By Paul Thompson
City Council members appear unconvinced of the rationale for an estimated 6-12 month delay in the construction timeline for Kansas City’s new single terminal airport, a project approved by 75% of Kansas City, Missouri voters in November 2017.
Project developer Edgemoor Infrastructure and Real Estate – along with the City’s own Aviation Department – delivered the news to the KCMO City Council during an Airport Committee meeting on Thursday, June 14, suggesting that a combination of a delay in signing a Memorandum of Understanding with the City, a hold on construction for ongoing environmental studies, and the recent addition of four gates (from 35 to 39) to the project have pushed the scheduled financial close of the project from June 2018 to November 2018.
The City Council response to news of the delay was a separate development entirely. Both during the meeting and in social media posts that followed, Council members expressed exasperation at a project that remains without a guaranteed maximum price, a definitive timeline for completion, unambiguous compliance with the City’s own master bond ordinance, an agreement with the Kansas City labor unions that will be relied upon to complete the construction, and, it seems, the full support of a Council that appears to be at its wits’ end.
At one point during the meeting 3rd District Councilman Jermaine Reed, an early and ardent supporter of the Edgemoor team, relayed his concern that assumptions are still being made related to costs, Federal Aviation Administration (FAA) requirements and the project timeline.
“Do we have the right folks at the table doing this work?” Reed wondered.
While the City Council has successfully maneuvered difficult situations before, it doesn’t change the fact that Council members appear perplexed at a process that, more than four months after the signing of an MOU, remains lacking in concrete details.
When Aviation Department Chief Financial Officer John Green informed the committee that clarification changes were being considered in relation to the City’s master bond ordinance, 3rd District Councilman Quinton Lucas launched a line of inquiry.
“It’s interesting to note that we’re making modifications to the master bond ordinance, because I perhaps might have incorrectly thought that the master bond ordinance was actually something that was kind of set in stone,” Lucas said.
Lucas further suggested that the Council had lengthy conversations in the summer and fall of 2017 about the rigidity of the master bond ordinance, and how “compliance with it was a prerequisite to working with the City on this project.”
Green attempted to explain the difference between the changes being made to the master bond ordinance now, and the circumstances that led the Burns & McDonnell-led Hometown Team to be disqualified from consideration for a project expected to cost more than a billion dollars to complete. According to Green, the change being considered is only a clarification to the master bond ordinance, not a material alteration.
“When we defined debt, we never contemplated the issuance of debt through a conduit,” Green said. “We’re simply making a clarification.”
Aside from that, Green agreed that the master bond ordinance needs to remain rigid.
“Yes, the master bond ordinance has provisions in there that we cannot change. We are not allowed to do anything that would impair the standing of our current bondholders,” Green said. “When we issued bonds in the past, we said ‘These revenues are pledged to you, and if we were to issue any additional – so now we’re more leveraged – these are the steps we promise to take to make sure that you’re protected.”
Second District Councilwoman Teresa Loar expressed her own concerns about potential changes to the master bond ordinance.
“I’m very uncomfortable not knowing what’s happening here with the master bond ordinance,” said Loar. “If we’re fiddling with that, we’re going to get sued.”
Loar’s comment about a potential lawsuit is an apparent reference to Burns & McDonnell, the local firm that was disqualified from the project over concerns related to the master bond ordinance. The specific concern was that the Hometown Team’s bid didn’t adhere to the ordinance because it would have prioritized its own debt over previous debt incurred by the City.
“If we’re changing the rules of that bond ordinance now, that would be unfair to the people we disqualified,” Loar said. “It was a decision between the local company and a company from out of town, and because of that disqualification, the out of town company got the bid.”
That isn’t the only way the Hometown Team continues to loom over the project: During the bidding process, Burns & McDonnell had also reached exclusive agreements with local labor unions and MBE/WBE businesses.
Loar suggested after the June 14 Airport Committee meeting that- as a result, Edgemoor has faced a steep learning curve in the negotiations.
“The unions already had an agreement with AECOM and Burns & McDonnell, where they did not with Edgemoor. I think that might be it,” Loar said. “Edgemoor’s from out of town, so they don’t know the companies – the MBE’s and WBE’s. I know they’re trying to catch up, but I think it’s just a lot of work on their end.”
Edgemoor managing director Geoff Stricker acknowledged that sticking points remain in the negotiations with local labor representatives, though the project presently touts partnerships with at least 50 local professional services, construction services and financial firms, along with 33 minority and women-owned businesses. At least some of the union representatives, Stricker said, are dead-set on a project with 100% union representation. Stricker conceded that it would be difficult to reach 100% union representation while also hitting the project’s minority and women-owned business goals.
