Denver airport’s expanding terminal project faces big questions

Denver International Airport’s leadership has drafted the latest chapter in the terminal renovation saga — one that promises to prolong the once-troubled project through most of this decade while more than doubling the cost to $2.1 billion.

Led by new CEO Phil Washington, officials argue the huge escalation will better equip DIA to handle tens of millions more passengers each year and take care of the terminal’s long-term needs. And they say it’s possible to carry out the work without inconveniencing travelers nearly so much as happened during the first three years of the project.

This week Washington pressed his case to the Denver City Council and addressed media questions about $1.1 billion in proposed contract additions to what’s currently a $770 million project. Those additions would be coupled with $200 million in other non-contract costs, to be borne directly by DIA, that were disclosed this week.

If you have whiplash, that’s understandable: DIA majorly scaled back the project last year to save money after terminating the original contractors amid disputes over costs and delays. So far, several council members have voiced agreement with the drive to finish out the major components of the project’s original design: relocating the main security checkpoints to the upper level and completely rebuilding all airline check-in areas.

But the ballooning costs have given them pause.

“You’ve given us everything we’ve asked for, and a little more, at a price that we didn’t expect,” Councilman Kevin Flynn told Washington and other DIA officials during a hearing Wednesday at the business and aviation committee. “So that’s something we’re going to have to consider, and I thank you for all the openness and transparency you’ve given us in the briefings.”

The committee advanced the contracts, but council members said they weren’t done asking questions. Here are several big ones swirling around the airport’s project.

Why was this major renovation needed?

DIA, which opened in 1995, remains one of the newest major airports in the United States. But airport leaders say that as the facility nears 30 years old, it needs refreshes and reconfigurations to keep up with technology, air travel and security trends, and, most importantly, the airport’s own rapid growth in passengers — which is expected to resume next year after a pandemic dip.

Built for 50 million passengers a year, DIA notched 69 million in 2019. The airport projects traffic will near 73 million next year, Washington says.

Those are the reasons DIA’s previous CEO, Kim Day, pursued the Great Hall project, which began construction in 2018. Another was that the two main security checkpoints, expanded after the 9/11 terrorist attacks, are vulnerable to attack from walkways above.

But the project has traveled a bumpy road, with smoother progress since DIA brought in new prime contractors early last year.

Now Washington, the former Regional Transportation District leader who took over mid-summer, wants to restore many of the scaled-back components while adding some new touches. He’s noted that older, land-locked airports in Los Angeles and New York City are spending upwards of $8 billion on renovations and expansions.

“We feel like this is the best time to finish what we started,” he said during a media briefing Thursday morning. “This terminal in this airport is 26 years old right now and is showing signs of age. A new terminal sets us up, if you will, for the next 20 or 30 years.”

What work is already underway?

The scaled-down project is creating more floor space within the Jeppesen Terminal, largely without expanding the building itself. There are two phases:

  • Renovations of the central areas of the terminal, on both levels 5 and 6, were finished last month. Southwest and United airlines have begun using reconfigured, two-sided check-in areas on Level 6 with lots of space for self-service kiosks, while construction walls have come down and new bathrooms have opened on the lower level.
  • The second phase, expected to finish in 2024, centers around the relocation of one of the two lower-level Transportation Security Administration checkpoints to the upper level, replacing some check-in counters. Crews are extending the flooring on the northwest part of the terminal farther into the atrium under DIA’s tented roof to make room for a higher-capacity screening area.

Separate projects are underway on the three concourses to add 39 gates, all of which will be open by mid-2022, and to update parts of those facilities. In all, DIA has $3.5 billion in capital projects at various stages.

What would this expansion add?

DIA’s proposed $1.3 billion expansion includes these major components, with estimated costs detailed by the airport:

  • $496 million: Relocation of the other lower-level security checkpoint to the expanded northeast corner of the upper level by 2026. Combined with the existing A-Bridge security checkpoint, the two relocated screening areas would increase capacity by 62%, DIA says, with 10 additional lanes and more efficient screening equipment.
  • $604 million: Reconfiguration of remaining check-in areas for other airlines on the south ends of the east and west sides of Level 6, near the Westin hotel, finishing by summer 2028. That work will require a $40 million buildout of temporary check-in areas on the Level 5 to accommodate airlines during construction.
  • $40 million: Building a new Center of Excellence and Equity in Aviation in unused space on a lower level of the hotel and transit center, just south of the terminal, starting in late 2022. It’s intended to feature new aviation technology and education for both young people and airport employees about careers in aviation, says Washington, who pushed for the project’s inclusion.
  • $160 million: Other components include upgrades for curbside pick-up and drop-off areas as well as baggage claim renovations.

