City of Kansas City, MO CITY COUNCIL BRIEFING Leadership

City of Kansas City, MO
CITY COUNCIL BRIEFING
Leadership Committee Recommendation
Terminal Modernization Program
Kansas City International Airport
April 26, 2016
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Agenda
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Briefly review Exhibit K requirements
Provide an overview of concept development process
Present Leadership Committee’s recommended concept
Demonstrate recommendation is affordable
Describe key elements of the Memorandum of Understanding
between KCAD and the Airlines
• Takeaways
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Exhibit K
Requirements
&
Industry Visibility
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Exhibit K
• First Master Amendment to the Use and Lease Agreement
containing Exhibit K approved by City Ordinance 140114, dated
02/20/14
• Developed a non-political and methodical process to evaluate both
Major Renovation and New Terminal options
• Established Leadership Committee made up of KCAD and Airline
representatives
• Revisited future Aviation Demand for the Kansas City market
• Established facility requirements based on that future demand
• Requires Airport/Airline agreement on:
o Terminal Modernization Concept
o Target Annual Airline Requirement
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Exhibit K – Planning Team
City of Kansas City Mayor/City Council
Airport & Airline
Affairs Committee (AAAC)
AAAC
Chairperson
or Designee
Kansas City
International Airport Director of Aviation
Deputy Director
Finance
Deputy Director
Engineering
Program Director
TERMINAL PLANNING TEAM
L&B
LANDSIDE
HNTB
UTILITIES & CUP
SKDesign
HNTB
MEPFP
Ross & Baruzzini
PGAL/WA
TERMINAL PROGRAMMING
L&B
CONCEPTUAL DESIGN
MAJOR RENOVATION
PGAL
WA
NEW TERMINAL
PGAL
Deputy Director
Commercial Development
Leadership
Committee
Terminal Planning
Team
AIRSIDE
L&B
FUELING
HNTB
DEICING
L&B
HNTB
CONCESSIONS
AirProjects Inc.
Bag Handling Systems VTC
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Meeting Activities
Over 80 Meetings since June 2014 including:
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Leadership Committee Meetings (26)
Webinars and/or Teleconferences (30)
Industry Expert Workshops (15)
Charrettes (3)
City Council Briefings (3)
Airport Committee Briefings (6)
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City Council Briefings
Business Sessions
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January 22, 2015 – 6-month Update
July 21, 2015 – 12-month Update
December 10, 2015 – 18-month Update
April 26, 2016 – Final Recommendation
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City Council Briefings
Airport Committee
• January 26, 2016 – Overview of Exhibit K Process, Overview of
Financial Operations
• February 2, 2016 – Major Renovation Options for Kansas City
International Airport
• February 16, 2016 – KCI Terminal Improvements to Maintain
Status Quo
• February 23, 2016 – Financial Analysis – Terminal Modernization
Program Funding
• March 15, 2016 – New Terminal Evaluation for Kansas City
International Airport
• April 12, 2016 – Customer Convenience
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Industry Visibility
Exhibit K Process
• Other airports are monitoring Exhibit K process successes
• Other airports are incorporating elements of Exhibit K process in
new agreements
• Exhibit K process is becoming the new benchmark for future
projects
• Rating agencies are taking note in evaluating bond ratings
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Lease Negotiation Sessions
Results
• Executed the First Amendment to the Master Use and Lease
Agreement in 2014.
• Executing Second Amendment passed by City Ordinance
No. 151046, dated 01/07/2016, to the Master Use and
Lease Agreement.
• KCAD and the airlines have reached agreement on a
Memorandum of Understanding which provides the
framework for a new long-term use and lease agreement to
support the Terminal Modernization Program.
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Leadership
Committee
Evaluation Process
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Program Objective
Establish an affordable Terminal Modernization Program that meets the
future needs of the Kansas City community, achieving customer
convenience and operational efficiency objectives
KCAD and the Airlines believe that doing nothing is not a reasonable option
Airlines are prepared to make a significant investment in the future of Kansas City and its airport terminal facilities
The Program will be financially backed by the Airlines serving Kansas City and not City tax revenues 12
Evaluation Criteria – Major Categories
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Customer Convenience
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Airside Functionality
Program Costs
Safety & Security
Sustainability –
Environmental
Landside Functionality
Terminal Functionality
Baggage Handling Systems
Construction Logistics & Phasing
Future Expansion
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Aviation Forecast Approach
Airline input
Proprietary airline forecasts were collected in confidential conference calls, correspondence and in‐person interviews.
