KCI New Terminal Project Frequently Asked Questions
The following are answers to some of the most frequently asked questions about the KCI New Terminal project. If you have a question not listed here, please contact us via e-mail (email@example.com) or Twitter (@kciedgemoor).
- What is an MOU?
- What is a public-private partnership?
- Who is paying for the new terminal?
- Why does the MOU include a reimbursement agreement?
- What are the details of Edgemoor’s financial plan?
- What is included in the Community Benefits Agreement?
- What M/WBE goals has Edgemoor committed to for the project?
- What support will be offered for minority and women-owned firms?
- What is the Community Workforce Agreement?
- How can my company bid on work on the New Terminal project?
1. What is an MOU?
The memorandum of understanding (MOU) is a non-binding contractual agreement between the City and Edgemoor outlining each parties' roles, responsibilities and key terms related to the KCI New Terminal project. This agreement is the first stage in the formation of a formal development agreement between the City and Edgemoor.
2. What is a public-private partnership (P3)? How does it differ from how a project is typically delivered?
A public-private partnership is a common, alternative way to contract for the delivery of public infrastructure. In this approach, the public and private sector come together to allocate risk, roles, and responsibilities to the party best able to manage and price the risk. A P3 ultimately delivers infrastructure more efficiently than traditional approaches. The P3 contract delivery model creates a partnership between a government entity and a private-sector entity (the City of Kansas City, Missouri and Edgemoor) to develop, finance, design, build (and at times operate) critical infrastructure projects, such as public transportation networks, courthouses, educational facilities, and airports. The public-private partnership delivery method integrates the development, financing, design, and construction activities under a single private entity, thereby shifting the project’s cost and delivery risk from the public to the private sector.
Benefits of P3 delivery include:
- Increased collaboration, resulting in a facility tailored to stakeholder needs
- Price and schedule certainty
- Improved end-user experience by promoting innovations and creative problem solving
- Increased transference of risk from the public sector to the private entity
- A reduced project delivery schedule by overlapping development, design, and construction activities (as illustrated in the timeline below)
3. Who is paying for the new terminal?
The costs to finance and build the new single terminal will be paid for by the airlines and through airport revenues.
- No taxpayer money will be used
- As the developer, Edgemoor assumes ALL financial risk, including responsibility for budget and schedule overruns
4. Why does the MOU include a reimbursement agreement?
Since Edgemoor’s selection as the preferred team in September 2017, we have been working on the project to complete critical path activities (e.g., environmental, program validation, design, budgeting and engineering) to reach commercial and financial close by September 2018. These activities must be completed for the Aviation Department to finalize Use and Lease Agreements with the airlines. Edgemoor underwent a thorough examination and identified all costs we could incur to complete these tasks in the year-long period between our selection and when the project reaches financial close (September 2017 - September 2018).
Key facts regarding the reimbursable agreement:
- Edgemoor is only reimbursed if the City chooses to not move forward
- Only the City can terminate the deal
- Edgemoor is only reimbursed for expenses requested and approved by the City for work to advance the project
- The reimbursable expenses cover the cost to produce work product related to critical path activities (environmental studies, geotechnical work, program validation, design development, etc.) necessary to progress the project
- A reimbursement agreement is a standard document in public-private partnership arena
- The agreement ensures the City can keep the work product in the event they choose to not move forward with Edgemoor
- Under the revised MOU, there is a $23M cap on the total amount of expenses that can be reimbursed; Edgemoor is planning to perform approximately $30M worth of work, therefore, if the City terminates the deal at the end of the term, they are buying that work product for 76 cents on the dollar
- Edgemoor does not make any profit in the event the City decides to not move forward; the agreement only covers direct costs incurred to progress specific work product
- Edgemoor is working At Risk until financial close
5. What are the details of Edgemoor’s financial plan?
Edgemoor provided a detailed financing approach as part of our RFQ/P response to the City.
Key facts about Edgemoor’s financing plan include:
- Edgemoor was the only team to provide a 100% debt solution for the new terminal
- Edgemoor's debt only solution saves $90M for the City and airlines. The $90M savings stems from not paying 30+years of equity payments at 3X the cost of debt
- The MOU reflects a commitment to provide a debt only solution
- Compared to the original unsolicited proposal, the City and airlines will save an additional $300M in payments over 30 years
Advantages of using 100% debt financing approach include:
- Lower total financing cost
- Lower risk than an equity financing solution
- City keeps any profit generated by the debt capital after interest payments
- Greater tax savings
Key facts regarding the design and construction contract for the New Terminal project include:
- The design and construction of the New Terminal will be delivered under a Lump Sum contract, which stipulates that the contractor (Clark | Weitz | Clarkson) submit a guaranteed fixed price for all the work to be performed in advance of financial close, and before construction activities begin.
- The Lump Sum approach reduces design and contract administration costs, and places the risk on Clark | Weitz | Clarkson for any cost overruns.
- The Lump Sum approach was stipulated in Edgemoor’s RFQP submission (section H2).
