CHICAGO – Kansas City, Missouri voters endorsed a proposed $1 billion terminal overhaul at Kansas City International Airport giving the city the go-ahead to finalize a memorandum of understanding with its chosen private partner.
About 75% of those voting on the issue on the Tuesday ballot approved the plan to shift from the existing three-terminal design to a single, modern terminal. The city council must approve a MOU and a final contract and public hearings will be held on the design. The city hopes to open the terminal in late 2021.
It remains unclear how the financing might be influenced by House Republicans’ proposed tax bill that would eliminate private activity bonding. Most airport bonds fall under the classification as does most borrowing used in the P3 sector.
A special selection committee chose Edgemoor Infrastructure in September from among four firms vying to lead a public –private partnership.
A release date for the finance plan has not been set. City officials said Wednesday they remain in close contact with their congressional delegation and trade organizations tracking the tax bill as it stands to impact both the project and general city bonding options going forward.
“We, of course, view this as a national issue that will affect all cities across the country and many more projects than just our terminal modernization project,” said finance director Randall Landes. “We are watching the situation carefully, so that we can determine how the proposed tax plan would affect not only our terminal modernization project but also other planned financings of the city.”
“With regard to the terminal modernization project, we are working closely with our partners to develop the plan of finance” and “all options” are still under consideration, Landes said.
The “financing is provided by the development team and will be paid back solely by the airlines and through revenues generated at the airport,” city documents say. “Instead of the Aviation Department issuing airport revenue bonds to finance a new terminal, the developer will assemble the financing without using city taxpayer funds or issuing airport revenue bonds.”
While GARBs may have been pushed to the backburner, Edgemoor has touted its flexibility on P3 financing and said a range of tax-exempt, private, and “innovative” options were on the table at a news conference after its selection was announced.
Past projects financed by Edgemoor’s financing partner have tapped into bank debt, private activity bonds, TIFIA loans, export credit agency financial products, and derivative products.
While Mayor Sly James had long sought the airport project, the P3 effort was launched after Burns & McDonnell pitched the idea earlier this year in the form of a no-bid contract. The city’s interest, however, led officials to open a competition for the project and Edgemoor was selected over Burns and two others.
The ballot question asked whether the existing terminals should be demolished and a new terminal built “with all costs paid solely from the revenues derived by the city from the operation of its airports and related facilities, and without the issuance of general airport revenue bonds unless such general airport revenue bonds have received prior voter approval?”
In other Missouri-based election news, St. Louis voters approved by a 60% margin a half-cent sales tax hike. The hike in the rate that will hit 9.7% in some areas of the city will raise about $20 million annually and fund pay raises for police officers and firefighters. A corresponding hike in the business use tax would generate $4 million for other public safety initiatives.