Burns & McDonnell joining AECom in KCI Partnership to rebuild KCI

KANSAS CITY, Mo. -- Over the weekend, Kansas City manager Troy Schulte tried to explain the reasons for the discord among Kansas City leaders over the construction of the new single-terminal airport.

He used a now-familiar form of communication (Twitter, with a 280 character limit) to try to simplify the issues and explain why there is an unexpected and wide divide between the city council and the company it chose to rebuild the airport.

Read Sept. 6th story: Committee chooses company named Edgemoor to build single-terminal airport for Kansas City

On Thursday, the Kansas City Council rejected the memorandum of understanding  (MOU) with Edgemoor, the company it selected in September to design the new, single-terminal Kansas City airport.  A memorandum of understanding is a document between parties that outlines the agreement. It was voted down 9-4.  The four votes in support of Edgemoor's MOU came from the project's key supporters: Mayor Sly James and council members Jolie Justus, Jermaine Reed and Kathryn Shields.

Following the Thursday turmoil, Edgemoor abruptly canceled a meeting scheduled Thursday night to get feedback on designs from the community, saying the city was cutting off negotiations and negotiating with another team. Edgemoor asked for up to $30 million to recoup its costs thus far, including costs from before Nov. 8. It came as a shock to many in the community who had voted in support of the airport in the Nov. 7th election.  With 49,950 votes to 16,378, voters had made it clear that they want a new airport.

On Monday, AECom, the company that was the council's second choice to build the airport, will hold a news conference from its parking lot at 2380 McGee.

The news conference will be led by the KCI Partnership team. They say they will provide an update on its 'unwavering commitment to design, build, and finance a new single-terminal at KCI and announce new team partners,' their announcement said.

Look for a livestream on fox4kc.com/live at approximately 11 a.m. (Other news coverage may be streaming in the player before then.)

Last week, Kansas City Mayor Sly James didn't hold back his resentment that the council voted down Edgemoor's agreement memo and in effect, decided to move on to AECom.  He said the councilmembers who voted against Edgemoor's memo of understanding were 'playing politics.' The mayor said there's still plenty of time to strike a better deal with Edgemoor, but councilman Lee Barnes Jr. is ready to walk away. He drew up an ordinance to ditch Edgemoor and move onto the No. 2 pick, AECom. He is expected to present it Thursday night at the next city council meeting.

Part of Barnes' resolution:

Finding that the City is unable to negotiate a satisfactory contract with Edgemoor Infrastructure and Real Estate LLC for a terminal modernization project at the Kansas City International Airport; terminating negotiations with Edgemoor Infrastructure and Real Estate LLC for said terminal modernization project; and authorizing and directing the City Manager, pursuant to Chapter 3 of the Code of Ordinances, to undertake negotiations toward a memorandum of understanding and other initial contractual arrangements with the KCI Partnership for said terminal modernization project toward a memorandum of understanding and other initial contractual arrangements.

On Saturday, City Manager Troy Schulte tried to explain the problems encountered during negotiations with Edgemoor.  He sent out 16 tweets that day that identified the key issues that were apparently insurmountable as they negotiated with Edgemoor.

In summary, they include:

  • Expectations/goals to hire union labor to build the airport

Issue: How does recent Missouri legislation effect the city's labor agreements on construction projects? This year Senate Bill 19, commonly referred to as Right to Work, was passed by the legislature and signed by the governor. This measure prohibits employers from requiring a person to become a member of a labor organization as a condition of hiring or continued employment. It also repeals project labor agreements (PLAs) for public construction projects. Under a PLA, local governments can require nonunion contractors to pay union wages.

  • Expectations/goals about the percentage of minority and women businesses Edgemoor would use in the project. (Minority Business Enterprise (MBE) and Woman Owned Business Enterprise (WBE))

Issue: Can construction be a 100 percent labor union workforce and still achieve high minority participation?

  • The size and scope of  Community Benefits Agreement (CBA) for the new KCI and specifically the benefit cost to workers

Barnes said Edgemoor 'didn't do any segregation of the Minority Business Enterprise (MBE) and Woman Owned Business Enterprise (WBE) proposal they came back with.'  Councilmembers also apparently had concerns about Edgemoor's proposed Community Benefits Aggreement, which includes transportation to/from job site for workers, health care & child daycare for workers involved in project.

Fox 4 compiled the 16 tweets from the city manager below in bold (with minor edits.) Scroll down to see his tweets embedded.

Lots of twitter activity today about labor unions and the new KCI. The issue surrounds whether the new KCI project will be all labor and achieve high MBE/WBE goals. Some labor groups want only 100% labor workforce. Many MBE/WBE firms are non-union. Edgemoor in its Memo of Understanding has asked for flexibility to meet aggressive MBE/WBE goals of 35 percent by allowing non-union MBE/WBE firms to participate in the project. All laborers would be paid prevailing wage and provided union scale benefits while working on the airport.

The city's Human Relations Department believes a 28 percent total MBE/WBE goal for the new KCI is realistic. A 35 percent goal is an aggressive reach by Edgemoor. Requests by certain community groups of 40 percent participation goals by MBE firms alone are probably not realistic.

The policy issue that certain members of the City Council are wrestling with is 'Can the new KCI construction by a 100 percent labor union workforce and still achieve a high MBE/WBE participation which is a stated council priority for the project?'

Recent legislative actions by the Mo General Assembly prevent the city from requiring or even being a party to a Project Labor Agreement for construction projects. PLA's stipulate union vs. non-union and work rules that will govern the construction project.

Other council members have expressed concern about the size and scope of the proposed Community Benefits Agreement (CBA) for the new KCI. The proposed CBA includes transportation to/from job site for workers, health care & child daycare for workers involved in project.

The CBA also includes $1 million each for historic preservation, Love They Neighbor housing rehab program and a contribution to the Shared Success Fund (east side development).

It is these $3 million in indirect payments that are not directly related to the construction of the new terminal that may cause the City and Edgemoor some issues with the Federal Aviation Administration.

The FAA has very stringent rules surrounding the use of aviation funds. Aviation fees generated at the airport can only be used for aviation purposes. Any use of airport funds non-aviation purposes runs the risk of fines and cancellation of future airport grants.

Some Councilmembers wanted Edgemoor to spend more on these and other projects not directly related to the terminal project. If not approved by the FAA, these contributions would have to be absorbed by Edgemoor and not reimbursed.

The City needs to be very careful as it pursues the CBA for the airport. Community benefits directly tied to airport will be approved, but those benefits not directly tied to airport operations could lead to fines and loss of grants

Lots of discussion about the $30 million reimbursement agreement that was part of the MOU agreement with @KCIEdgemoor. This was done only to accelerate the project and meet the Nov. 2021 delivery date for the terminal.

Edgemoor was asked by the City to identify all costs that would be incurred by them to complete required FAA environmental compliance processes and deliver a final terminal design by September 2018 so that construction could start.

It is anticipated that it may be as late as Sept 2018 before the final development agreement was signed with the developer.

Rather than waiting for the final development agreement to be approved, the City wants the developer to get started now and if the deal fell through later then the City would not have lost this time on the project.

The City would have achieved the required federal approvals and developed a final design and had it done quicker by the developer instead of the City. All costs incurred would have been reimbursed by the airlines so the City was never at financial risk.