Salt Lake airport requests $350M more for its renovation

Salt Lake airport requests $350M more for its renovation

(Scott G Winterton, Deseret News, File)


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SALT LAKE CITY — Citing an explosive construction market and unanticipated soaring costs, Salt Lake City International Airport officials say costs for the terminal redevelopment project has increased by $350 million.

The first phase of the project was originally estimated at $1.8 billion, but it will now cost $2.15 billion, while remaining phases of the project are expected to bring the total cost to $2.9 billion — all to be funded through airport revenue, not tax dollars.

Airport leaders appeared before the Salt Lake City Council on Tuesday to request two actions to help finance the new budget: a $294 million amendment to its 2016-17 budget, as well as a $972 million bond to help finance the project.

Maureen Riley, Salt Lake City's airport director, attributed the cost escalation to a "hot Utah construction market," resulting in bids for labor and materials coming back higher than originally estimated last spring.

Construction activity in Utah typically averages $2.5 billion a year, but in today's economic climate, construction activity rests at about $5 billion annually — a record high, said Mike Williams, the airport's program director.

"There's significant pressure on the workforce here," Williams said. "There's not a lot of labor available. Contractors are picking and choosing where they want to work."

'Fast-tracked' timeline

Their requests were generally met with support from members of the council Tuesday, but Councilman Charlie Luke expressed concerns about the timing of the airport's requests.

Luke pointed out that the City Council didn't receive details of the proposed budget adjustments until Nov. 18, leading to a "fast-tracked" timeline to take public comment in time so the budget adjustments can be implemented.

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"It looks like we're rushing this enormous amount (of money) through," he said.

"It had to be expedited," Riley said after the council meeting. "That's mostly because on Dec. 14 we have some contracts that must be executed or bids will expire. That would mean we'd have to go out and rebid and we'd be subject to increases in costs again."

Riley added that airport officials were "scrambling" in September after they learned of the cost increases to figure out if their original budget would be enough to cover the costs.

The increases were then reviewed by the Department of Airport’s Advisory Board during September and October public meetings. According to the Airline Use Agreement, the added costs also require airline approval, which was received in September.

Riley said the airport would have preferred not to expedite the budget changes, but the timing of the bids and budget deadlines forced the rushed timeline.

The first phase of the terminal redevelopment is scheduled to be completed in 2020. It includes a new parking garage, terminal, rental car service facilities and an additional concourse. Future phases have yet to go out for bid.

The requested $972 million bond is one of three bonds expected to be requested to fund the full life of the project.

Future bonds are expected to bring in about $1.8 billion. Other funding sources comes from airport revenue, including $260 million in passenger facility charges, $174 million in customer facility charges, $474 million in airport funds and $153 million in airport improvement grants.

Public hearings

A public hearing for the budget amendment is scheduled for Dec. 13 at 7 p.m. at the Salt Lake City-County Building, with a vote expected that same night. The public hearing for the bond is slated for Jan. 3, with a vote expected Jan. 17.

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Katie McKellar

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