Denver International Airport has proposed a $1.8 billion partnership with a team led by Ferrovial Airports for a terminal renovation and 30 years of oversight over new concessions. DIA’s terminal is shown on Aug. 4, 2017.
The vast spaces beneath Denver International Airport’s signature tented roof would be in for massive changes if the City Council were to sign off Monday night on a controversial $1.8 billion, 34-year terminal partnership contract.
As of 10:45 p.m., the council’s discussion of the deal still was in early stages. Its members earlier had listened to testimony from 25 people during an hourlong public hearing.
“By supporting this contract tonight, the citizens of Colorado will no longer have anyone to complain to” about some terminal problems, said Joyce Foster, a former state senator and Denver council member. “I know that sounds tempting, but your hands will be tied — along with the next three decades of elected officials. … I’m here now to hopefully change a few minds.”
Other speakers expressed concern about the length of the deal and labor issues for concessions workers, but the hearing also attracted many who were in favor, including construction contractors and current airport concessionaires who expressed excitement about the project. One industry estimate puts the number of construction jobs that would be generated by the terminal project at more than 11,000.
“I cannot imagine what our city would look like — or would not look like, perhaps — if we still had Stapleton (airport),” said Walter Isenberg, the president and CEO of Sage Hospitality, referring to DIA’s opening in 1995. “I think we can all agree it is time to reinvest and update the facilities.”
Under the proposed public-private partnership with a team led by Madrid-based Ferrovial Airports and Centennial-based Saunders Construction, the next four years would bring big changes for security screening as part of a larger $650 million renovation of the Jeppesen Terminal.
The most notable part of the plan calls for relocating security to the north ends of the upper level, modernizing the checkpoints with faster technology and consolidating the already-shrinking ticketing areas into smaller spaces.
In the ensuing three decades, Ferrovial — which operates London’s Heathrow Airport and is part of an international conglomerate — would manage expanded money-generating concessions spaces on the main floor, overseeing contracts with the operators of retail and food outlets.
Most council members have lauded the renovation plans, which also include a new main-floor welcome atrium near the hotel.
But it was the long-term and private concessions management aspects of the nearly 15,000-page contract that gave several members heartburn for the last several weeks.
Provided by Denver International AirportA rendering shows how the main floor of Denver International Airport’s terminal might look after one of the main security checkpoints is moved to the upstairs level. Plans call for more concessions in a post-security gathering area before passengers go downstairs to take trains to the concourses.
DIA’s proposed contract includes an up-front cost split with Ferrovial’s Great Hall Partners on the set-price $650 million renovation, with DIA paying for 74 percent. However, the airport also would be responsible for a contingency fund that would cover up to $120 million in large unforeseen construction and design costs because of airline needs, surprises lurking behind the walls or changes in airport regulatory requirements.
Over the 30 years of concession operation, DIA would pay Ferrovial annual capital and operating reimbursements, totaling $1.2 billion. At the same time, DIA would receive 80 percent of revenue from the new concessions, while Ferrovial reaps 20 percent.
DIA has estimated Ferrovial’s profit on its initial $82 million equity investment at a minimum 4.8 percent, but likely closer to 10.8 percent, based on concessions performance.
After the renovation, many of the new concessions spaces would be in a post-security screening section that passengers would pass through on their way to the concourse trains — a bet by Ferrovial and DIA officials that the private manager can make terminal concessions more productive than they are now, compared with the much more popular concourse stands.
Going into Monday’s meeting, DIA officials were hopeful they had locked up at least the seven votes needed for approval on the 13-member council. But amid concern about the length of the deal, public-private partnerships and a loss of council power over most terminal concessions, some council members were seen as on the fence over the weekend.
One member, Stacie Gilmore, was set to recuse herself from voting because her brother-in-law’s construction company is part of Ferrovial’s large bid team.
A breakdown of costs in Denver International Airport’s terminal renovation.
Another complication has been in the mix: DIA’s major airlines, including United, Southwest and Frontier, have lodged financial concerns about fee increases they likely will shoulder, along with logistical objections to the security relocation. DIA officials have been meeting with airline representatives in recent weeks, saying project design changes would be possible after the contract’s approval.
United area manager Steve Jaquith testified Monday that the airline was more comfortable with recent simulations but still was seeking more assurances and modifications in the talks.
“The simulations for the checkpoint area require that 28 of the 34 planned lanes in the current design must be open, or else a security queue flows into our (ticketing) lobbies,” he said.
Here is the main document from the DIA-Great Hall Partners contract: