Kansas City taps Edgemoor on airport P3
CHICAGO – The private investor group recommended by a Kansas City, Missouri selection committee to lead a $1 billion public private partnership airport terminal project touted its flexibility on financing and said a range of tax-exempt, private, and “innovative” options are on the table.
Edgemoor Infrastructure & Real Estate broadly outlined design and finance goals on Friday as it began its public push to build support for both its role on the P3 and for the airport project itself.
The City Council must approve the firm’s selection and a final contract and some members have said they have questions over the selection process. Voters also will have the final word with the project going before local voters on a special Nov. 7 ballot to decide whether to proceed with the consolidation of three terminals into one at Kansas City International Airport.
The option of fully funding the project with tax-exempt debt helped the team’s bid, according to members of the selection committee.
The firm put forth multiple options for the city on financing and is “flexible” on coming up with the best solution whether that’s a “debt and equity solution or a debt solution,” Geoffrey Stricker, managing director at Edgemoor, said at the news conference.
“Our role will be to evaluate and structure an effective financing solution that delivers the most efficient form of financing for this project,” said Victoria Taylor, chief executive officer at Project Finance Advisory Ltd., said at a news conference. The firm is financial advisor to the Edgemoor bid team.
Taylor cited the firm’s role in past projects that have relied on fully tax-exempt financing to those that have tapped into “innovative options” all which of which are under consideration as the team negotiates with the city. 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.
The team led by Maryland-based Edgemoor won the nod of a special committee of city and council representatives over three others, including the local firm Burns & McDonnell which was initially considered a favorite. AECOM and Jones Lang LaSalle also were vying for the project.
The original announcement Thursday came amid allegations by Burns & McDonnell that a city advisor had a conflict of interest because of a past relationship with the Edgemoor team. The firm called for the process to begin anew.
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.
“Edgemoor offers the city the best project for the cost, a record of positive labor relations, a deep level of experience on similar projects, and a commitment to local partnership for this generational project,” Mayor Sly James said in a statement.
Members of the committee said the Edgemoor proposal offered the most flexible and affordable financing options and cited the team’s $60 billion worth of work at more than two dozen airports.
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 Kansas City Star recently reported that the city’s bond counsel, Kutak Rock, had raised concerns that the Burns & McDonnell financing proposal could run afoul of the city’s master bond ordinance by prioritizing new private debt and that could interfere with the city’s future use of tax-exempt debt. The firm disagreed with that assessment.
The P3 calls for the design-build-and financing of a $1 billion renovation of KCI with 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.
The ballot question asks 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?”
The mayor shelved a previous question in 2014 on financing a new terminal due to lack of public support.
“Our review of the city’s recently released selection criteria memo only raises more questions,” Burns & McDonnell vice president Mike Brown said in a statement Friday. “Yesterday was the first time we had any indication that the city did not even consider our qualifications due to recommendations from the city’s outside legal and financial consultants. We are baffled by this erroneous technical argument.”
The team said it provided the city with a written legal opinion from Gilmore & Bell confirming its position during the review process. “This is a prime example as to why we believe the city, led by the City Council, must thoroughly review this process and make sure all proposers are properly considered,” said Brown.