City‐pairs
Analyzed city‐pair markets based on airline input on service to existing and new destinations to prepare forecasted schedules
Operations
Derived Avg. Day Peak Month (ADPM) passenger airline aircraft operations based on forecasted schedules and aircraft fleets
Passengers
Derived Avg. Day Peak Month (ADPM) passengers based on forecasted schedules and load factors
Annual Demand
Derived annual passenger airline activity in 2025 and 2030 based on forecasted schedules
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Resulting Gate Forecast
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KCI needs 35 gates in 2030.
(29 currently leased)
Aircraft Operations (Arrivals and Departures) in 2030
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Forecast Results
Courtesy: Leigh Fisher
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Program Highlights
Airside Program Requirements
• 35 Gates (design aircraft B737-900/A321)
• 31 Airline Gates
• 4 City Gates (internationally capable allowing for two dependent
widebodies)
• Core processors sized for future expansion (Total of 42 gates)
• 19 remain overnight aircraft parking positions
• Eliminate aircraft movement conflicts
• Upgrade deicing facilities and operation
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Program Highlights
Landside Program Requirements
• Improve terminal roadways
• Separate curbs for Arrivals and Departures to minimize conflicts,
reduce congestion and improve safety
• Provide 6,500 space parking structure (4,264 today)
• Provide 1,940 space close-in surface parking (1,722 today)
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Program Highlights
Terminal Program Requirements established for:
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Curbside
Ticket Lobby
Baggage Handling System
Security Screening Checkpoint (SSCP)
Holdrooms
Concessions
Baggage Claim
International Arrivals Facility
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Existing & Proposed Terminal Program
FUNCTION
Gates
Ticketing/Check‐in
Security Checkpoint
Departure Lounges
Post‐Security Departure Corridor
Post‐Security Restrooms
Airline Club
International Arrivals
Concessions
Pre‐Security Circulation, Restrooms, and Seating
Bag Claim
Baggage Makeup
Airline Operations/ATO/BSO
Non Public Spaces
Terminal Functions (HVAC, MEP)
Total Area
*Existing Terminals B&C
Existing* Requirements
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20,879
29,951
100,281
0
4,949
0
21,001
60,097
156,283
17,745
72,761
96,591
91,955
101,357
32,000
18,640
81,600
95,540
11,200
2,500
31,460
70,660
58,200
45,710
82,080
56,720
49,450
117,200
773,850
752,960
SQUARE FEET
Post‐Security Space Undersized by Nearly One‐Half
Pre‐Security Space Nearly 3x Amount Needed
Bag Claim Space Undersized by Nearly 2/3rds
Non Public Space Oversized by Nearly 2x Amount Needed
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Approach to Developing Terminal
Alternatives
Major Renovations
• Evaluated the general geometric characteristics of the existing
terminals
• Evaluated utilizing existing infrastructure to the extent possible
• Evaluated alternative terminal configurations
New Terminals
• Evaluated alternative terminal locations
• Evaluated alternative terminal configurations
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Overview of Terminal Planning Process
KCAD and the airlines reviewed options identified in earlier studies, ideas from the Mayor’s Terminal Advisory Group, and public comments; then generated numerous new terminal alternatives to optimize the configurations
Major Renovation | MR
New Terminal | NT
MR | OPTION A
NT | OPTION A
MR | OPTION B
NT | OPTION B
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Terminal Alternatives
Conclusion of Terminal Planning Process
From an Airport perspective,
New Terminal alternatives are
able to meet the future needs of
the Kansas City community
related to:
 customer convenience
 future growth opportunity
 serving as a gateway to the
region
From an Airline perspective,
New Terminal alternatives
achieve objectives related to:
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customer convenience
operational efficiency
future flexibility
constructability
completion schedule
financial affordability
• The Major Renovation alternatives do not achieve the agreed upon
program objectives and are not supported by the airline industry
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Proposed New Terminal Conceptual Site
Plans
New Terminal | “NT A”
LEGEND
New Terminal Garage
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New Terminal | “NT B”
New Terminal Options Meet Program Goals
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Customer Convenience
Program Costs - Affordability
Safety & Security
Sustainability
Airside Functionality
Landside Functionality
Terminal Functionality
Baggage Handling Systems
Construction Logistics & Phasing
Future Expansion
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Leadership
Committee
Recommendation
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Terminal Modernization Recommendation
New
Terminal
B Garage
New Parking
Garage
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Terminal Modernization Recommendation
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Terminal Modernization Recommendation
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Terminal Modernization Recommendation
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Terminal Modernization Recommendation
Ticketing Hall
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Terminal Modernization Recommendation
Post Security Checkpoint
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Terminal Modernization Recommendation
Airside Concourse
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Is the Recommendation Affordable? YES!
