KANSAS CITY, Missouri (September 18, 2017) – Burns & McDonnell and its financial partner, Americo, today asked for full reinstatement of all four proposers in the KCI Airport Selection Process, prior to any vote by the full City Council, or, as a second option, restarting the proposal selection process from the beginning. Burns & McDonnell, Americo and more than 30 partners comprising the KCI HOMETOWN Team were disqualified from consideration by the full City Council due to alleged non-compliance with the City’s Master Bond Ordinance (MBO).
“We believe we are the best team; the airlines believe we are the best team; and the community believes we are the best team to design, build and privately-finance a new KCI,” says Ron Coker, senior vice president, Burns & McDonnell. “The fact that we did not advance as a response to erroneous information and the threat of a frivolous lawsuit from an out of town competitor is terribly disappointing.”
Coker says Kansas City, Missouri Mayor Sly James shared publicly last week on KMBZ radio that the City’s outside attorneys warned that selecting the KCI HOMETOWN Team could lead to litigation and negatively impact the entire process.
“The City and the Selection Committee should provide scoring details on the merits of each proposal. If the City was threatened by a lawsuit for selecting the HOMETOWN Team, we should know who made that threat. This is a once in a lifetime project for Kansas Citians. No one should be bullied into picking an out of town firm by those who don’t live in Kansas City.”
The KCI HOMETOWN Team was the only proposer to back up its proposed financial approach with a legal opinion supporting why it complied with the City’s MBO. The KCI Hometown Team retained the services of Gilmore & Bell, one of the preeminent law firms in the country specializing in public finance. Gilmore & Bell issued a written opinion as part of the proposal stating that the team’s proposed private financing structure was in compliance with the City’s MBO.
“We are very familiar with the City’s master bond ordinance and we have worked closely with the KCI HOMETOWN Team to craft a private financing proposal that complied with the master bond ordinance,” says Gary Anderson, director, Gilmore & Bell. “The KCI HOMETOWN Team proposal is valid and legal under the master bond ordinance and can be implemented in a way that does not negatively impact existing or future city airport financings. I welcome the opportunity, thus far denied to us, to meet with the City’s legal advisers and aviation department to walk them through our firm’s reasoning.”
To further confirm the legal opinion of Gilmore & Bell, the team asked a second nationally recognized bond attorney, Mike Lause of St. Louis-based Thompson Coburn, to review the KCI HOMETOWN Team’s proposed financing structure.
“We have reviewed the KCI HOMETOWN Team’s financing proposal, the City’s master bond ordinance and other relevant matters,” Lause says. “We are in agreement with Gilmore & Bell’s analysis that the KCI HOMETOWN Team’s proposal can be finalized and implemented in compliance with the master bond ordinance and without negatively impacting existing or future airport financings.”
The KCI HOMETOWN Team also raised concerns about a proposed private financing structure by the recommended proposer that may not comply with provisions of the Missouri Constitution. Both Gilmore & Bell and Thompson Coburn were asked to review this question, as well.
“We also believe that the KCI HOMETOWN Team’s proposal may be the only one that complies with the Missouri Constitution,” Anderson explains. “The Missouri Constitution has specific provisions giving authority for a city to pledge its airport revenues, but only for voter-approved airport revenue bonds issued by the City. Nowhere in the Missouri Constitution does authority exist to pledge City airport revenues for privately arranged debt, including by a conduit bond issuer.”
“We also agree with the Gilmore & Bell analysis that a major risk of going forward on a financing proposal, such as the selection committee has recommended here, is that the finance team will belatedly recognize the potential uncertainty inherent in the proposal and/or that the public bond market would reject it,” says Lause. “The risk is significant, because the Missouri constitution does not clearly authorize a pledge of airport revenues for privately arranged bond debt, which we understand to be a cornerstone of that proposal.”
The currently selected proposer Edgemoor, proposed a “no equity” financing approach that could leave the City on the hook if the financial package fails to close.
The KCI HOMETOWN Team also asked for an opinion from the Stinson Leonard Street law firm regarding compliance of the Selection Committee process with City procurement ordinances and Missouri statutory authority and case law.
“It is my opinion that the committee’s recommendation is legally void and incorrect,” says Chuck Hatfield, an attorney with Stinson Leonard Street. “It violated both City and Missouri law and must therefore be set aside to allow the City Council to evaluate all proposers who responded to the Request for Qualifications."
“The City ordinances give the City Council the authority to make the decision themselves and they should,” Hatfield continued. “Alternatively, the procurement process could be restarted with sufficient safeguards to ensure it will not be invalidated again."
With three outside legal opinions supporting their position, Burns & McDonnell’s HOMETOWN Team challenged the City’s outside selection consultant’s decision to disqualify the team.
“In the 119 years that Burns & McDonnell has been in business, we have never been disqualified from a qualifications-based selection and we should not have been disqualified on this pursuit,” said Coker. “A new KCI is too important for those of us who love Kansas City to not speak up. We must not allow a flawed selection process, what we strongly believe to be bad advice from outside consultants and the threat of a lawsuit dictate who builds a new KCI. It is never too late to correct a mistake. The City Council needs to correct this one."
About Burns & McDonnell
Burns & McDonnell is a Kansas City-based firm that’s been committed to the people and growth of our hometown since we were founded in 1898. The 3,000 employee-owners based in Kansas City actively volunteer within the community and have donated millions of dollars to causes that support our great city from United Way to Science City. We are made up of more than 5,700 engineers, architects, construction professionals, scientists, consultants and entrepreneurs with offices across the country and throughout the world. We strive to create amazing success for our clients and amazing careers for our employee-owners. Burns & McDonnell is 100 percent employee-owned and is proud to be No. 16 on Fortune’s 2017 list of 100 Best Companies to Work For.