Former Rivals AECOM, Burns & McDonnell See New Chance for Big Airport Contract
Concerns over financing terms ground Edgemoor's $1B Kansas City terminal bid
The long road of planning, designing and rebuilding Kansas City International Airport into a modern, single-terminal airport took another unexpected detour on Dec. 14, when the city council rejected a memorandum of understanding between the council and chosen developer Edgemoor Infrastructure & Real Estate, Bethesda, Md.
Edgemoor stands to lose its negotiated $1-billion deal, the product of negotiations between the firm and the city's hired legal firm, Husch Blackwell, if a new agreement cannot be reached. By a vote of 9-4, the council rejected the MOU due to concerns over the agreement's vague financial terms, insufficient community benefits and a provision that could pay Edgemoor up to $30 million if the deal never closes.
"There's a reimbursement agreement that obligates the city to potentially millions of dollars—a number of those costs incurred before the election," says Councilman Quinton Lucas, who represents Kansas City's Council District 3. "There was absolutely no detail on financing. I know we want flexibility, but we also want to know what we are binding the city to, potentially, for years to come."
In a Nov. 7 referendum, voters approved by a 3-to-1 margin construction of a single-terminal airport, but the ballot measure's language does not specify any single plan or developer. In another twist, AECOM and local engineering firm Burns & McDonnell, two of the losing developers in last summer's often acrimonious public bidding process, now have joined forces to offer the city an alternative to Edgemoor.
"Combined, we offer Kansas City the strongest possible local team," says Mike Handelman, senior vice president of AECOM and principal of KCI Partnership, AECOM's KCI venture that Burns & McDonnell joined. "Our teams share mutual respect [and] a love of Kansas City, and we are highly compatible on a project of this size and complexity. We have a long working relationship and are currently working together on other airport projects here in the U.S. and around the globe."
At a Dec. 18 press conference, the now-united KCI Partnership touted several aspects of its offering, including a commitment to a transformative project; up to 33% minority business participation; working directly with the community to develop a customized agreement that provides more than $15 million in community benefits from KCI Partnership; no reimbursement requirements from the city; hiring and training a local workforce; and an accelerated, five-day payment plan for all contractors. On top of these project-related promises, AECOM and Burns & McDonnell also pledged to create the so-called KCI Legacy Fund, which will provide more than $75 million in new capital over 30 years for minority-owned, women-owned and small businesses beyond those that work on the airport project.
Prior to Edgemoor's selection, Burns & McDonnell and AECOM were very competitive rivals during the open bidding process, so their announced partnership was surprising to many observers. AECOM's KCI Partnership finished second to Edgemoor in the selection process, and Burns & McDonnell's KCI Hometown Team was disqualified for language that the selection committee said did not comply with the city's bonding ordinance.
"We have no worries that we can't be great partners together," says Ron Coker, senior vice president of Burns & McDonnell. Edgemoor, however, still has the sole right to negotiate with the council and says it will continue to do what is necessary to assuage concerns.
"Since the Edgemoor Team's selection, we have been working collaboratively with the City to address all of the elements of the MOU," read a statement posted to KCI Partnership's website. "Over the last two months, we have incorporated every change that has been requested by the City. Just yesterday, new concerns were brought to our attention during Business Session. We were unaware of these concerns prior to the meeting, and believe we should be afforded the opportunity to continue negotiations and develop solutions. Throughout the procurement process, and during the campaign and the weeks that followed, our team has been open, transparent and collaborative with the Council, and the community, with a focus on delivering the best result for Kansas City. … We are confident we can reach an agreement that will continue this great region's momentum and enable Kansas City to bring to life a game-changing gateway for generations to come."
A move to terminate negotiations with Edgemoor by Lee Barnes, councilman from Council District 5, was rejected. The city council on Dec. 21 passed a resolution to negotiate with Edgemoor at least through January. That's cold comfort to citizens and groups, such as the Kansas City Chamber of Commerce, which publicly has lamented the "chaotic" selection and contracting process.
"The [city council's new] resolution set … a path to bring out an agreement on any issues that weren't brought out in the initial negotiating period," says Geoffrey Stricker, managing director of Edgemoor. "I believe that we should be able to reach an agreement through modifications to the original MOU through this process and [by the end of January]."