KCI Project Agreement Progresses As Kansas City Continues Negotiations With Edgemoor
Kansas City officials on Thursday weighed in on negotiations for an agreement with Maryland-based Edgemoor Infrastructure & Real Estate to build an estimated $1 billion new terminal at Kansas City International Airport.
A skeptical city council heard the latest changes to the Memorandum of Understanding — a development agreement that sets out terms, guidelines and landmarks for the project. A previous version of the MOU was rejected by the council late last year and Edgemoor was nearly booted from the project altogether.
Several council members said the initial agreement was vague on financial details, didn't guarantee enough community benefits and left the city on the hook for millions of dollars should the project be terminated early.
Attorneys working on behalf of the city on Thursday said they're making progress on those fronts.
More specifics on financing
After the competitive bidding process, city officials praised Edgemoor's team for their flexibility on financing models. But by the time the first MOU was presented, council members were ready for more specifics.
Edgemoor will officially commit to 100 percent debt-only financing, which they estimate will save the city $90 million.
Generally, private equity on a project this large would demand around a ten percent interest rate, as opposed to a four percent interest rate on debt.
Attorneys also addressed a provision that leaves the city on the hook for up to $30 million should the project terminate early. This would pay Edgemoor for work already completed, like designs or environmental studies. The city would be able to keep that work.
Councilman Kevin McManus wants to limit the scope of costs that would need to be reimbursed to further reduce that $30 million cap.
Councilman Quinton Lucas suggested that any costs incurred by Edgemoor before November's election, in which resident overwhelmingly approved construction of a new terminal, not be eligible for reimbursement.
A better community benefits agreement
When the city campaigned for a new terminal, they promised the project would not only create temporary jobs, but benefit the broader community. Several council members thought the first version of the community benefits agreement fell short of that goal.
The agreement will still include free or subsidized transportation options and licensed child care for workers, as well as an on-site health clinic, pay without delay and workforce training during the project.
It adds a pre-apprenticeship program, where about 40 inexperienced workers per week would receive on- the-job training and, on completion, be guaranteed work on the project. Edgemoor estimates that workers who go through this program would represent about five percent of the total workforce.
The value of the new community benefits agreement is valued at $24.2 million — nearly double the previous version.
Edgemoor also clarified their promise to include 35 percent participation on site for minority and women-owned construction firms. That will break down into 20 percent minority-owned firms, and 15 percent women-owned firms. They pledge to make their best effort to meet the same goals for professional services.
Lucas wants those goals set in stone, but also says Thursday's update showed progress despite some still-needed improvements.
"I think there's still some of us who still say reimbursement costs too much, community benefit, too little. It's not a question of if we have them, it's a question of how we do it to make sure we protect everybody the best," Lucas says.
A complete list of concerns from city council members will be passed along to Edgemoor.
Edgemoor managing director Geoff Stricker says they are meeting with the city's negotiating staff Friday.
"We're confident that we can work through all those items quickly," Stricker says.
The council set a timeline to finalize and MOU by the end of January. Should it extend past that into late February, the timeline for the project could be delayed.
Lisa Rodriguez is a reporter and the afternoon newscaster for KCUR 89.3. Connect with her on Twitter @larodrig.