Government & Politics

KC Council votes to stick with KCI developer Edgemoor — for now

KC City Council votes to stick with developer Edgemoor

The Kansas City Council voted 8-5 on February 8, 2018 to accept a memorandum of understanding with KCI developer Edgemoor.
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The Kansas City Council voted 8-5 on February 8, 2018 to accept a memorandum of understanding with KCI developer Edgemoor.

The Kansas City Council, which entered Thursday awash in uncertainty about how it would vote on a key measure for a $1 billion KCI terminal, decided to keep working with developer Edgemoor Infrastructure & Real Estate — for now.

The council voted 8 to 5 to accept a memorandum of understanding with Edgemoor that provides a framework for continued negotiations toward a final contract agreement, expected in September.

Voting for the MOU were Mayor Sly James and council members Dan Fowler, Quinton Lucas, Jermaine Reed, Katheryn Shields, Jolie Justus, Alissia Canady and Kevin McManus.

Voting against were Mayor Pro Tem Scott Wagner and council members Heather Hall, Teresa Loar, Lee Barnes and Scott Taylor.

Edgemoor’s hold on the KCI project was in doubt until the late afternoon roll call vote. Several council members in recent weeks have either not approved of all the details in the MOU or had preferred that the city start discussions with AECOM and Burns & McDonnell, two unsuccessful KCI bidders who had joined forces.

But in the end, three members thought to be on the fence –– Lucas, McManus and Fowler –– swung the vote in favor of continuing with Edgemoor.

Mayor James warned before the vote that the council risked a “monumental mistake” by rejecting the MOU. Such a decision, he said, would put the brakes on years of civic progress and constitute a slap in the face to voters who overwhelmingly endorsed the terminal project in November.

“Voters are watching us,” James said in prepared remarks. “They have high expectations for this city now and they want to believe that we’re listening.”

James also deflected arguments by Wagner that problems at Sea Tac International Airport near Seattle, where Clark Construction, Edgemoor’s parent company, has encountered costs increases and delays, were grounds for a “no” vote. James said the two ventures have completely different financial structures that make comparisons impossible.

James added that the reality is all complex public works projects encounter unwelcome surprises and unanticipated costs.

“We are dealing with a huge project and it’s high-stakes poker for everybody involved,” he said. “I doubt there is a significant developer in the country that hasn’t had a negative headline...or an amount needed to be explained.”

Thursday’s vote doesn’t seal the deal for Edgemoor. The developer still faces prolonged negotiations with city officials before a final pact is reached. That means there is time for continued lobbying by forces that don’t want to see Edgemoor get the project.

James criticized AECOM and Burns & McDonnell, first during an early morning interview on KMBZ and again during a lengthy floor speech before the final vote, for working behind-the-scenes to undermine Edgemoor’s negotiations. On KMBZ, he called AECOM’s and Burns & McDonnell’s actions “heavy-handed politics.”

“Heck, before Edgemoor was selected, Burns & McDonnell and AECOM privately and publicly talked about each other as if they were fighting in a schoolyard,” James said during the council legislative meeting. “After they were both rejected, however, they formed a convenient partnership and now Edgemoor is under attack.”

Burns & McDonnell rejected the mayor’s remarks.

“It was disheartening to hear the Mayor attacking those within our own community again this morning,” the Kansas City construction and engineering firm said in a statement. “This is not about us. This is about doing the right thing for Kansas City. We believe in local companies; we believe in local workers; and we believe the new KCI project should be one that is positive for all Kansas Citians.”

Over the course of a roughly two-hour debate, several council members maintained their criticisms of the Edgemoor MOU.

Wagner, a mayoral candidate, laid out several concerns, including a provision in the MOU that puts the city at risk for up to $23.2 million in payments to Edgemoor if the deal falls apart before financial close. He said Clark Construction’s performance in Seattle was burdened by construction delays and cost increases.

