Road blocks common for airport projects like KCI terminal
A consortium of companies led by AECOM, a firm that bid unsuccessfully to build a new terminal at Kansas City International Airport, said in a letter Thursday that it can beat the current price for the project by more than $1 billion.
In a letter to Kansas City Council members Scott Wagner, Teresa Loar and Lee Barnes the consortium, KCI Partnership, said its revised plan would save $1.113 billion over the current proposal by Edgemoor Infrastructure & Real Estate, the firm selected by the city.
The letter was in response to three council members who asked that KCI Partnership update its financial proposals as the current KCI terminal project has proceeded in fits and starts.
The letter was emblematic of the ongoing political tensions over the new terminal and the apparent lingering of unsuccessful bidders around the periphery of a contract award they did not receive.
While the city’s final agreements with the airlines and Edgemoor still haven’t been inked, it’s unlikely at this juncture that the city would switch developers.
KCI Partnership’s savings claim hinges on a purported $85.2 million in annual debt payments the city would make on the terminal costs over 35 years, in comparison to the same $117 million annual payment by Edgemoor.
Geoffrey Stricker, managing director of Edgemoor, said its proposed financing plan with the city is a 35-year financing but that payments occur for 31 years, not 35 as KCI Partnership assumed.
KCI Partnership officials did not respond to questions about how they arrived at the $85.2 million figure. Some council members were skeptical of its provenance and reliability, saying it would be difficult to make such claims without having been part of the design and planning process for more than a year.
“There’s no merit to what’s in there because the people being asked have not been at the table and don’t know what the airlines have asked for,” said Jolie Justus, a council member and chair of the city’s airport committee.
Wagner said he has passed KCI Partnership’s letter on to Southwest Airlines, the lead carrier in negotiating a use and lease agreement with the city for the new terminal. Airlines pay for the bulk of terminal improvement projects.
“I’m not the expert in building airports and I’m not the one responsible for doing so,” Wagner said. “It’s important to then make those numbers available to the very airlines that have used their own third party to verify the numbers provided by Edgemoor.”
Wagner opposed Edgemoor last year as the City Council deliberated and ultimately voted to enter into an initial agreement with the Maryland-based firm. He had reservations about cost increases that occurred in the construction of a terminal at the Seattle-Tacoma International Airport, where Edgemoor partner Clark Construction is the lead contractor.
KCI Partnership continually sought ways to undercut competitors on price during its failed bid for the KCI terminal.
In 2017, the consortium’s initial proposal claimed to save $462 million over 30 years compared to an original, unsolicited bid by Kansas City engineering and construction firm Burns & McDonnell.
Burns & McDonnell and another bidder, Jones Lang LaSalle, were disqualified during the evaluation of proposals, leaving KCI Partnership and Edgemoor.
Edgemoor was selected, in part because its proposal contemplated financing the project entirely through debt, which city leaders believed would save money over paying a developer returns on an equity contribution to the project.
KCI Partnership’s letter on Thursday indicated that it was interested in the KCI project despite the difficulty Edgemoor, the city and airlines have had in negotiating an agreement. The firm said it was willing to contribute its own $140 million equity investment into the financing.
“Our team is ready to deliver this project,” KCI Partnership’s letter declared.
Justus seemed to douse the idea with cold water.
“We are only dealing with one developer,” she said. “There’s not a scenario where we could switch like some people think we could.”
Burns & McDonnell said Thursday that it was no longer involved in the project. For a time, the company had teamed up with AECOM as part of KCI Partnership, but that agreement has since lapsed.
A political action committee formed last fall, Missourians for Effective Leadership, has been financed almost exclusively by Burns & McDonnell. The firm has accounted for all but $350 in the $120,350 raised by the PAC as of its Jan. 15 report to the Missouri Ethics Commission.
Commission records show that Missourians for Effective Leadership has made donations of $2,625 to several council members who have been skeptical of Edgemoor, including Wagner, Loar and Barnes, who sought updated financial plans from KCI Partnership and Burns & McDonnell.
Burns & McDonnell pointed out that Missourians for Effective Leadership has donated to 40 state and citywide candidates in Missouri. Asked if Burns & McDonnell was trying to compete for the KCI project or tip the scales in any way, the firm replied “No.”