Just when I thought Kansas Citians might be warming up to the idea of building a new single terminal at Kansas City International Airport, along comes Mayor Sly James with an alternative that was cooked up in secret and threatens to hopelessly muddle the airport situation.
The Star is reporting tonight that the Kansas City-based engineering firm of Burns & McDonnell (commonly known as Burns and Mac) “has proposed to privately build and finance a new single terminal at Kansas City International Airport, as a way to finally garner voter approval and get the controversial airport project done.”
This reminds me of being in the Army, with the platoon going steadily along in one direction, when the drill sergeant suddenly barks, “Right face! Harch!”
The idea of the city handing over to a private company the main role and responsibility of the city’s Aviation Department — providing our metro area with a good airport — strikes me as abandonment of duty…Not to mention throwing a sharp-breaking curve ball at area residents.
I understand the thinking behind this. Many area residents have been nonplussed by plans to eliminate the 45-year-old horseshoe-shaped terminals at KCI and replace them with a new structure that many people are convinced would not be as “convenient” as the existing set-up. Many people also don’t understand that a new terminal would not be built with general city funds; revenue bonds would be issued and then retired with money generated solely from airport operations, including airline gate rentals, parking and concession fees, and a surcharge on airline tickets.
In the face of strong resistance and taxpayers’ lack of understanding, James and other advocates of this new plan would like to relieve the city of all risk and just get on with the job, even if it means making a deal that involves not taking bids. Their pitch will be, as The Star put it, to emphasize that if Burns & McDonnell were to build the terminal with its own money, “Kansas City would issue no bonds and bear no taxpayer risk if the airport failed to generate the revenues needed to pay off the construction and other costs, including overruns.”
Under the Sly James/Burns and Mac plan, the city would own the airport; it just wouldn’t go through the customary process of soliciting, analyzing and awarding bids and then — if voters approved — issuing city-backed revenue bonds to finance the project. Burns & McDonnell would assume the risk, in return for the chance to make a very handsome profit on the design and construction contract.
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It is unclear how long this proposal has been in the works, but it appears the idea was to bring the proposal to the Kansas City Council quickly and get the council to approve a public vote to endorse the new plan in November.
A Kansas City Star editorial says the original schedule “called for submitting the agreement for City Council consideration on May 18, with a final council vote coming as soon as May 25.”
It appears that Star reporters caught drift of the plan, prompting Mayor James and other advocates to hastily call for a meeting Thursday with The Star’s editorial board.
The editorial board was very circumspect. Its unsigned editorial, posted Thursday evening, said:
City Hall wants the voters’ trust. It has started one of the most critical campaigns in city history with closed-door dealings that effectively cut Kansas Citians out of the process. That is just wrong. The airport debate must be open, fair, complete, fact-based and inclusive. Supporters of a new terminal may get there eventually. They have started on the wrong foot.
That’s got to make James and other supportive council members cringe. Having reacted so strongly so soon, The Star’s editorial board — whose support I think would be essential to voter approval of any plan — seems unlikely to endorse this plan, regardless of how it is stroked and fine tuned.
Here’s another observation I have on this gambit: It smacks of desperation on the part of Mayor James.
James has run a very erratic course on KCI from the outset. If you’ll recall, he and former Aviation Director Mark Van Loh came out of the box gangbusters a few years ago on plans for replacing the 45-year-old, horseshoe-shaped terminals with a new single terminal expected to cost about $1 billion. When the public blanched at the prospect of losing its “convenient” curb-to-gate airport, tapped on the brakes.
The mayor then appointed a 20-plus member, “blue ribbon” committee to study the matter, and the committee concluded a new single terminal was the way to go. Gingerly, the mayor put his foot back on the gas pedal, but last year along came a public-opinion survey showing a large majority of Kansas City voters still didn’t want any part of a new design. The mayor pulled back for the second time…and now this.
A sure sign of his desperation, in my view, is a quote that appeared in The Star’s story tonight. If the City Council authorized a vote on the Burns and Mac plan and voters rejected it, James told a reporter, “we’re screwed.”
To me that sounds like the mayor is actually saying this new plan, pulled like a rabbit from a hat, is the last, best option for getting a new airport, and if voters don’t see the light, well “screw them.”
And the thing is, even if the City Council approves a November election, a majority probably will vote no. The rule of thumb is that when voters are confused, they vote “no.” I thought the KCI situation was starting to become clearer, as the arc lights glared on the KCI issue and people continued going to the airport and seeing the advancing deterioration. I thought patience, voter education and a well-organized campaign would carry the day.
But now, James is suddenly directing voters’ attention toward the sky, saying: “Look…It’s a bird, it’s a plane, it’s an airport…Free!”
JimmyCsays: At the juncture of journalism and daily life in KC 
If they don’t build it, they can’t steal from it.
My first question would be very simple…”Does Burns and Mac have a BILLION dollars in their checkbook?” WOW!!! That’s a lot of zeros.
About that, The Star’s story says, Burns and Mac “plans to put money into the project itself, attract other investors and line up private lenders to complete the financing.”
What is still unclear to me is how Burns and Mac makes money on this…Do they get paid a set amount by the city over time? Do they get some of the proceeds of airport revenue during construction? Do they get a development fee, like the developers of the proposed downtown convention hotel would get? Very murky.
