Municipality to raise up to $90 million for preliminary work.
- The $90 billion bond issuance will finance early design and development costs
- Eight of the airlines located at Kansas City will have to agree on carrier fees before the bonds can be sold
- Groundbreaking is scheduled for March 25
Kansas City’s airport committee has reportedly approved a $90 million bond issuance that will be used to finance early design and development costs incurred by Edgemoor Infrastructure and Real Estate.
The bonds according to an official report will be repaid over 35 years in annual increments of $104 million. However, Kansas City and the airlines must first agree on the carrier fees before the bonds can be sold.
Moreover, the city’s master bond ordinance must also be modified to include the bond type that must be sold. The council is according to local media outlets slated to explore those modifications toward the end of the month.
A groundbreaking ceremony is for the estimated $1.5 billion project is currently scheduled for March 25. The estimated completion date is 2023.
The new terminal will boast 39 gates as well as a 6,300-space parking structure, a central utility plant, and both landside and airside improvements. It is, according to the city, the largest structure to be built in its history and will be financed exclusively through tax-exempt debt.
A joint venture comprised of Edgemoor Infrastructure and Real Estate, Clark Construction Group, Clarkson Construction Company will construct the terminal. The JV had been one of four teams that in 2017 submitted bids for the project. Those other teams were: Burns & McDonnell KCI Hometown Team; KCI Partnership (AECOM, Oaktree Capital Management and Turner Construction); and a BlueScope Construction/JLL joint venture.
Edgemoor was the only team to provide a 100% debt solution for the new terminal. According to the team, the use of tax-exempt debt will provide roughly $90 million in savings since it would not require 30 or more years of equity payments at rates estimated at three times the cost of the debt.
In addition to lower financing costs, Kansas City will be able to keep any profits generated by the debt capital after interest payments have been made.
The deal includes a $28.85 million community benefits agreement with the city. Roughly $8.9 million of that amount will go to workforce training and small business development programs. Another approximately $6 million will be used to provide services for disadvantaged residents such as jobsite transportation, subsidized child care, and on-site medical care. A complete summary of benefits can be found here.
But, while the Kansas City Airport deal, while considered by some to be a boon for the city, is not without its share of detractors even on the city council.
Councilwoman Alissia Canady reportedly criticized the deal for not being the “transformative” project that voters expected. said the deal was not the “transformative” project Kansas City was promised when voters approved it in November 2017. Councilwoman Teresa Loar has also been skeptical of the change in the project’s cost since it was originally at $1.6 billion.