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$1.5B KCI Terminal Timeline Moved Up

Wednesday, November 20, 2019

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An update on Missouri’s $1.5 billion Kansas City International Airport project has revealed that the timeline has been moved up and that work is running on budget and ahead of schedule.

Elsewhere, though, a city chamber group is claiming that developer Edgemoor Infrastructure and Real Estate, along with the city, is overstating its success in hiring women- and minority-owned businesses. This is just the latest in the political turmoil that has plagued the project from day one.

Project Background: The Bidding

Back in 2017, developer Edgemoor was awarded the bid after nudging out firms AECOM, Jones Lang LaSalle and Burns & McDonnell.

In the beginning, some took issue with the project proposed as a no-bid contract by Burns & McDonnell, a local firm, leading to a public outcry when the bidding was opened up. In addition, several airlines that fly out of the airport came out in support of Burns & McDonnell, though they did add that they’d be willing to work with any of the four teams that had bid on the project.

Images: Edgemoor

An update on Missouri’s $1.5 billion Kansas City International Airport project has revealed that the timeline has been moved up and work is running on budget and ahead of schedule.

Another glitch was that the bidding process was handled differently by each company, with some releasing financial information and design renderings publicly. Others also publicly criticized the process.

According to the Kansas City Star, Karl Reichelt, an AECOM Capital senior manager, had said that the committee’s follow-up questions to bidders were “moving the goalposts” and allowing other competitors to alter proposals.

Burns & McDonnell held rallies and alleged conflict of interest, going so far as to say within recent weeks that the process should start over.

In the end, the selection committee said it recommended Edgemoor because of terminal project experience and finances, but also because the company kept a low profile.

The Contract

Then, in December 2017, the Kansas City Council rejected the original memorandum of understanding with Edgemoor, with members posing concerns about the agreement’s vague terms and insufficient community benefits, but a questionable provision that put the city on the hook for up to $30 million, even if the deal never closes.

When it came to light that the council was questioning the MOU, AECOM and Burns & McDonnell announced that they had teamed up and were waiting to step in if the council decided to completely scrap the deal with Edgemoor.

However, the council and Edgemoor came to a revised agreement in February 2018, which included a more robust description of community benefits, such as free or subsidized transportation options and licensed child care for workers. It also added contributions to several charitable organizations, detailed an apprenticeship program and made commitments to hiring minority- and women-owned businesses.

Costs of the project had been rising since its inception, and in November 2018, officials released new estimates, putting the price of the project as a whole at nearly $2 billion, which includes about $400 million in finance costs.

Elsewhere, though, a city chamber group is claiming that developer Edgemoor Infrastructure and Real Estate, along with the city, is overstating its success in hiring women- and minority-owned businesses.

Geoffrey Stricker, managing partner for terminal developer Edgemoor, told the Star at the time that the ballooning costs were because the airlines (who are financing the project) have requested four additional gates, more parking for airplanes and larger gate holding areas.

The End?

By the end of January of this year, developer drama was still continuing, with three members of the council—Scott Wagner, Teresa Loar and Lee Barnes—reportedly asking a consortium, KCI Partnership, which was led by AECOM, for an updated financial proposal, highlighting how divided the council members were on the project in the first place.

AECOM claimed it could save the project $1.113 billion. The council did not entertain the idea of switching developers, however.

By March, a ceremony was held for the groundbreaking where the projected 1 million-square-foot project is expected to generate up to 5,000 jobs.

In August, Edgemoor, along with architect SOM, released updated renderings and a construction update. News outlet 41-KSHB Kansas City reported that more than 60 local firms—including 41 minority- or women-owned businesses—are on the docket to participate in the project. Many of those companies are listed on the expanded BuildKCI.com. (Officials also note that the design will incorporate materials that are “unique to Kansas City,” and will include wood ceilings and stone walls.)

And, finally, in October, a report by the Star found that when it bid on the job, Edgemoor did not disclose that the Weitz Company, one of three contractors on the docket to help manage the project, has been in a slew of legal trouble in various past projects.

The Star reported that, since 2015 more than 30 former subcontractors have filed liens for payment against three separate Weitz projects. City Manager Troy Schulte said that the city should have done the due diligence and asked about penalties or the whole team, and noted that if Weitz was in a general contractor role, previous complaints about its jobs in the city would concern him, but noted that Weitz is in more of a management role and the high-profile project is being watched very closely.

What Now

Earlier this month, a statement released by the Kansas City Black Chamber demanded a review of contracting procedures and more oversight on the project, claiming that Edgemoor was lying about its numbers for contracts with companies owned by women and minorities.

In August, Edgemoor, along with architect SOM, released updated renderings and a construction update. News outlet 41-KSHB Kansas City reports that more than 60 local firms—including 41 minority- or women-owned businesses—are on the docket to participate in the project.

“The deceptive reporting practices must stop immediately, and an equitable solution that benefits and transforms minority businesses and workers as promised must be found,” said Kelvin Perry, President of the Black Chamber of Commerce of Greater Kansas City.

The goals in the contract include 15% of the construction work on the terminal is to go to subcontractors owned by women and 20% go to minority-owned firms.

The Chamber says that Edgemoor’s numbers are deficient; Edgemoor has challenged the Chamber’s math and cites the city’s Human Relations Department.

So far, minority-owned firms have received $2.1 million for construction services and $4.7 million for professional services. For women, they’ve received a combined $4.8 million.

The Chamber is looking at the contract totals in relation to the total budget for the project, which would put the participation for minority-owned businesses at .32% for construction and 6.4% for professional services and women-owned businesses at .3% and 3.9%, respectively.

Edgemoor’s numbers, however, go by the budget that has been spent so far, not the total, which would then put minority-owned construction services at 19.5% and professional services at 16.9% and women-owned construction services at 19.5% with professional services at 10.3%.

Edgemoor says it expects to make up ground on the professional services figures over the next few months of design work.

The Chamber acknowledged that it’s early in the project, and that the numbers now don’t necessarily mean they won’t improve, but insists that it’s still a highlighted concern.

In terms of the accelerated timeline, Edgemoor Managing Director Geoffrey Stricker spoke at a City Council committee hearing also earlier this month and noted that the timeline for opening has moved up to the first two weeks of March 2023, to ensure that the space is ready for the 2023 NFL Draft, which will be held in April in Kansas City.

Reports noted that the revised timeline should not impact the budget.

Stricker also announced that the project had won two approvals: one from the city’s Municipal Arts Commission for design of the parking garage and the airport, and one from the Federal Aviation Administration that will greenlight several initiatives for the development's community benefit agreement, which include free job-site transportation, extended day care hours and a workforce training program.

   

Tagged categories: Airports; Bidding; Commercial Construction; Contracts; Good Technical Practice; Government contracts; NA; North America; Ongoing projects

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