KCI New Terminal City Council June 2018 Update Report

KCI NEW TERMINAL PROJECT UPDATE June 2018

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Executive Summary Design & Construction Environmental Assessment Community Benefits Agreement Negotiating the Contract Financial Close Community Outreach

EXECUTIVE SUMMARY Less than two months ago, Southwest Airlines spokesperson Steve Sisneros reported that air travel in Kansas City had almost tripled the original projection (from the 2013 Exhibit K document) and the airlines were prepared to increase their investment to ensure the KCI New Single Terminal will meet the airlines and City’s needs, not only when it opens but also well into the future. On June 21, the Kansas City Aviation Department (KCAD), Edgemoor, and the Airlines Technical Representative (ATR) Team provided an update to City Council about how the increase in the number of gates is anticipated to impact the budget and schedule. While airlines representative Jim Burchett noted that there are still some unknowns, they are expecting the total cost to increase to the $1.3B - $1.4B range and remain committed to paying for the new terminal. The increase is based on several factors, including: increased square footage and infrastructure to support 39 gates on opening day and the potential future expansion to 42, as well as adjusting the 2015 cost estimates to 2018 dollars.

Edgemoor Infrastructure & Real Estate Managing Director Geoff Stricker reported that the project is still on track to reach Commercial Financial Close this November. He anticipates early start work, including utility relocation, temporary road construction, and demolition of the existing Terminal A will start this winter, with substantial completion of the new terminal anticipated in August of 2022 and a Fall 2022 opening.

While Edgemoor and the design-build team, Clark | Weitz | Clarkson, continue to advance the design and preconstruction work, the Kansas City Aviation Department is focused on furthering the Environmental Assessment, which is required by the Federal Aviation Administration (FAA) before construction can begin.

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2.3 Construction

DESIGN & CONSTRUCTION

2.1 Procurement To date, the Edgemoor Team includes 50 local firms, of which 33 are minority- or woman-owned small businesses. It is very early in the procurement process, and there will be many opportunities for additional companies to join the team. Interested firms should visit cwcjv.com and check out the “Doing Business with Us” page.

2.2 Design The Edgemoor team developed an initial set of Design Standards that were presented to KCAD and the airlines in mid-June for their review. These include guidelines for building systems such as the baggage

handling system, parking garage, deicing facilities, utility relocation, ticketing and security requirements.

This is an important step in the design process because the document informs KCAD and the airlines on key building elements regarding the quality, finish materials, form, and specifications. Once KCAD and the airlines approve the Design Standards, the document becomes the underpinning for all design and budgeting work moving forward. There are still many decisions to be made; the design will continue to be refined.

In addition to determining the Design Standards, the airlines, KCAD and Edgemoor Team have been collaborating to make hundreds of decisions about everything from baggage handling, plane deicing and security to ticket counters and bathrooms.

The geotech work, which includes drilling holes and collecting samples, concluded this month. Initial findings for the new terminal site do not show any signs of contamination or hazardous materials. The geotechnical information is important because it informs the structural work and foundation design for the building.

Other work includes building the interior office space for the collective Edgemoor Team to collaborate and work over the next four years. Locally owned, Infinite Energy is building the space, with help from Alexander Mechanical and Alpha Electric. In addition to being a base for the developer, designer and contractor, the office provides ample co-location space for any project partners while working on the project. In addition, the owner’s representative, Paslay Management Group (PMG), is building out its contiguous office space to create a highly-collaborative team environment for key project stakeholders.

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As part of the EA process, archaeologists recently surveyed more than 150 areas on the airport campus. Their analysis demonstrated no findings of cultural or archaeological artifacts.

Located on the airport campus, the New Terminal project office includes space for Edgemoor, CWC, and SOM personnel, as well as flex and conference space to host project partners.

ENVIRONMENTAL ASSESSMENT

Work on the Environmental Assessment (EA) continues. At the recommendation of the State Historical Preservation Office (SHPO), the KCAD hired an archaeologist to survey the land area (i.e., dig more than 150 holes and trenches) where the new terminal will be built (area around the existing Terminal A) and other locations througout the airport property. In addition to on-site digs, the archaeologist also reviewed the dirt samples that were taken during the geotech work. The analysis of the survey work demonstrated no findings of archealogical or cultural resources on the site. The archaeologist is expected to submit its final report in July. This information

will supplement Landrum & Brown’s work on the EA document. The first draft of the EA will be ready for public review in August, at which time a second public hearing will be held. The final EA is on track to be completed this fall.

