Denver Airport Officials Deny That Hotel and Transit Project Is Over Budget
Denver International Airport officials insist the project to build a hotel and transit center connected to the airport terminal remains on track at an adjusted budget of $544 million, despite recent reports the job may have ballooned as much as 34% over initial costs.
The centerpiece of the project is a 500-room, 14-story Westin hotel that is going up at the terminal's south end, near a new train station and public plaza, also under construction.
Budget figures provided by DIA show the airport is not counting in the project total nearly $128 million in "related costs." Those expenditures include $74.7 million for excavation, infrastructure and sewer improvements, baggage-system upgrades and new bridges on levels Nos. 4 and 6 near the hotel site. Also not included is $53 million in shared costs as part of a lawsuit between DIA and the city's transit agency, the Regional Transportation District. RTD is a partner in the transit piece of the project, which will bring commuter rail to the airport from downtown Denver (ENR 2/17/14 p. 13).
The disputed funds would pay for site excavation, roadways, train-platform construction and other infrastructure work near the terminal. Both agencies say the other should pay for the improvements. In 2012, a mediator ruled that RTD is responsible for only $7.8 million of those costs, so DIA sued to recover the balance.
If both the disputed and "additional related" costs are included in the project total, the price tag jumps to $672 million.
"This comes down to semantics," says DIA spokeswoman Julie Smith. "The $544-million figure is the key. The other pieces are not project-related, things we didn't have to do but made sense for us to do now while contractors are on-site."
But there are indications the airport has been cutting costs to take up the slack. The project team already has scrapped plans for an automated baggage-check system and security-screening access at the new transit station and trimmed one floor from the hotel design. Also, the airport is not planning to build 10 new airline gates, for which it borrowed $280 million in 2008; instead, five temporary gates have been added onto Concourse C.
"But with the Frontier [Airlines] bankruptcy, we didn't need all 10. We bought some of their gates," says Stacey Stegman, DIA's global communications director. The airport has at least $600 million in cash on hand, "way more than the industry standard. We are in a hugely healthy financial position," she adds.
Airport CFO Patrick Heck says the hotel and transit center project "is absolutely not cutting into other capital or maintenance projects at DIA. We're not making financial sacrifices to get the [hotel] project done," he says.
Heck estimates the hotel will generate $4 million to $5 million a year in profits for the airport. The hotel portion of the project remains on schedule for a late 2015 completion and opening.
