DALLAS — Denver continues to cut costs associated with its $500 million South Terminal airport redevelopment project that will be financed with bonds.
The latest cutback involves a planned rail bridge over Pena Boulevard, the main access route to Denver International Airport.
The bridge for a new commuter-rail line linking DIA to downtown Denver was to have been designed by the well-known Spanish architect Santiago Calatrava. However, on Tuesday, airport manager Kim Day announced that the $22 million price tag for the “signature” bridge was too high and that a less expensive alternative would be built.
Calatrava remains the designer of the South Terminal itself, which will include an airport hotel and a station for the new rail line.
The Regional Transportation District, which is building the $1.1 billion commuter rail line to the airport, has said it would contribute $7.6 million toward the cost of the bridge.
Meanwhile, the RTD has decided against seeking a sales tax increase this year to cover the cost of completing the FasTracks program by 2020.
With bonds approved by voters in 2004 along with a 1-cent sales tax to service the debt, the original target date of the mixture of light rail, commuter rail and bus lines was 2017. Since then, revenues have fallen and costs have risen.
Rather than seek a tax increase this year sufficient to complete the project by 2017, district staff has recommended a bringing 0.4% increase before voters in 2012 to finish construction by 2020. The 24-mile rail line from downtown Denver’s Union Station to DIA is expected to be ready by 2016.
“We remain committed to continuing to work with our regional partners to complete FasTracks sooner rather than later,” RTD chairman Lee Kemp said.
Earlier this year, DIA reduced the cost of its South Terminal redevelopment project to $500 million from a previous estimate of $650 million. The project is part of the airport’s 10-year, $1.5 billion capital improvement program.
The centerpiece is a 500-room Westin hotel that will be built above the train station and an outdoor plaza.
Plans for the hotel brought a gloomier rating outlook from Moody’s Investors Service in a recent refunding deal. While maintaining its A1 rating, Moody’s shifted the outlook to negative.
Moody’s analyst Kurt Krummenacker cited DIA’s debt load of nearly $4 billion as almost double the hub airport median of $2.1 billion. Revenues from the airlines would not be used to support the hotel debt. Thus, the hotel is not a core asset for the airport, he said.
“These projects introduce substantial new operational risks to the enterprise, which already has an above-average debt burden,” Krummenacker wrote.
Airport officials dispute the idea that a hotel is be a non-core asset, citing competing airports served by hotels.