The upshot of the completion phase is that all security screening would occur upstairs, with passengers descending to the concourse trains on escalators or elevators. Meanwhile, freed-up space on Level 5, where most screening happens now, would be used for meet-and-greet plazas for international and domestic passengers as well as additional food and coffee outlets, all outside the secure zone.

Why would the new work take so long?

Michael Sheehan, DIA’s senior vice president for special projects, says the lengthy schedule is being built in large part to avoid subjecting passengers to major disruptions, as happened when the center part of the terminal was under construction. He says work would wrap up sometime between spring 2027 and summer 2028 and would avoid disrupting the concourse train.

Contractors also would face logistical project hurdles in a major operating airport, requiring the work to unfold in stages.

How is DIA paying for all of this?

DIA pays for all its projects using the revenue it generates from airlines, passengers, concessionaires and other tenants, as well as from federal grants. Though it’s owned by city government, the airport doesn’t receive local taxpayer money.

Washington said the terminal project likely would benefit from the $1 trillion infrastructure package passed by Congress, which set aside $25 billion for aviation. DIA is in line to receive $350 million to $400 million from formula grants for its projects, Washington said, and it likely will compete for project grants that could bring “substantial funding.”

But as of now, the bulk of the project expansion would be covered by DIA bonds. Sylvester Lavender, DIA’s chief financial officer, said this week that the airport has staggered its project plans to avoid stretching its debt coverage too thin or increasing airlines’ operating costs so much that DIA would no longer be competitive among airports.

How would these big contracts work?

DIA has faced some questions about its decision not to start over with fresh bids two years ago after the original contracts went south. Instead, to save time, officials selected Hensel Phelps Construction as the new prime contractor after soliciting only firms that had experience at DIA.

DIA now proposes to increase Hensel Phelps’ $365 million by up to $900 million, with smaller increases for four other design, engineering and management contractors totaling $1.1 billion. Washington argued that issuing fresh bids for the completion phase would take too much time and pose logistical construction hurdles if new firms came in.

Still, Sheehan says much of the new construction work would be competitively bid out to smaller subcontractors working under Hensel Phelps, similar to how the project’s second phase has worked.

He expressed hope that the overall $1.3 billion in estimated additional costs would end up lower, saying: “We will only spend what we need to spend to build this.”

Why the huge cost escalation?

The original project, which included several components DIA now wants to add back, was supposed to be a $650 million renovation and was supposed to wrap up this fall. It was part of a larger $1.8 billion public-private partnership that included oversight over new terminal concessions for more than three decades.

DIA attributes some of the much higher cost estimates now to different contract setups and escalation in construction costs over time. But there’s no escaping the fact that, as an airport spokeswoman acknowledged last week, the original cost estimates proved to be wildly “unrealistic.”

Regardless, Washington argues the work is still needed. On Wednesday, in a nod to requests from council members for a look at how the original project fell apart, he made a promise: “I’m committed to complete a lessons-learned (report) within 90 to 120 days,” he told the committee.

What do DIA’s airlines think?

The nearly two dozen airlines that operate at DIA have signaled they support the airport’s plan, even if they’ll end up helping pay for it. That’s a change from four years ago, when they were more skeptical of the original plan.

United Airlines’ Brendan Baker, who chairs the Denver Airlines Airport Affairs Committee, told the council committee that “DENAAAC’s consensus is that the Great Hall Phase 3 needs to be completed.”

What’s the council vote timeline?

The committee advanced the proposed $1.1 billion in contract amendments Wednesday in a 6-1 vote. That sets up Jan. 3 for a final vote by the full council, but it’s likely at least one member will trigger a rule extending consideration by another week, pushing a vote to Jan. 10.

“I firmly believe that we have to complete it and we have to do it right,” said Councilwoman Debbie Ortega, though she added that “there are still some fiscal questions that I have.”

Councilwoman Amanda Sawyer voted no Wednesday after floating an unsuccessful motion to delay the committee’s consideration until early February, arguing much more time was needed to scrutinize the contract increases.

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