Mayor Pro Tem Scott Wagner, a Northland councilman who is running for mayor, has grown tired of delays and foot-dragging on the KCI project. He thinks an infusion of outside equity could help move things along.
Wagner proposed Wednesday that Edgemoor Infrastructure & Real Estate, the Maryland firm picked to develop a new terminal at KCI, consider taking on equity as part of the airport’s financing plan. The idea is to keep Edgemoor from borrowing from the city or other sources while it waits for bonds to be sold.
The project to replace the three existing terminals at KCI with a single building has encountered a laundry list of delays and hiccups since voters enthusiastically approved the idea in November 2017.
“The idea is to see if we can find someone who is willing to inject actual capital into the project and, therefore, move risk from the city back over to the developer and the development team,” Wagner said.
He has a someone in mind: Oaktree Capital, the financing partner of one-time KCI project bidder AECOM.
That idea doesn’t impress fellow council member and mayoral campaign opponent Quinton Lucas, who said Oaktree’s involvement is “inappropriate,” given that the firm had partnered with a rival bidder.
“I don’t see this as a serious proposal,” Lucas said. “(Wagner) has been here longer than I have so I think he understands that when we’re engaged in negotiations with one firm, we should have fair and open negotiations with them.”
Wagner said Oaktree Capital isn’t Edgemoor’s only option, but added that the firm is ready to line up as much as $150 million in equity.
When a selection committee picked Edgemoor to develop the new terminal, part of what city leaders said was appealing was that the firm proposed to finance the entire project through debt. That would be cheaper, they said, than other proposals that included equity.
When someone puts equity in a project, they expect a return on that investment. City Hall thought debt was cheaper than equity, which helped pushed Edgemoor to the top.
Edgemoor has borrowed $23 million to do its work up to this point. There’s another $48 million needed for the company to continue before bonds are issued. The city thought about lending its own funds to bridge the gap, but concluded that was politically unpopular, given that voters were promised there would be no taxpayer money in the airport deal.
So things are more or less stuck.
“One of the things we said over and over again about this project is the risk is on the developer, the risk is on the airlines, not on the city,” Wagner said. “As ordinances have come forward it, suggests the risk is on the city if this project is going to move forward.”
Geoffrey Stricker, Edgemoor’s managing director, wouldn’t bite on Wagner’s suggestion.
“Our focus remains squarely on delivering a world class terminal to the people of Kansas City,” Stricker said in an email. “On the heels of the airline agreement, we remain committed to working closely with the airlines and the KC Aviation Department as we continue to follow the process set forth by the City.”
Wagner’s ordinance will be introduced at Thursday’s council session, at which point it will likely be referred to the Airport Committee. It’s first opportunity for a hearing will be next week.