Mayor Sly James reveals surprise plan for new KCI terminal
Kansas City Council members on Tuesday peppered Mayor Sly James with questions about Burns & McDonnell’s proposal to build and finance a new airport terminal, even as the mayor called for a quick decision so the public can vote on the plan in November.
Tuesday’s two-hour airport discussion was the first chance the council has had to grill the mayor and City Manager Troy Schulte about Burns & McDonnell’s unusual private airport financing plan. The mayor, city manager, airlines and company officials have been quietly discussing the idea for some weeks, but it just was publicly unveiled last week.
The plan calls for the company to pull together the private financing to build a new, $1 billion terminal, where Terminal A is now at Kansas City International Airport, in exchange for the exclusive right to do the design and construction work. Kansas City voters would be asked to approve the new terminal project in a November election.
Tuesday’s discussion revealed significant concerns and skepticism from various council members but also a willingness to keep an open mind.
Council members asked how the city and traveling public’s interests can be protected, how to assure Burns & McDonnell won’t build a cheap “Butler Building,” and how to assure that Kansas City companies and employees get a fair share of the work.
James said the city is working to quickly hire independent legal counsel to advise the council on this unusual type of contract, and to protect the city’s interests in its negotiations with Burns & McDonnell.
“We’re looking for a firm that has the experience, the expertise and the time” to provide this counsel very soon, James said.
City Councilman Quinton Lucas, who teaches contract law at the University of Kansas, said it’s essential that the city negotiate a solid agreement with Burns & McDonnell.
“Whether you call this a term sheet, or a napkin, or a contract, it’s exceedingly important,” Lucas said, pointing out holes and questions in the current “memorandum of understanding.”
Schulte said he thinks a majority on the 13-member council will ultimately favor this approach to modernizing KCI. But the discussion also revealed that this high-stakes council decision is on a fast track, which clearly made some council members uncomfortable.
“How do we know they’re the best bid?” Councilwoman Heather Hall asked of Burns & McDonnell’s unsolicited proposal, raising a question that other council members echoed. “I feel like we’re rushing, rushing, rushing.”
“They came to us,” James responded, noting that he urged the business community a year ago to help the city find a solution to its airport improvement dilemma. “Nobody else stepped up.”
James said Burns & McDonnell is the nation’s third-largest airport builder, with huge projects underway at LaGuardia and at Los Angeles airports. He said the city is on solid ground to approve this “sole-source bid” because of the unusual nature of the airport situation.
But Lucas noted other companies may not have known there was an opportunity to bring forward such a proposal. Councilwoman Teresa Loar said she’s heard from Black & Veatch and other firms that would have loved a crack at the project.
James told his colleagues that time is of the essence to get the pieces in place in time for a November election.
Things that need to happen:
▪ The “memorandum of understanding,” which will set out basic terms of the agreement with the company and the city, must be approved by June 15. The memorandum is still being drafted but should be introduced at this Thursday’s council meeting. Revisions can continue until the council votes.
▪ The council plans to hold public hearings on the memorandum and the airport project, with tentative dates of May 23, May 25 and June 8. Exact times and locations are being determined. A final hearing possibly could be held the morning of June 15, before the council vote that afternoon.
▪ If the council approves this deal, Burns and McDonnell could then proceed to get a guaranteed maximum price for what the new terminal would actually cost. It must assure that the project can be built for about $1 billion, and get that price firmed up by August.
▪ The council must then approve ballot language by Aug. 24 to set the stage for a November city vote.
James acknowledged that if voters then reject the idea of a new KCI terminal, the city probably will be left with no good options for airport improvements.
James answered some of his colleagues’ questions but at times appeared impatient with their skepticism. He said Burns & McDonnell has pledged to build the airport at an affordable price that can be paid back with airport revenues. In part that’s possible because the construction schedule would be accelerated and the project completed by 2022, instead of the city’s anticipated time-frame of 2024.
Time is money in construction, he said, and it accomplishes the airport improvement that the airlines want. James also emphasized that if the project goes over budget, Burns & McDonnell assumes that financial risk, not the city.
“The airlines were getting tired of jacking around with us,” James said. The airlines had wanted an election in August 2016 on a new airport terminal, but James halted that idea after polling showed Kansas City voters overwhelmingly support the existing horseshoe terminal configuration for its convenience.
It’s not known whether any of that voter sentiment has changed, but business leaders and the airlines have made clear that they don’t think KCI’s current configuration serves passengers well, and they believe a new terminal can be as convenient, while also being more efficient, serving larger aircraft and providing better flight connections.
Councilwoman Katheryn Shields worried that Burns & McDonnell would have to cut corners on construction to make private financing as economical as public financing with airport revenue bonds, which normally carry a lower interest rate.
Schulte agreed the city doesn’t “want to end up with a giant Butler Building,” and will insist on a high quality project.
Councilman Scott Wagner said Burns & McDonnell will have to build a quality project, because its reputation is on the line. Plus, its employees also fly thousands of flights out of the airport every year, so he said they’ll want something “state of the art.”