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Outstanding debt expires freeing up capacity
Debt is stretched out over 35 years (like a mortgage)
Future PFC revenues uncommitted in the future
Passengers increase at conservative 1.9% per year
Parking rates increase modestly
Airline costs increase $2.10 per passenger in current dollars
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Affordability -- Expiring Debt Capacity
KCI Outstanding Annual Debt Service (000s)
$35,000
Existing Senior Lien
Existing Sub. Lien
Existing PFC Bonds
$30,000
Bonding capacity opens for future Terminal Bonds $25,000
Capacity to layer debt service for future Terminal Bonds
$20,000
$15,000
$10,000
$5,000
2029
2028
2027
2026
2025
2024
2023
2022
2021
2020
2019
2018
2017
2016
$‐
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Airline Rates & Charges Will Remain
Reasonable
US Medium Hub Airline Cost Per Enplanement
Cleveland
Pittsburgh
Sacramento
St. Louis
San Juan
Memphis
Oakland
Providence
Portland
Ontario
San Jose
Anchorage
Milwaukee
Santa Ana
Indianapolis
Buffalo
Hartford
Cincinnati
Albuquerque
KC New Terminal (2015$)
Columbus
Austin
New Orleans
Dallas Love
Fort Myers
Nashville
Palm Beach
San Antonio
Jacksonville
Maui
Kansas City (2015)
Raleigh
Omaha
Houston Hobby
Burbank
75th Percentile $11.18)
50th Percentile ($9.01)
25th Percentile ($7.51)
$-
$2.00
$4.00
$6.00
$8.00 $10.00 $12.00 $14.00 $16.00 $18.00 $20.00 $22.00
 Source: FAA Form 127 for Fiscal Years 2014, except for KCI which is for FY2015
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Memorandum of
Understanding
Between the
City of Kansas City
and the Airlines
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Memorandum of Understanding
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Describes airline-approved terminal modernization concept
Provides target annual airline requirement
Defines terminal modernization budget
Identifies financing plan
Identifies program cost controls and oversight
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Memorandum of Understanding Terminal Modernization Recommendation
• Approximately 775,000 square foot Terminal
• 35 Gates with Expansion to 42 Gates Possible
• Two-level Terminal Roadway Connecting to Existing Airport Roadway
System
• Public Parking Structure with Approximately 6,500 Spaces and 2,000
Surface Lot Spaces
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Memorandum of Understanding –
Construction Budget
• Anticipated budget between $950M and $975M in current dollars
• MOU provides a breakdown of construction cost estimate totaling
$964M in current dollars
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Memorandum of Understanding –
Oversight and Cost Control
Steering
Committee
AAAC Airline
AAAC Airline Chairperson
(3) Airline Representatives
Deputy Director of Aviation
Finance
Properties & Commerical
Development
Planning & Engineering
Program Management
Committee
Deputy Director of Aviation
Planning & Engineering
Airline Technical
Representative
Program Management
Team
Airline Technical
Representative
Program Manager
Design / Terminal
Project Controls
Aircraft / Airline Systems
Director
Airside/Fueling/Deicing
Terminal Design
Terminal Construction
Director
Landside/
Parking Structure
Utilities / Infrstructure
Director
Project Controls
Construction
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Resulting Revenue Bond Authorization
Requirement
Description
Amount
Total Terminal Project Costs
$964M
Plus: Inflation (3%)
153M
Less: Federal Grants and PFC Pay‐
As‐You‐Go
Plus: Financing Costs*
(156M)
Required Revenue Bonds
$1.250B
289M
* Includes interest during construction ($191M), bond reserve ($86M) and issuance costs ($12M)
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Remaining $240M Bond Authorization
Currently Approved
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Mitigates construction completion risk
Provides funding for improvements for next 10 years
Funding if additional gates required by 2022
Improves rating agency evaluation
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Takeaways
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Airlines have agreed to a New Terminal
Airlines have agreed to take the financial risk
Airlines have agreed to back the debt
Airlines do not support any other terminal alternative
An August 2016 referendum is requested
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