Why is the EA important? The EA investigates, analyzes, and discloses any potential environmental impacts associated with construction of the New Terminal. The FAA requires the EA to be completed, submitted, and approved by the FAA prior to starting construction on the New Terminal. The timeline for reviewing and finalizing the final EA document is driven primarily by the FAA.

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COMMUNITY BENEFITS AGREEMENT

Representatives from the City, KCAD, and Edgemoor have been meeting with and coordinating with the airlines and FAA to answer any questions and provide clarifications on the Community Benefits Agreement (CBA). The FAA must approve the agreement to move the project to Financial Close; however, even if the airlines or FAA decide to not fund one of the items in the CBA, the Edgemoor Team remains committed to providing every benefit that is included in the agreement.

4.3 Internships 4.1 Low-Interest Loans Support fo Small Business Edgemoor took the first step in putting a low-interest loan program into motion with the addition of locally-owned Lead Bank to the Team. Lead Bank brings extensive expertise developed through its For Change Initiative, a program that has lent more than $12M to small businesses that have contracts with the City. Any small business working on the project that applies and is approved for a loan will have the opportunity for Edgemoor to offset a portion of the cost of that loan by either subsidizing the upfront fees, paying part of the interest rate the company will pay, or both depending on the size of the loan.

4.2 Strategic Partnership Program With 10 weeks of the KC Strategic Partnership Program complete, Edgemoor is pleased to report strong participation from local business owners. This past April, the Edgemoor Team received overwhelming

The KC Strategic Partnership Program includes more than 20 weeks of business and project management courses, supplemented with guest lectures. Kansas City Human Resource Department’s Andrea Dorch recently joined the class to educate participants on the roles / responsibilities of HRD and process of becoming certified with the City.

interest in the program, with 160 local firms submitting applications. The team plans to offer a second class starting this fall and will continue to expand the session until the community demand has been met.

The New Terminal project team welcomes Josiah Berhane as a summer intern. Josiah graduated in May from Park Hill South High School and plans to attend Washington University in St Louis in the Fall.

Q: What made you want to be an intern on the New Terminal project?

A: When deciding which summer internship to pursue, this one really stood out to me because of the huge effect it will have on Kansas City. Also, I knew I would be able to get a lot out of this internship due to the project’s size, and all the different things that go into it.

Q: What are you hoping to gain through this experience?

A: I’m hoping to gain real-world knowledge about how a project like this works, and all the different stages involved in completing a task like this. I want to observe the work that takes place behind the scenes, that very few people are exposed to.

Q: Have you learned anything about building that surprised you?

A: One thing that really surprised me is the number of different companies that must work together to complete this project. I was also surprised by the level of depth that the engineers and architects have to go into.

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NEGOTIATING THE CONTRACT

The first draft of the 243-page comprehensive Development Agreement was shared with Edgemoor in May. In June a draft term sheet was developed that identified key business points for negotiation, which has led to ongoing discussions between KCAD and Edgemoor. KCAD and Edgemoor met twice in the past 30 days, and have another negotiation session scheduled for mid-July.

Josiah joins Liam Dai, his classmate from Park Hill South High School, as an Edgemoor intern in the New Terminal project office.

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FINANCIAL CLOSE

The New Terminal project is anticipated to reach Commercial Financial Close in November of this year, at which time the airlines will also sign a new Use and Lease Agreement with KCAD. The Use and Lease Agreement, among other items, will memorialize the airline commitment to pay back the financing for this project.

The Edgemoor Team’s outreach efforts continued in June with presentations and talks with various community groups, including residents in Councilman Dan Fowler’s district.

In addition to attending community events across Kansas City, the Edgemoor Team hosted its own event to unite new members of its growing project team and celebrate the beginning of an exciting project. The event, hosted at Edgemoor and CWC’s project office, was attended by nearly 150 project partners.

@kciedgemoor kci-edgemoor.com

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COMMUNITY OUTREACH

Edgemoor Team members have been visiting with community, business and civic organizations. Recent presentations include the KC Hispanic Contractors Association, Kansas City, Missouri 5th Council District Meeting and “Donuts with Dan” (2nd District Councilman Dan Fowler).