DALLAS -- Denver International Airport has selected an international team that includes a company headed by basketball legend Magic Johnson to enter into negotiations to renovate its main passenger terminal through a public-private partnership.
The 22-year old DIA is the fifth-largest hub airport in the U.S. with 54 million passengers per year. The facility is served by 25 airlines, including hub operators United Airlines and Southwest Airlines.
The Denver airport proposed $950 million of terminal upgrades in 2009, but a hotel and train station were removed from the master plan and built as separate projects. Both are now operational. The terminal project is part of the remaining master plan.
Airport officials selected the consortium led by Spanish firm Ferrovial Airports as the preferred partner for the project from a short list of three applicants.
The selected team includes equity partners Ferrovial Airports International and a joint venture group that includes Magic Johnson Enterprises and Loop Capital. The equity partners' legal advisor is Gibson, Dunn & Crutcher.
Ferrovial operates several airports in Great Britain, including London's Heathrow.
Ferrovial Agroman and Colorado-based Saunders Construction Co. are the group's design and build partners.
Citi is financial advisor to the private partners.
Proposals were also submitted by investor groups headed by Westfield Corp. and Manchester Airport Group.
Terms, construction costs, and scope of the P3 have not been determined, with a final decision not expected for several months.
Negotiations are under way with the selected consortium on the initial pre-development phase of the project, said airport spokesman Heath Montgomery.
"The specific terms of the pre-development contract between the airport and Ferrovial will be available in August when it is presented to the Denver City Council," Montgomery said.
Approximately six months of additional negotiations will be needed to refine the scope, financial terms, and schedule for a potential long-term agreement for renovating the terminal, he said.
"Denver International Airport is pursuing a P3 model that seeks the creativity, expertise and capital from the private sector to help reimagine the layout and use of the terminal," Montgomery said. "At the end of the pre-development phase, the airport and city will make a decision whether to proceed with this P3."
The airport's Jeppesen Terminal currently houses the Transportation Security Agency's security checkpoints, airline passenger ticketing counters, baggage claims, and numerous shops and restaurants in its 1.5 million square feet of space. Every passenger that arrives or departs from the Denver airport comes through the terminal.
The airport hopes to convert portions of the Great Hall and move the TSA checkpoints to provide more retail space. Potential bidders were asked to come up with their best proposal for a P3 approach.
"We're looking for people to propose a physical plan and a plan of finance," said project manager Kenneth Ho.
The upgrades could include new shopping and food service areas, a relocated and expanded screening area, new airline passenger check-in areas, and improved passenger flow.
The city is seeking a federal grant to move the security area to another level within the terminal.
The airport brings in $700 million per year of operating revenue, with 46% of it coming from non-airline sources such as parking, car rental fees, and food and beverage sales, he said.
In the request for proposals issued for the terminal project in January, the airport said it "is looking for that 'wow' feature for the customer experience that best reflects Denver International, Colorado, and the Rocky Mountain Region."
Ho said the airport has developed a wide range of estimates for the project but the final cost will depend on whether it is basic renovation work or a more-imaginative remodeling of the massive hall.
"We would like to make sure that whatever gets built here fulfills customer expectations," he said.
