Government & Politics

Long-awaited KCI airlines agreement comes with new price tag for terminal project

Developers of the new single terminal at Kansas City International Airport pledged Thursday to build the same project for a new, lower price recently agreed to by the airlines that serve KCI.

What was a $1.64 billion project will be delivered for $1.5 billion, airline and city aviation officials said.

They appeared before the City Council Airport Committee following Wednesday’s news that the airlines serving KCI had reached a long-awaited accord on what they would spend to build the terminal.

The city has promised no taxpayer funds will be used for the project, which was overwhelmingly approved by voters in November 2017. Airlines will be responsible for any cost overruns.

Steve Sisneros, managing director of airport affairs for Southwest airlines, announced that most of KCI’s eight carriers, the Kansas City Aviation Department and developer Edgemoor Infrastructure and Real Estate were in agreement on a deal.

“There’s been some long days, admittedly, and some long nights along the way, but I’m pleased here to report that we’ve reached an agreement...” Sisneros said. “This is only the first step in moving the project forward, and we look forward to continuing our strong working partnership.”

Edgemoor managing director Geoffrey Stricker told committee members Thursday between 10 and 15 percent of the design work is complete and that moving forward his team can find cost savings to shave off $140 million.

“It will be an airport that Kansas Citians are proud of,” Stricker said.

Until Wednesday’s announcement, the project had been held up while city officials waited for consensus from the airlines. They had been in negotiations since November when two smaller airlines balked at the $1.64 billion budget. There was also widespread disagreement among the carriers over how to share the cost of a baggage handling system valued at $20 million a year.

Mayor Sly James said after seven years working on the project, having the agreement was huge.

“Folks should understand this is not a negotiation to get on a Lime scooter and ride from one part of town to the other — lots of moving parts, biggest project in the history of this city,” James said.

Councilwoman Jolie Justus, 4th District, who chairs the committee said the airline agreement was a huge step forward and the city could still get the airport it wants.

“We’re early enough right now to set the goal, work toward it and still get everything that we’ve been shown,” said Justus, who is running for mayor.

Aviation Director Pat Klein said he expected six of the eight airlines that serve KCI to sign the agreement by Feb. 25.

Committee members peppered Stricker and Sisneros with questions about how it could deliver the same airport for a lower price. They said that on large airport projects design teams can target a budget and design toward that number.

Stricker said every project is different, but the team can look at elements like flooring and lighting systems to bring the costs down.

“We don’t view this as cuts to anything,” Sisneros said. “The savings are going to be in design.”

Still, some council members were hesitant to celebrate.

“I am not one to generally celebrate victory until I understand what the victory is,” said Councilman Scott Wagner, 1st District at-large, who is running for mayor.

Wagner pointed out the $1.5 billion figure does not include the costs and fees to finance the project and expressed concern that the council did not yet know what kind of contingency fund the project would have in case it goes over the new budget.

Klein said the aviation department was working with the airlines to iron out details.

Now that the airlines are on board for the airport, the City Council has to pass ordinances approving a development agreement, a community benefits package and a pledge to use minority and women-owned contractors with Edgemoor. It also has to pass the term sheet that lays out the fees and rent the airlines will pay at the new airport.

At the same time, council members are working through suggestions for how to pay for the work Edgemoor and its sub-contractors have done so far. Some members also want to find a way to finance early work on the airport site, including demolition of Terminal A and laying of utility lines. That way the project can get started once it’s approved instead of waiting more than a month for bonds to be sold and proceeds to flow in.

City officials have considered borrowing the funds from within the city’s own budget, but that has proved a sticking point between council members. The city’s finance department is working to set up a possible short-term private loan for the costs.

Councilwoman Teresa Loar, 2nd District at-large, questioned why the city wouldn’t just wait to start on the project until the bond proceeds flow in.

But Klein said as soon as the council green lights the project, the city owes Edgemoor for the work it has done so far.

Wagner asked whether Edgemoor could hold off on being paid until the bond proceeds flow in, but Stricker said the company had taken out a loan for the work it and its sub-contractors had done so far.

“We have tapped that out, and we are not in a position at this point to extend in essence further credit to folks,” Stricker said.

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Allison Kite reports on City Hall and local politics for The Star. She joined the paper in February 2018 and covered Midterm election races on both sides of the state line. She holds a bachelor’s degree in journalism with minors in economics and public policy from the University of Kansas.