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Scope of New KCI Airport Now Under Question

Wednesday, December 5, 2018

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Officials surrounding the new terminal at Missouri’s Kansas City International Airport are taking another look at the project’s scope as the work awaits approval of its environmental review and carriers work out who will be paying for the $20 million baggage handling system.

“Since the project cannot move (forward) with further design and construction until the environmental approvals are granted, the airlines have requested as part of their due diligence, and we have agreed to take a second look at the project scope and ensure everyone is comfortable,” said Kansas City Mayor Sly Jakes.

What's Been Happening

The project has already faced its fair share of turbulence.

Rendering courtesy of KCI

Officials surrounding the new terminal at Missouri’s Kansas City International Airport are taking another look at the project’s scope as the work awaits approval of its environmental review and carriers work out who will be paying for the $20 million baggage handling system.

Last month, officials released new cost estimates, putting the price of the project as a whole at nearly $2 billion, which includes about $400 million in finance costs.

Geoffrey Stricker, managing partner for terminal developer Edgemoor, told the Kansas City Star at the time that the ballooning costs were because the airlines (who are financing the project), have requested four additional gates, more parking for airplanes and larger gate holding areas.

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.

Some took issue with the project 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 bidding 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 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.

Then, in December 2017, the Kansas City Council rejected the original memorandum of understanding with Edgemoor, with members posing concerns 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.

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

Geoffrey Stricker, managing partner for terminal developer Edgemoor, told the Kansas City Star that the ballooning costs were because the airlines (who are financing the project), have requested four additional gates, more parking for airplanes and larger gate holding areas.

When it came to light that council was questioning the MOU, AECOM and Burns & McDonnell, announced that they had teamed up and were waiting to step in if the council decided to completely scrap the deal with Edgemoor.

However, the council and Edgemoor came to a revised agreement in February, which included a more robust description of community benefits, such as free or subsidized transportation options and licensed child care for workers. It also added contributions to several charitable organizations, detailed an apprenticeship program and made commitments to hiring minority- and women-owned businesses.

What Now

After all that, some of the smaller airline carriers are protesting their parts of the bill.

Spirit Airlines senior vice president and chief commercial officer Matt Klein said Spirit thinks the cost of the project is favoring the large carriers.

“As a direct result of the project as now conceived, Kansas City residents and visitors will pay significantly higher fares in the future and may lose valuable low-fare service,” Klein said. “We are urging the city to move toward a plan that allows all carriers to operate equitably and to one that does not stifle competition.”

Allegiant airline has also told the City Council’s Airport Committee that it thinks the $1.6 billion price tag (costs without considering financing) is “unsustainable.”

In addition, committee members are now saying that they’re reviewing the agreement with Edgemoor yet again and will also now have to approve the funding agreement between airlines.

   

Tagged categories: Airports; Developers; Finance; Upcoming projects

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