I have a bad feeling that the payment would be city turning over the airport to a private concern led by Burns and Mac and that the city would be offered a free ride for doing so. No one seems to be learning the lesson of what has already happened in other places where such offers came about (Indiana Tollway, Chicago parking meters, etc.) and how the residents of those areas have been totally taken for a ride on those projects. I don’t see how this survives any vote.
Overall, I think Sly James has been a good mayor for Kansas City. But, candidly, there are too many times like this when he seems more impulsive than thoughtful. Obviously, the Burns & McDonnell proposal needs a lot more than a couple of weeks of public discussion before the city council votes.
I agree this looks like an impulsive move…It’s also hard to tell a big company like Burns and Mac “no thanks” after they come to you, saying they’ve put thousands of hours on this project and they want to build the airport for you. But that’s when the mayor has to say, “Thanks for the offer; we’ll be getting back to you with all deliberate speed.”
Seems like another muddle…starting over with open bids from several firms?
Good analysis. Imagination is in short supply as far as an airport design, it’s either let the old keep getting older or build a big box. I’m sure there’s some smart architect out there with some world experience who could come up with a design that would wow the public, satisfy the stoogy business class and keep the convenience factor. Trouble is . . . the civic and business community don’t go looking for that.
B.H.:
I was just reading about that Chicago parking-meter deal last night.
Here’s what I read on one site:
“In 2008, (Mayor Richard) Daley signed over the next 75 years of meter money to Chicago Parking Meters, a consortium led by banking behemoth Morgan Stanley, in a move that only five members of the City Council opposed at the time. Since then, rates have skyrocketed (downtown areas more than doubled in cost to $6.50 an hour by 2013) and the company has netted $778.6 million in revenue. By 2020, the company will have made back its initial $1.15 billion investment and will continue to profit for 60 years.”
Unless the city was up against an incredible cash-flow dilemma, the deal looks very bad for the city.
Jim,
After reading Dave Helling’s commentary in the Sunday paper about the issue, people need to realize that the amount paid now to operate/retire bonds at KCi is $57.5 million a year. The amount that Burns and Mac and city have tossed around is $82.5 million a year. This is a 30% increase in the yearly operating and bond costs.
I am sure that the airlines have agreed to some slight landing fee and facility increase. The real money will come from two sources: a Passenger Facility Fee (PFC) and Parking Fees. That means the traveler. Don’t think that the person buying a sandwich and drink is going to make up that difference. That will be the real target of where extra $25 million a year will come from. You also need to figure a cushion to that amount to account for economic factors (slowing business cycle will mean less parking and less PFC income).
It also interesting that former airport director Van Loh argued that additional airlines could not come to KCI due to lack of gate space (which has turned out not to be true in the short term). We have already reduced from 90 to 60 gates. This Burns and Mac plan reduces that 35 gates. Just that alone would suggest there some thinking in the planning process that current number of flights that KCI gets now may be reduced due to increase in airport costs or other factors.
I also have seen in articles so far about this the inevitable comparison between Kansas City and St. Louis. One article stated that Southwest has 30 more flights a day at Lambert compared to KCI. Just because we build a new terminal does not mean these flights would magically move to KCI. In St. Louis:
– Southwest has it’s own terminal (something that could already be done here if the city and airport leaders wanted it to be so).
– St. Louis needs to pay for $1 Billion runway project planned and built as the TWA hub days ended. So they were and continue to be anxious to cut deals on landing fees.
– St. Louis metro and surrounding area has a larger population and potential customer base than Kansas City does.
And I wish in these articles that business people would stop saying that if we build a new terminal all of their problems will be solved. If we do build a new terminal, the same leaders will then say afterwards how expensive it is now to use the new airport and that all of the flights they dreamed about having have not materialized.
I think asking potential bidders to look at a $65-70 million operating/bond repayment yearly amount would have have a better chance of moving forward. It would not require significant cost increases over the current amount and, if by some chance, the airport became extremely successful, it will be easier to sell an addition to the terminal concept later i.e. the Streetcar project.
As of Friday afternoon, this deal still looks like something out of Fantasyland. I’ve read two KC Star news stories about the proposal and one editorial and still don’t understand where the money comes from to pay Burns and Mac for the job or how much of a profit they expect to make, and how.
Joe Robertson’s story this afternoon quotes Sly James as saying there would be “zero money from the city,” “zero tax increase” and it would add “not a penny of debt” on the city.
If the city doesn’t pay Burns and Mac to build the airport, then who does? Where does the money come from and how do they profit? You know they’re not going to do this job at cost and not make a profit. At this point, it sounds like Burns and Mac is throwing bouquets of roses and bags of cash at the city, but we know that’s not the way it’s going to be. So, come on! Somebody needs to provide some details.
Any finger prints of Rex on this? Rex made a back room deal with Mayor Slay as he was headed out the door where Rex funded a study to privatize Lambert. Add toll roads in Virginia and Orange County, CA to your list of failed privitaztion projects. Private firms over estimated how much the driving public was willing to pay to use a private road.
Rex Sinquefield, of the St. Louis area, of course…Not that I know of, Tom. I think this is all Burns and Mac. They built themselves a huge headquarters building a few years ago where Ward Parkway segues into Wornall in south KC, demonstrating their capabilities go well beyond engineering and designing.