KANSAS CITY, Mo. --The future of a new single terminal airport at KCI hinges on a few votes Thursday afternoon.
Just last week the city's aviation committee unanimously approved a revised memorandum of understanding with Maryland-based Edgemoor. A memorandum of understanding is a document between parties that outlines the agreement -- in this case, the new airport project.
The entire KC City Council is expected to decide at 3 p.m. whether to approve the revised memorandum of understanding the aviation committee approved. There are 13 votes up for grabs, but only seven are needed for approval.
Based upon previous votes, the decision will come down to four or five city council members.
The $1 billion project has gone through plenty of turbulence after it was approved in November. The main concerns center around Edgmoor’s commitment to minority hiring, labor hiring, and other issues.
The Black Chamber of Commerce sent out a release Wednesday urging members of the council to reject the memorandum with Edgmoor because of the aforementioned issues along with financial issues it has with Edgmoor. Scroll to the bottom to read their entire release.
Councilperson Scott Wagner echoed some of the same sentiments regarding the financials. He released a long statement Wednesday that said part of Edgmoor's team, Clark Construction, is having budgeting and delay issues building a similar airport in Seattle. Scroll to the bottom to read his entire statement.
Councilperson Jermaine Reed, who is expected to vote yes said Wednesday, "The time is upon us to convert our rhetoric into commitment…it’s time for all of us to get on the plane for the benefit of our city, citizens, and business community.”
Council members rejected the memorandum of understanding with Egdemoor back in December.
If the council votes against Edgmoor, talks could resume with second place bidder, AECom which has partnered up with local firm Burns and McDonnell.
Black Chamber of Commerce's full statement:
The Black Chamber of Commerce of Greater Kansas City is urging the Kansas City Council to reject a Memorandum of Understanding (MOU) between Edgemoor Infrastructure & Real Estate and the City of Kansas City, because it falls well short of its potential to transform the City as a whole, as well as the minority community.
The KCI Airport Project should serve as the cornerstone for a new vision of progress for Kansas City where corporate leadership, labor, construction contractors - large and small, black and white - community groups, and our chambers of commerce and schools forge new relationships in developing sustainable minority enterprises and making workforce inclusion a top priority. Unfortunately, throughout the process, Edgemoor has failed to demonstrate a meaningful commitment to developing a single terminal airport project in a truly transformative manner.
Major concerns include:
● No Substantive Investment in Kansas City: A Community Benefits Agreement (CBA) outlines a series of programs and initiatives, but proposes to pay for them from airport revenue instead of from developer funds. This means Edgemoor fails to make a real investment toward a comprehensive CBA. Under this structure, these additional costs actually increase Edgemoor’s profit. In addition, many of the costs seem inflated and programs appear to be staffed with Clark Construction employees/consultants, further shifting costs away from the developer. These are significant concerns, particularly when this diversion of revenue must be approved by the Federal Aviation Administration (FAA).
● Insufficient MBE Goal: Edgemoor’s 20% MBE goal is shameful and insufficient, falling well short of the 28% MBE participation the City achieved in 2016 for construction services. More important, MBE goals on this once-in-a-generation project should exceed 28%. This is a transformative project that holds the potential to place a great number of minority businesses on the path to long-term economic viability. If history is prologue, insufficient goals and lack of goals for specific minority workforce composition will result in lower skilled positions being filled by minority workers while higher paying jobs are filled by white men. Arguments to the contrary are simply unworthy of belief.
● Edgemoor Has Changed Financial Terms: The revised MOU appears to have changed the contract from a Guaranteed Maximum Price (GMP) to a Lump Sum. This means Edgemoor collects the full contracted price, even if actual costs are well below that amount. No money is returned to the City. The Lump Sum approach is far less transparent, compared to the GMP, where every dollar is reported and accounted for. Furthermore, with $29 million in CBA costs paid from the project instead of the developer, the profit potential for Edgemoor is greatly enhanced. This does the community a disservice and all citizens should strongly disapprove.
It is clear Edgemoor is not committed to transformative minority participation. The City should not partner with a company that is reluctant to invest in our community and is simply seeking to profiteer. We urge the Council to reject Edgemoor’s proposed MOU and immediately commence negotiations with the second-ranked proposer, in accordance with City procurement practices.
Councilperson Scott Wagner's full statement:
Is Kansas City Heading Toward the Seattle Experience?
Tomorrow we have an expected vote on the future of KCI.
I am writing this today, because although we have had great discussions on the MOU I feel it is just as important to look at the experience of others as a guide as whether to vote for or against it. That story has not been told sufficiently and I feel obligated to bring it forward.
Back in December the City Council made a “stunning” vote on the MOU with Edgemoor that was both vilified in the press and by our Mayor. We were accused of backroom dealing among other things. In response I wrote a detailed piece as to why I voted that day as I did. Among the reasons I listed at the time was that the team was a year and a half behind on a project at another airport. That information was given to me by a Senior Project Manager at the airport project where the Clark/SOM team was the prime contractor.
After that December vote I spoke with a Vice President from Clark who explained to me why that was the case, suggesting the reason for the delay was due to the airport and the airlines at that airport. I decided that I would call again to verify if this was true. This time I spoke to two individuals. Let me be clear. When I call people about sensitive information I try to keep my sources confidential, because they respect that I’m calling as an elected official. The information is for me to make a decision, not for general consumption, but since I have people thinking that I’m just making this stuff up or being spoon-fed by people who have a stake in the outcome I’ll tell you here that one is a senior project manager and the other is the primary person responsible for representing the Port of Seattle, operators of the Seattle-Tacoma Airport in their airport projects. Neither work for anyone who has responded to the KCI RFP/Q. Here is what they told me:
The project was for the International Arrivals Facility (IAF). It is a Progressive Design-Build project, meaning that unlike what we are doing here, Seattle decided that they wouldbuild in a series of milestones in order achieve better control and cost containment of the project. The contract was executed with Clark/SOM in July 2015. At the time the expected completion date was September 2019.
It may seem like a long time, but this allowed for a validation period to test and confirm assumptions, commence design, early construction, and procurement to get to a Guaranteed Maximum Price, and then the actual full build. The original approved project budget was $608.4 million.
As this project proceeded there were four scope additions/changes: A Sterile Corridor Extention ($41 million), Phase 2 Acceleration ($11 million), SSAT NB Configuration ($5.5 million) and Outbound BHS ($18.5 million). The Port of Seattle and Clark/SOM agreed to these changes and the final approved project budget was now at$684.4 million. When those additions were done there was no concern expressed as to an inability to satisfy the needs of the overall project, or to remain in budget.
It was in December 2016, when Clark estimated that they would be $92 million overbudget, in some respects due to the labor market in the Seattle area. Prior to that it was communicated that they would be on budget and on time and for 14 months gave the impression that they could meet the challenges of that market.
Today, the current estimate for completion of the entire project is $812 million based on a presentation in March 2017 (months before we started the Kansas City discussion in earnest) when the Port Authority of Seattle was told that they needed to increase their allocation by $130 million and extend the time when they would get their Guaranteed Maximum Price (GMP) to September of 2017. (If you don’t know what a GMP is, it's where the contractor gives you a ceiling on the cost of the project and is compensated for the costs that occur. If the contractor goes over, they are responsible for the overrun.) In Seattle's case, they assumed that negotiations on the GMP would occur in Fall 2016 and end with a Port Commission taking action in January 2017. This relied on Clark negotiating the GMP at or near the 60% design level. They are now at 100% completion of design and 98% of the bid packages are out and there still is no GMP. Essentially, Sea-Tac (Seattle Tacoma Airport) will continue to pay without knowing the fiscal outcome.
The other concern for Sea-Tac is the schedule. The Clark/SOM team is currently 256 days behind schedule and representatives of the Airport don’t know why. Even items that have a legitimate delay, like some contaminated soil that needed to be remediated are taking longer than determined. The Port provided for 90 days for removal, but the issue remains unchanged. At this point the current forecast for completion of the project has been moved from September of 2019 to May of 2020.
So the project is overbudget, late and there is still not a maximum price. Why? Well, here is what I heard since I brought this up:
1) Sea-Tac added projects – That’s true, but again, the Port of Seattle staff and Clark/SOM agreed to them and budgets were increased to accommodate. Their $100 million + over that amount.
2) AECOM works for Sea-Tac so I’m clearly being told inaccurate information to embarrass the Edgemoor team – Yes, AECOM makes up a small number of the 35+ consultants working for the Port of Seattle and their part of the airport project, but I’ve not talked to any of them, nor have I talked to any employee of AECOM during this entire procurement. And also, many of the documents I reference were presented publicly before we started our procurement.
To be fair, Sea-Tac was not the only airport I called. I also called LAX as Clark has done some projects there with another joint venture partner managed by Parsons Construction. The report there was not nearly as onerous, but what came from that call was the suggestion that Kansas City should know the Key Personnel on our project as well as how different construction entities would manage workflow. In LAX’s case, when there was a problem it would take a long time to figure out the source of the issue. The process wasn’t smooth.
But back on Key Personnel, my request to add it to the MOU was granted. People have been named to this project. One of them is the person that was supposed to be in Seattle on an almost daily basis for Clark. I have heard from Clark representatives that at this point that person really doesn’t need to be there and that it has been communicated to their client that this person was going to be doing other project work by now anyway. I can tell you that came as a great surprise to Sea-Tac when I asked if that were the case.
Compounding this personnel issue is that the design team at SOM is not there in Seattle. I am told that most of the work is generated out of San Francisco, and that Clark staff are not working with them to make the design work fit the construction budget.
When the RFP/Q submittal was sent in from the Edgemoor team for the Kansas City Single Terminal, there were no airport projects given as references. After talking with Sea-Tac it is no wonder. This is a client who is frustrated and trying to improve a bad situation. When they heard Kansas City chose a team with Clark and SOM they expressed amazement that we would do such a thing. They have given me all of this information not because they will get anything out of it. Quite the contrary, airing this runs the risk of repercussions from the Port Commission. Rather, their frustration is so great they want to avoid it for someone else.
I’ve neglected to place in this post more of the inflammatory remarks that were provided to me in my interviews. I’ve tried to stick to the facts. I’ve shared these facts, conversations and documents with a variety of individuals including several Councilpeople, the Mayor and even members of the media. Some have taken it seriously.
I am taking it seriously because I want the best for the people of Kansas City, and I am willing to do my homework to make sure Kansas City gets the best airport possible.