Burns & McDonnell disputes claim that competitor can build KCI for less

The KCI procurement process is starting to look an awful lot like a political campaign, one that may be aimed mainly at decision-makers. Burns & McDonnell beats back claims that a KCI Partnership can offer a new terminal at KCI for far less cost.
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The KCI procurement process is starting to look an awful lot like a political campaign, one that may be aimed mainly at decision-makers. Burns & McDonnell beats back claims that a KCI Partnership can offer a new terminal at KCI for far less cost.
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Government & Politics

How did Burns & McDonnell manage to lower its finance payment for KCI?

By Steve Vockrodt

svockrodt@kcstar.com

August 18, 2017 04:48 PM

In a week’s time, Burns & McDonnell’s proposal for a single terminal at Kansas City International Airport dropped the annual financing payment for the project by about $15 million a year.

On Thursday, Burns & McDonnell, the lead partner in KCI Hometown Team, said in response to questions by the KCI selection committee that it could build a $1.117 billion terminal with average annual financing payments of $65.3 million a year.

Contrast that with its written proposal sent to the selection committee last week that indicated a $1.05 billion airport would cost $80.5 million in annual financing payments.

That payment figure has become the focal point in what’s become a fiery debate between Burns & McDonnell and the AECOM-led KCI Partnership, which argued all week long that it could build the single terminal for several hundred millions of dollars less than Burns & McDonnell.

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The two teams have since exchanged arguments publicly about which airport proposal is more economical, even though the selection committee is weighing more factors than just price among four proposals for the single terminal contract.

That’s after four teams presented their proposals to the selection committee on Monday; that day, three of the four teams released their proposals publicly. On Tuesday, the selection committee sent questions for each team to answer.

KCI Partnership has charged that the selection committee’s decision to ask each proposer to present its financing approach based on a common set of assumptions, including the theoretical $1.117 billion construction cost for the airport, is a way for other proposers to meet or beat its financing terms.

Mike Brown, vice president of Burns & McDonnell, said the selection committee’s questions allowed the KCI Hometown Team to use revenue sources in its financial model that it had previously not set out to use.

Those revenue sources were $96.1 million in passenger facility charges — surcharges collected from airline ticket fares that can fund airport capital improvements — and $60 million in federal Airport Improvement Program grants.

With a combined $156 million plugged into the KCI Hometown Team financial model, it results in an annual payment of $65.3 million.

“Under the new City financing assumptions that each Proposer was supposed to use for their (Thursday) submission, $156.141 million of the airport improvement program and passenger facility charges money was to be utilized as construction proceeds,” Brown said in an email to The Star.

“Previously, the KCI HOMETOWN team had not used these funds for construction, but instead had left these funds with the airport to use to retire existing debt before the date of beneficial occupancy of the new terminal. Integrating these new available funds into our financial model significantly lowers the amount the airport would have to provide to the Proposer to pay for the financing.”

KCI Partnership and the other proposers, Jones Lang LaSalle and Edgemoor Infrastructure & Real Estate, have not released their revised financial approach publicly.

Steve Vockrodt: 816-234-4277, @st_vockrodt