As seen in the Kansas City Business Journal. Reported by Rob Roberts. (Jun 21, 2017)
Burns & McDonnell, a Kansas City-based engineering and architecture firm competing for the single-terminal modernization job at Kansas City International Airport, just unveiled two secret weapons:
JE Dunn Construction and McCownGordon Construction.
Those Kansas City-based general contracting leaders have agreed to join the team Burns & McDonnell is assembling to design, build and privately finance the new terminal at KCI (Code: MCI).
It’s a move that starts to make good on Burns & McDonnell’s promise to maximize the involvement of local labor in the roughly $1 billion project, which is projected to generate 18,000 jobs — including 14,000 construction jobs.
Combined with the private financing option introduced last month via Burns & McDonnell’s no-bid KCI plan, which was subsequently subjected to a competitive process, the involvement of local firms and workers represents the only path to voter approval in November, Ron Coker, a senior vice president with Burns & McDonnell, said Wednesday.
“In our opinion, if the city really wants a new airport terminal, this is the path,” Coker said. “This Burns & McDonnell proposal, with a local (design-build) team and a local (private financing) component, is the only thing the public will support in November. We see that just by looking at the polls.”
The team component
Ramin Cherafat, who will become CEO of Kansas City-based McCownGordon in January, disclosed during an interview Wednesday that his firm had been part of another team pursuing the terminal job but decided to join the Burns & McDonnell team “because we felt this was the best (plan) for Kansas City.”
McCownGordon does not disclose revenue numbers, but it nonetheless is considered one of Kansas City's top general contractors. It has never worked on the same project with JE Dunn. Instead, the two often compete for the same complex, high-profile area construction jobs, which are frequently won by one of them.
JE Dunn ranks No. 1 on the Kansas City Business Journal’s most recent list of top area general contractors, with $657 million in local billings in 2016. Dunn, which posted $3.2 billion in revenue last year, has about $500 million worth of airport work in its pipeline and has completed about the same volume of airport construction jobs, CEO Gordon Lansford said.
Coker said definitive roles have not been set yet for JE Dunn and McCownGordon.
“But there’s certainly areas where we think JE Dunn and McCownGordon can add great value,” he said.
Part of the job of John Maranowicz, the Burns & McDonnell project executive who will lead the construction effort if his firm’s proposal is selected by the City Council, will be to identify those areas, Coker said.
“But I can tell you, in general, JE Dunn is going to be a great partner in helping us put together the parking facility, which is a massive, 6,500-space parking garage,” Coker said. “And we know McCownGordon is going to help on elements of the terminal, along with our (Burns & McDonnell) construction teams.”
In addition to having a lot of experience with parking garages and aviation projects nationwide, Lansford added, “I think part of the value we bring to the team is access to local labor, which is very tight right now, and our ability to self-perform concrete (work).”
Lansford said JE Dunn also has “a lot of experience working on high-visibility public projects and bringing in the (women-owned business) and (minority-owned business) teams” required for such projects.
Burns & McDonnell, which has teamed with Kansas City-based Americo Life Inc. for the private financing portion, will name other design-build team members “as we get closer to the submittal dates,” Coker said.
The voter component
The City Council recently extended the deadline for firms to submit qualifications and design-build proposals until July 27 and private financing proposals until Aug. 10. Both deadlines had previously been set for June 20. But city officials remain hopeful that the process will allow ballot language to be finalized by Aug. 24 — the deadline for placing the airport issue before voters in November.
By ordinance, Kansas City voters must give their blessing before the city completes any major airport project. If the city issues revenue bonds for the KCI project, the bonds, too, would be subject to voter approval.
Noting that city-issued bonds could reduce cost without putting taxpayers at risk, Councilwoman Kathryn Shields has introduced an ordinance that calls for the City Council to consider a public financing option. The ordinance is scheduled to be debated next week.
Burns & McDonnell officials hope the City Council doesn’t take the public financing route.
Mike Talboy, Burns & McDonnell’s director of government affairs, said the firm’s recent polling, conducted by Axiom Strategies subsidiary Remington Research Group, revealed that only 38 percent of Kansas Citians supported a new single-terminal facility at KCI when they were not provided with any details about a proposed plan.
But when they were asked about a terminal that was built by a local company using local labor and private financing, support increased to 56 percent, Talboy said.
The financing component
During debate about the terminal modernization process, supporters of city-issued bonds have noted that they would not put taxpayers at risk if the city declined to guarantee repayment. But Coker said the public's perception of city-issued bond risk is not merely a misperception.
Even if officials said the city would not back the bonds, "they could,” in the event of a default, later agree to guarantee city bond repayment, he explained.
“I’m not saying they would, but they could,” Coker added.
Under Burns & McDonnell’s private financing plan, the firm would be solely responsible for covering any shortfalls if the airport-user fees and grants earmarked for repayment of private debt holders and equity investors don’t bring in the expected $85 million annually.
If the city delays the project by exploring a public financing model, construction cost increases could offset any savings the public financing might net, said Greg Carlson, Burns & McDonnell’s vice president of global facilities construction/design build.
“Even at 2 or 3 percent inflation, it’s a big number annually on this project,” he said.
The Burns & McDonnell approach will save money and time, Coker added.
“Provided the voters approve, we will be under construction next year, and we will have a completed project in 2022,” he said.