Kansas City aiming to close on KCI financing late this year
CHICAGO – Kansas City and its private partners in a $1 billion airport terminal makeover hope to win final environmental approval and strike price and airline lease agreements in October, setting the stage for a late November financial closing.
That’s according to a project update presented by city, airline, and developer officials to a City Council committee Thursday.
Some dates from the original timeline were pushed off to accommodate a decision to increase the number of terminal gates to 39 from 35. The city expects to submit its draft environmental report to the Federal Aviation Administration in July with a final record of decision now expected in October. Final price and financing agreements are now expected later in the fall. The cost of the new gates has not yet been determined.
“There is an impact to our schedule to financial close. We think it’s going to be roughly 60 days. Instead of closing late September, we are now estimating it’s probably in late November,” city Aviation Director Patrick Klein told council members.
The city expects a budget estimate in June that probably would be pared down. The goal is to reach a final budget by Oct. 1 that airlines agree to and can win City Council and airline approval by the end of that month, setting the stage for closing on the final price and financing agreements by late November, Klein said.
Officials have been working to validate airport estimates previously used to craft the initial terminal plan “to make sure we are rightsizing” the proposed facility, Klein said.
The estimates projected annual passenger growth of 1.9% from 2013 to 2030 but it’s instead averaged 3.9% since 2013 and four new airlines were added last year.
Southwest Airlines' official Steve Sisneros, who spoke on behalf of several key KCI airlines, said the airlines were still exploring the added costs, which he stressed would fall on the carriers. “It’s good news … it’s additional commitment by the airline community to KCI,” he said at the hearing.
The team said it can't now project the opening date for the terminal which previously was set for late 2021.
The council in February cleared the path for the city to take the next steps in its P3 with Edgemoor Infrastructure & Real Estate LLC by approving a memorandum of understanding with the firm.
Edgemoor’s preliminary design features a two-level curbside drop-off and pickup area. Requirements of project agreements provide for private financing for a 750,000 square foot terminal, a 6,500-spot parking garage, 35 gates with room to expand to 42, use of a local worforce, prevailing wages for construction workers, and assurances that minority and women-owned business goals are met.
Financing for the new terminal will be paid back from airport revenues and the city will continue to own and operate the airport.
Edgemoor was chosen to lead the $1 billion project in September, beating out three rivals including the local firm Burns & McDonnell which first proposed the city consider the design, finance, and build P3 model.
One factor in Edgemoor’s favor was its debt-only financing option. It was the only one to offer that option and city officials said it could trim $90 million off costs.
Voters approved the planned overhaul, which will replace three existing terminals with a single modern one, and the use of a P3 in a November referendum.
The airline has 31 gates currently leased. The terminal plan would allow for future growth with plans to potentially grow to 50 gates in the coming decades.