Burns & McDonnell said Thursday it could build a theoretical $1.117 billion terminal at Kansas City International Airport with $65.3 million in average annual financing payments.
The company is the lead partner in KCI Hometown Team, one of four proposers seeking the single-terminal contract from Kansas City. On Thursday, it submitted its response to follow-up questions from the KCI selection committee, three days after the four teams presented their plans to the six-member committee.
The selection committee asked each team to present its financial approach to the airport project with a common set of assumptions, including a $1.117 billion cost and a 30-year repayment schedule. The original proposals contained financial plans based on different assumptions, and the selection committee wanted to analyze each approach side by side.
The Burns & McDonnell financial proposal on Thursday would undercut the $69.8 million annual financing payment in the original AECOM-led KCI Partnership submission to the selection committee on Monday. KCI Partnership has not yet publicly released its responses to the committee’s questions.
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Geoffrey Stricker, managing director of Edgemoor Infrastructure & Real Estate, said his firm would not release its responses until after the city decides on a proposer; Jones Lang LaSalle also declined to release its responses.
KCI Hometown Team and KCI Partnership appear to view the competition for the terminal project as a two-horse race. On Wednesday, both teams made public announcements accusing one another of playing fast and loose with their interpretations of the financial proposals.
Since Monday, KCI Partnership has said it could provide large cost savings — hundreds of millions of dollars worth — over KCI Hometown Team. KCI Hometown Team responded that its proposal could actually beat the KCI Partnership financing plan.
In Thursday’s response, KCI Hometown Team said that while its proposal was altered to meet the selection committee’s assumptions, it did not change its equity contribution ($50 million) or ask the city to restructure its existing airport debt (about $239 million).
“Our review of AECOM’s August 10th proposal shows they treated these items in a manner that is financially detrimental to the city,” reads a letter signed by Burns & McDonnell chief executive Ray Kowalik and Americo Life Inc. director of investments Greg Hamilton.
“Specifically, the AECOM proposal required the city to refinance its existing debt; it also applied (passenger facility charges) to reduce their construction costs.”
The KCI Hometown team proposal said it allows the city to use surcharges collected from airline tickets to pay for certain airport improvements as it wishes. It also puts the city’s existing debt at a higher priority than its own debt, which had been an apparent concern of the selection committee.
Earlier in the week, AECOM senior managing director Karl Reichelt voiced his suspicion about the selection committee’s decision to ask for follow-up questions on each team’s financial proposals. He said he had concerns it could allow other teams to restructure their financial proposals to beat the KCI Partnership’s submission.
The other teams did not share Reichelt’s concern.
“Do we think the questions are fair? The answer is yes,” said Jim Heeter, a senior adviser for Jones Lang LaSalle. “We understand the need of the city to try and analyze the financial proposals on fair and equal footing.”