6. What is included in the Community Benefits Agreement?
Edgemoor has committed to providing a robust $28.85 million Community Benefits Agreement filled with services and programs that will grow the local workforce, build capacity in small businesses, and strengthen the Kansas City community. This plan exceeds the bar set by the City and provides support for Kansas City-based organizations and programs directly associated with the New Terminal project, including:
CBA highlights include:
- $8.9 million for workforce training and small business development programs
- $7.5 million in support services for Kansas City-based minority- and women-owned firms
- Nearly $6 million toward services designed to help Kansas City’s disadvantaged residents overcome the barriers to a career in construction, including jobsite transportation, subsidized child care, and on-site medical care
- $6.25 million in added programs and services
- Edgemoor is responsible for all programs in the CBA regardless of FAA approval and has made a commitment to deliver these programs/services at our own expense should funding not be authorized
7. What M/WBE goals has Edgemoor committed to for the project?
Edgemoor is resolute in its commitment to ensuring that both minority- AND women-owned businesses play a meaningful role in the KCI New Terminal project and has set a goal of achieving 35% M/WBE participation for the KCI New Terminal project. This was the highest commitment of any firm that submitted a proposal for the New Terminal Project.
A breakdown of our participation goals is as follows:
- Professional Services: 20%MBE; 15% WBE
- Construction Services: 20% MBE, 15% WBE
Our goal for MBE construction services participation exceeds that set by the City by 20%.
Our goal for MBE professional services participation exceeds the goal originally set by the City by 25%.
These goals are based on extensive market analysis and outreach efforts, including a comprehensive evaluation of the region’s market capacity, which included meeting with KC Human Relations Department (HRD) and conducting an independent survey of more than 600 local firms to identify which industries local minority- and woman-owned firms are serving. In addition to a market analysis, we have been actively communicating with the local subcontractor/subconsultant community for months:
- In the fall 2017, we hosted two small business outreach events, which were attended by more than 500 business owners and leaders.
- In January 2018, we hosted two additional outreach events focused on engaging Kansas City-based, minority and women-owned construction subcontracting firms. More than 300 industry professionals attended.
- We have held meetings with more than 50 local firms to understand their capabilities and the value they can bring to the project.
- We also have maintained a consistent dialogue with many local business organizations, including KC Minority Contractors Association, American Subcontractor Association of Kansas City, the Hispanic Contractors Association, Baptist Ministers Union, and Ministers Council, among others.
To date, 50 local firms have joined the Edgemoor Team, including 33 small, minority- and women-owned businesses.
8. What support will be offered for minority and women-owned firms?
Edgemoor's CBA includes a variety of services and programs that foster professional and workforce development, with a focus on the Kansas City minority- and women-owned business community.
- Our Small Business Strategic Partnership Program (SPP) is an intensive six-month MBA-style development program designed to grow capacity in the local small business community. Highlights of the program include:
- Provided at no cost to participants
- Available to MBE, WBE, SLBE and veteran-owned firms in Kansas City regardless of involved on the New Terminal project
- Taught by members of the Edgemoor Team and industry professionals
- Time-tested – it has been successfully implemented for 12 years; more than 500 small business owners have graduated from the program nationwide
- Application process for the inaugural KC SPP class opens February 5, 2018
- We are working with Lead Bank to provide support for MBE, WBE, SLBE and veteran-owned firms in areas such as:
- A low-interest working capital loan program.
- Bonding assistance - to assist subcontractors in taking the next step and become prime contractors, we will help facilitate access to independent bonding lines for their companies A self-bonding program where the Design-Build joint-venture will “self bond” smaller firms that are unable to get a bond – thereby creating greater opportunities on the project.
- Pay Without Delay - this program that ensures all MBE, WBE, SLBE and veteran-owned subcontractors are paid within 14 business days of submitting a properly documented request for payment.
9. what is the community workforce agreement?
From the beginning, the Edgemoor Team made a commitment to make this a transformational project – to not just simply build a terminal, but to create meaningful opportunities for both minority- and women-owned businesses, as well as local residents to contribute to the project. The Community Workforce Agreement (CWA) for the KCI New Terminal Project is a critical step in delivering on that promise.
What Makes this Agreement Significant?
While labor agreements are common on large projects, the terms of this agreement are unique to Kansas City because:
- It is a single-project agreement. As such, non-union companies can decide to join their respective trade union for this project only.
- Non-union companies that decide to sign the CWA can bring 100% of their existing workforce to the project, and their entire Project workforce will have access to established union training programs while working on the Project.
- Up to $55-60 million in potential construction contracts are available for certified small minority- and women-owned non-union businesses that do not elect to sign the single-project agreement.
What Happens Next?
The Edgemoor Team will work closely with union and community leaders to establish a framework for the Project’s Pre-Apprenticeship Program. Additional information on the Pre-Apprenticeship Program will be posted soon on both kci-edgemoor.com and cwcjv.com, the website for Clark | Weitz | Clarkson.
10. How can my company bid on work on the New Terminal project?
The construction phase of this project is led by the joint venture of Clark | Weitz | Clarkson. Contractors interested in working on the KCI New Terminal project should visit the Construction Procurement page of the project website: cwcjv.com. Here you can find the procurement schedule, contact information for the procurement team, and information about completing the Subcontractor Qualification Application (SQA), which is a required form for anyone wishing to bid on the project.