Denver signs off on $1.8B, Ferrovial-led airport P3
The Denver City Council on Tuesday voted to approve a $1.8 billion public-private partnership for the $650 million Jeppesen Terminal renovation and 34-year concession management deal at Denver International Airport (DIA), according to The Denver Post.
Spain-based Ferrovial will lead the P3 team, which will relocate and modernize security checkpoints, renovate ticketing areas to include more self-check-in kiosks and build a new entry atrium. The consortium will receive $1.2 billion in capital repayments and concession management fees over the life of the contract.
Airport revenue — and not tax dollars — will fund the project, which airport officials say will increase DIA's capacity to 80 million passengers a year. This is the first major P3 for a Denver-owned property.
The city of Denver has been in negotiations with Ferrovial for the airport deal, which will see the two share upfront costs and the P3 consortium receive 20% of concession revenue, for more than a year.
The project is not without its critics. Hotel and airport union workers pushed back when the Denver City Council announced it would pursue a deal with the Spanish company. The union questioned Ferrovial's financial dealings related to two toll projects in Texas and Indiana, the functionality of a baggage handling system the company installed at London's Heathrow Airport, and the firm's alleged "anti-labor" stance.
The finalization of the DIA P3 also marks another major airport investment for former NBA star Earvin "Magic" Johnson's JLC investment firm. Last week, LaGuardia Gateway Partners — the group responsible for the design, construction, financing, operation and maintenance of Central Terminal B at LaGuardia International Airport — announced that JLC had invested in their consortium, as well.
Airport owners, like the city of Denver and the Port Authority of New York and New Jersey, are turning to P3s not only for the convenience of being able to hand off the tasks of construction and management but also to shift the risk of cost overruns and other common construction issues to the private sector.
However, like any other major construction project, the battle to win the contract can be tight.
Kansas City (MO) International Airport is currently evaluating four P3 proposals for a $1 billion, 750,000-square-foot terminal replacement. It promises to be a controversial award process. The Kansas City Star reported that one of the bidders, led by AECOM, has charged the selection committee with "moving the goal posts" of the bid process and asking post-submission questions that could give the other three teams an edge.
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