Kansas City finalizes P3 airport pick
CHICAGO – The fate of Kansas City, Missouri’s proposed $1 billion public-private partnership airport project lies with voters after the city council’s approval of a private investor group.
The council signed off in a 10-2 vote on its special selection committee’s pick of Edgemoor Infrastructure & Real Estate LLC to lead the terminal overhaul at Kansas City International Airport.
Edgemoor got the nod from the committee earlier this month over three other firms, including the hometown favorite Burns & McDonnell, which first suggested the city consider using a P3 model to design, finance, and build the terminal project.
Mayor Sly James, who has long lobbied for the terminal overhaul, addressed the issue in his comments after the Thursday vote, noting that the firm that first pitched the P3 idea in the end was not the one at the finish line. He said he was sorry for that but suggested the city must now move on and focus on the vote.
“I have always believed and continue to believe to this day that the issue of who builds the airport is significantly less important than whether or not we build one because frankly if we don’t have a positive vote on Nov. 7 there will be nobody to build an airport because we will not be moving forward,” James said.
The two no votes -- Councilmen Lee Barnes Jr. and Scott Taylor – favored other bidders. Some council members who voted for the team said they are still unsure of the project but want voters to decide. Taylor argued Burns was unfairly disqualified after questions were raised about the impact of its proposals on future airport borrowing and that the selection process should be reviewed.
The campaign to win voter support now begins in earnest.
The ballot question asks whether the existing three 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?”
The measure approved by the city council directs the city to begin negotiating a formal contract with the Maryland-based Edgemoor team. Initial design plans are expected next month.
The review process came under fire from several bidders and calls for the city to start anew. Edgemoor was selected by the committee of city and council representatives over three others -- Burns & McDonnell, AECOM, and Jones Lang LaSalle.
Burns & McDonnell charged that a city advisor had a conflict of interest because of a past relationship with the Edgemoor team. It also questioned its disqualification over the bonding issue.
The city’s bond counsel, Kutak Rock, had raised concerns that the Burns financing proposal could run afoul of the city’s master bond ordinance by prioritizing new private debt and that could interfere with the future use of tax-exempt debt. The firm disagreed with that assessment and had supplied an opinion from Gilmore & Bell.
Selection committee representatives said even if the bonding question was overlooked, Edgemoor’s proposal still offered the best financing options including the ability to rely heavily on tax-exempt debt.
After the committee announcement earlier this month, Edgemoor touted its flexibility on financing and said a range of tax-exempt, private, and “innovative” options are on the table. Project Finance Advisory Ltd. is financial advisor to the Edgemoor bid team and its role is to evaluate and structure a financing.
The Edgemoor team includes Meridiam, which is a member of the LaGuardia Gateway Partners that is leading the private partnership on the on LaGuardia Central Terminal B Redevelopment Project. Other Edgemoor participants include Clark Construction Group, the Weitz Company, and Clarkson Construction.
The P3 calls for the design, build and financing of a $1 billion renovation of KCI into a single passenger terminal with 35 airline gates and a 6,500-space parking garage. The city would retain ownership and operational control of the new terminal.
Edgemoor has managed projects that relied fully on tax-exempt financing to those that have tapped into innovative options. Past transactions handled by PFA, which advised Edgemoor on a University of Kansas expansion project that closed last year, have tapped into bank debt, private activity bonds, TIFIA loans, export credit agency financial products, and derivative products. Edgemoor said it’s worked on more than $60 billion of projects at more than two dozen airports.