“In our view, the 35% commitment – 20% MBE and 15% WBE – that we’ve made for the entirety of the project becomes challenging if we don’t have at least the opportunity to give all firms in the community an opportunity to bid on it,” Stricker said. “It doesn’t mean we can’t get there, but it would be much easier if we have this opportunity to give everybody a chance to work on this project.”
So can a deal go forward if they don’t yield on that demand?
“This is obviously a labor town. They have the workforce,” said Stricker. “We think we’ll get there, and that ultimately we will have a labor harmony agreement, and be able to work with the unions and give everybody an opportunity to work on the job.”
Despite the tough questioning from the KCMO City Council, Stricker painted a picture of a project under control following the Airport Committee meeting on June 14.
“We’re confident that we’ll have a deal for close by the end of the year,” Stricker said. “Everything is moving forward – the design, the budgeting, the contract negotiations, the work we’re doing to get financing put in place – everything is moving forward as expected, so I’m confident we’ll get it closed by the end of the year.”
Both Loar and Stricker pushed back on the idea that loyalty to the Hometown Team remains a factor in the protracted negotiations between Edgemoor and Kansas City’s union representation. But at least one Council member invoked Burns & McDonnell following the June 14 presentation.
Sixth District Councilman Scott Taylor wasn’t at the Airport Committee, but the Councilman has long been an outspoken supporter of the bid from the 6th District’s own Burns & McDonnell. If there was any doubt where Taylor stands on the delays, his Twitter feed erased them.
“6-12 month delay, trouble with local workforce, now changing master bond ordinance?” Taylor tweeted on June 14, along with a link to a Kansas City Star story about the delays. “Would not have had these issues with hometown team.”
First District Councilman and Mayor Pro Tem Scott Wagner also expressed his frustration about the delays on social media.
“I’m going to review the video from this meeting, but if this is true I will be quite disappointed,” Wagner tweeted. “I raised a number of warnings which were dismissed.”
Wagner’s warnings stemmed from issues relayed to him about the Seattle-Tacoma airport project, where KCI project partner Clark Construction has overseen a project that has seen heavy delays and an ever-rising budget.
“When the RFP/Q submittal was sent in from the Edgemoor team for the Kansas City Single Terminal, there were no airport projects given as references. After talking with Sea-Tac it is no wonder,” Wagner wrote in a February 7 Facebook post. “This is a client who is frustrated and trying to improve a bad situation. When they heard Kansas City chose a team with Clark and Skidmore, Owings, & Merrill, LLP, they expressed amazement that we would do such a thing.”
Reached by phone on June 19, Wagner reiterated those concerns.
“All this stuff that we’re seeing and we’re talking about here? I’ve seen it before, and it was in Seattle,” Wagner said.
Third District Councilman Quinton Lucas posted his own lengthy Facebook screed on June 15, calling for a close review of further project activity. Specifically, Lucas called for 1) a public timeline and a new estimated completion date; 2) an August 1 deadline for negotiations with Kansas City’s labor unions; and 3) a guaranteed maximum price to replace the $964 million working estimate concocted back in 2015.
“Finally, what the project really calls for is more transparency and less surprise,” Lucas concluded.
Patience in the process, it seems, is wearing thin for a Council facing pressure to deliver a project with an uncertain cost as the timeline is slipping through their fingers. That dynamic won’t be acceptable forever.
“At this point in time, we’re pretty far down the road,” Loar said. “However, all I can say is that we don’t have a development agreement signed; we have an MOU. Until that agreement is signed, it’s anybody’s guess.”
Back in February 2018, when a torn City Council narrowly approved the MOU with Edgemoor, Lucas compared the City’s relationship with the developer to a marriage, suggesting that backing out of the agreement after the MOU vote would be akin to backing out of a marriage at the 11th hour.
“Basically we’re in the same situation,” Lucas said at the time. “We have this multi-million dollar obligation, we have an exclusive contract with them for negotiations (until) next September, so we’re not backing out of this deal in six months unless something calamitous happens.”
The ensuing months will reveal whether the relationship between the City Council and Edgemoor have reached those calamitous proportions.
The next Airport Committee meeting has been set for Thursday, July 19 at 9:30 a.m., and the full City Council is also schedule to receive a single terminal report on Thursday, June 21 during its 1 p.m. business session.