The Regional Transportation District is testing the 22-mile East Rail Line, scheduled to connect downtown Denver to Denver International Airport next year. The train arrives at the base of the new Westin Denver International Airport hotel that is being constructed as part of the DIA Hotel and Transit Center program.

DALLAS - As Denver International Airport's hotel and transit center nears completion, Denver Auditor Dennis Gallagher says the project is 40% over budget, a claim DIA chief Kim Day disputes.

"A project that started as a gleam in some former mayor's eyes is about to become reality," Gallagher wrote in a follow-up to a 2014 audit that cited numerous accounting problems. "But getting there has been a long and expensive journey with costs and the budget constantly going up."

The report puts the project's current cost at $719 million, a 40% overrun from the original $500 million price tag.

"Originally negotiated contracts were regularly amended upwards, each time increasing the overall scope and cost of the project," Gallagher wrote.

Day responded to the report by saying that the original budget was before the contract was awarded and that the budget was later adjusted to $544 million. Day has promised to bring the hotel and transit center project to completion at a price of less than $600 million.

"It was not the result of poor oversight," Day said. "We remain on track to complete the project between 5% and 10% over our budget of $544 million, as we announced last spring."

As for the costs rising to $719 million, Day attributed those costs to separate projects that include the responsibilities of the Regional Transportation District. The costs were included in the original project scope, but Day told The Denver Post that they should not be lumped into the overall budget.

Day said the costs include $75 million for "related capital projects," $53 million for "RTD infrastructure," and $2 million "that has not been captured by any established budget," but includes $450,000 associated with a financial-assurance consulting contract and $1.5 million for DIA salaries.

In December, a Denver judge ruled that $53 million still needed to bring passenger trains to the terminal was the airport's responsibility rather than RTD's.

DIA claimed that the Regional Transportation District, which is building the commuter rail line to the airport, was responsible for the last segment of the project.

Denver issued $763 million of subordinate-lien bonds for the project then called the South Terminal in July 2013 with ratings of A2 by Moody's Investors Service, A-plus by Standard & Poor's, and A by Fitch Ratings.

Day last year told the audit committee that rising construction costs and bad weather in the past year caused delays and problems. However, she said that a variance of 5% to 10% in the construction industry is considered acceptable.

The audit report made 11 recommendations on controlling costs, including a call for more oversight by the city and more transparency in reporting costs to elected officials.

Several council members and Gallagher criticized Day for the cost overruns and for a 4.25% bonus that airport officials agreed to pay three contractors for completing the project on time.

The hotel and rail station funding comes from general aviation revenue bonds, which are commonly issued for airport infrastructure projects, the second audit said. GARBs can be backed by various types of revenue, such as airline rates and charges, parking revenues, terminal concessionaire revenues or other lease revenues, and, in some cases, grant revenues.

Moody's, which has questioned DIA's use of its own financing to build the Westin Hotel, in June restored the outlook on Denver Airport Enterprise's A1 rating to stable from negative in June.

Moody's had held a negative outlook March 2011, citing investments in what analysts called non-aviation related projects such as a hotel and depot for a commuter rail line.

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