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$1B KCI Terminal Turbulence Calms Down

Tuesday, February 13, 2018

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A turbulent deal for Missouri’s Kansas City International Airport is back on course after the Kansas City Council approved a memorandum of understanding with Maryland-based Edgemoor Infrastructure and Real Estate.

The $1 billion deal was up in the air late last year when the council rejected the original MOU citing vague terms and insufficient community benefits. However, an 8-3 majority approved the new MOU last week.

Some Background

Edgemoor was awarded the bid in 2017 after a contentious bidding process. The firm nudged out firms AECOM, Jones Lang LaSalle and Burns & McDonnell for a new terminal at KCI.

Pacman5, CC-SA-BY 3.0, via Wikimedia Commons

A turbulent deal for Missouri’s Kansas City International Airport is back on course after the Kansas City Council approved a memorandum of understanding with Maryland-based Edgemoor Infrastructure and Real Estate.

The problem, for some, was that the project was proposed as a no-bid contract by Burns & McDonnell, a local firm, leading to a public outcry when the bidding was opened up. In addition, several airlines that fly out of the airport came out in support of Burns & McDonnell; though they did add that they’d be willing to work with any of the four teams that had bid on the project.

Another glitch was that the process was handled differently by each company, with some releasing financial information and design renderings publicly. Others also publicly criticized the process.

According to the Kansas City Star, Karl Reichelt, an AECOM Capital senior manager, had said that the committee’s follow-up questions to bidders were “moving the goalposts” and allowing other competitors to alter proposals.

Burns & McDonnell held rallies and alleged conflict of interest, going so far as to say within recent weeks that the process should start over.

In the end, the selection committee said it recommended Edgemoor because of terminal project experience and finances, but also because the company kept a low profile.

MOU Woes

On Dec. 14, Council rejected the original MOE sent by Edgemoor’s legal team. At the time, The Star reported that members of the Council not only posed concern about the agreement’s vague terms and insufficient community benefits, but a questionable provision that put the city on the hook for up to $30 million, even if the deal never closes.

“There’s a reimbursement agreement that obligates the city to potentially millions of dollars, a number of those costs incurred before the election,” said council member Quinton Lucas. “There was absolutely no detail on financing. I know we want flexibility, but we also want to know what we are binding the city to, potentially for years to come.”

While this was going on, AECOM and Burns & McDonnell, announced that they had teamed up and were waiting to step in if the council decided to complete scrap the deal with Edgemoor, despite the Council’s assurance that a restart wasn’t going to happen.

New MOU

The revised agreement includes a more robust description of community benefits, such as free or subsidized transportation options and licensed child care for workers. It also adds contributions to several charitable organizations and details an apprenticeship program.

The firm also made commitments to hiring minority and women-owned businesses, however, some of those still opposed to the deal include the Black Chamber of Commerce and the Hispanic Contractors Association of Greater Kansas City, citing insufficient goals and a lack of communication.

While the MOU is non-binding, the city is still on the hook now to pay Edgemoor for any design work or environmental studies up to $23.2 million—a sum that would make backing out of the deal unlikely.

Details of the project, including design and budget, are still forthcoming.

   

Tagged categories: Bidding; Business matters; Project Management; Terminals

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