He said those issues “paint a picture that suggests at least some concern. How will they interact with us? It suggests holding back information until it is too late.”

Taylor, an outspoken supporter if Burns & McDonnell, said he feared the project would suffer from the lack of strong local leadership.

“I am skeptical as to whether this developer has the ability in this market to bring parties together,” said Taylor, a candidate for mayor in 2019. “My if we are working this hard on an MOU it’s only going to get more difficult knowing how the process works. I think it’s a bad precedent and my comfort level is very low for this developer.”

Barnes reprised his support for AECOM and said Edgemoor had failed to address the needs of the city’s poorest residents.

“I start hearing that Lee Barnes is irrational, that he’s asking for too much,” he said. “Well somebody has to ask for too much for those that are in the distressed census tracts.”

But their voices did not win the day.

Various changes were incorporated in the MOU to allay concerns from skeptical council members.

Councilman McManus had wanted the addition of an interim update on the progress of City Hall’s and Edgemoor’s talk some time between the MOU and the final contract. He got that.

Councilman Fowler wanted funding for Northland social service programs. He got that.

Councilman Lucas wanted stronger language on Edgemoor’s minority- and women-owned business participation — set at 35 percent, even if the city’s Human Relations Department sets a lower goal — for construction and professional services. He got that.

Thursday’s vote closes a chapter in the protracted and contentious process for picking a terminal developer, which started with a no-bid contract and descended from there into unfounded accusations of interest conflict, favoritism, elaborate television ad campaigns and mayoral threats against City Council members who spoke about closed-door deliberations.

The turbulence began last March when James, Councilwoman Jolie Justus, City Manager Troy Schulte and Aviation Director Patrick Klein met with Burns & McDonnell executives at the members-only River Club. The company pitched its plan to design, build and privately finance a new single terminal.

The City Hall contingent liked the idea because it avoided a huge obstacle: voter opposition to selling airport revenue bonds, the most common form of airport financing. While such bond debt is retired not by tax funds but airport revenues only, the idea smacked to some of a government boondoggle.

Private financing, the officials reasoned, would remove any voter doubts about being stuck with the tab.

In May, James presented the proposal as a virtual gift from one of the city’s leading corporate citizens, which stepped up when no other builder expressed interest in taking on the project.

In fact, James and Schulte ignored accepted procurement practice, which called for formal request for proposals.

But the no-bid scenario touched off a long summer of charges that backroom cronyism was driving the biggest public works project in the city’s history. James and Schulte compounded perceptions of favoritism by allowing just a three-week window for other proposals, but announcing that Burns & McDonnell, which dubbed itself “the hometown team,” would get the opportunity to match them.

Again, a departure from standard practice. After renewed criticism, they extended the deadline for proposals.

Edgemoor, AECOM and Jones Lang LaSalle finally joined as competitors. In early September, the Bethesda-based firm emerged as the surprise selection of a city committee, which cited deficiencies in Burns & McDonnell’s financial proposal. The council ratified the committee’s selection in late September.

But even overwhelming 75 percent voter approval of the KCI ballot question in November did little to settle the situation at City Hall.

Edgemoor struggled to win the confidence of labor, minority groups and their allies on the council. A nine-member supermajority voted on Dec. 14 to reject a first version of the MOU, citing an inadequate package of community benefits and a provision to reimburse the company for up to $30 million in up-front costs if the deal collapsed.

The vote triggered new rounds of negotiating. Sensing blood in the water, Burns & McDonnell and AECOM teamed up and announced they were ready to step in.

Edgemoor redoubled its efforts to sell the project as a transformational opportunity for small and minority-owned businesses. Council members presented their wish lists of add-ons to the city’s legal team.

Casting a shadow over the MOU negotiations was Edgemoor’s talks with construction trade unions about a “labor harmony” agreement to rule out strikes at the job site. Edgemoor fought labor’s demand for an all-union workforce, contending that it could not meet its minority hiring commitments to the city under such an arrangement.

Those talks continue.