the airport.
That has always been true, but the deal allows city politicians to double pinkie-swear that Kansas Citians who don’t fly won’t have to pay.
Careful readers may now say: Surely there’s a catch. And there is.
It will cost more for Burns & McDonnell to borrow money than it would for the city. The city might pay 3 percent interest on airport borrowing, while Burns & McDonnell could face 5 or 6 percent.
Anyone who has ever borrowed to buy a home can tell you what a difference that makes.
It’s up to Burns & McDonnell to make the numbers work. The memorandum of understanding between the company and the city calls for annual “targets” of up to $85.2 million in revenue to repay the terminal borrowing. Last fiscal year, the airport said it generated $57.5 million for debt service. Almost everyone thinks more money will be needed.
City officials think efficient construction of a new terminal, more passengers and economic growth will help fill the gap. If the fund still falls short of $85 million, though, the airlines — actually, you — will make up the difference.
Burns & McDonnell could pursue a different option, of course: build a smaller, cheaper terminal with inexpensive materials and finishes. A cheaper terminal means borrowing less money, which could help keep the project under the $85.2 million annual cap.
Either way, private financing of a new terminal changes the equation: either higher travel prices or a cheaper facility.
And voters will face that choice because the city wants private financing. Not necessarily because it’s better, but because it will make the entire package easier to sell to voters.
Perhaps it’s a deal worth making. The bargain includes a new airport terminal. That should count for something.
But voters should be clear: Building a new terminal at KCI will cost more than a dime. Several billion of them, as a matter of fact.