Denver City Council voted 10-2 early Tuesday morning to approve a $1.8 billion, 34-year deal with a private consortium headed by Spanish transportation giant Ferrovial to renovate DIA’s Great Hall. The project is meant to solve a vexing security threat and fold in a shopping mall along the way.
By my math, this deal always had the votes to pass, but skeptical hold-outs asked pressing questions about labor conditions, about the costs of financing, about the authority the council is ceding, about how accountable the private partners will be. As the discussion stretched to nearly five hours, several council members with serious concerns about the deal found themselves at yes.
The two no votes were Councilwoman At-large Debbie Ortega and Councilman Rafael Espinoza, who himself said he might have voted yes if his vote were required to break a tie because he sees a lot of good in the deal, including a “stellar” design for the main terminal. Instead, he had the “luxury of voting my conscience.”
“The fact that we had a 15,000-page contract that we had a week to read before it came to committee … I do not have the comfort level that some of my colleagues do,” Ortega said.
Councilwoman Stacie Gilmore abstained because her brother-in-law’s construction company has an interest in the deal.
Twenty-five people addressed City Council during an hour-long public hearing on the contract. The majority of speakers supported the deal as a mechanism to drive jobs and new business opportunities — including representatives of construction trades unions, contractors and a series of small business owners who said the airport’s support for minority- and women-owned businesses (as a matter of city policy) had been crucial to their success.
The council members who enthusiastically support the deal similarly see major economic opportunities along with a chance to reconfigure security operations for the post-9/11 world, something that has not been possible with the current layout of the airport.
“We’re going from a small town to a small big city,” Council President Albus Brooks said. “… We’re on a new level. We’re competing globally. The vision that our great mayor, Mayor (Federico) Peña, had (in building DIA) is coming to fruition.”
Councilman Chris Herndon said the status quo at the airport is not acceptable.
“What kills organizations is complacency, the idea that you don’t need to improve,” he said.
The basic terms of the deal, described in much more detail here, are that Denver International Airport will put up $480 million (and up to $120 million in contingency) toward a $650 million terminal renovation. Great Hall Partners, a consortium that includes Ferrovial, Saunders Concessions and Magic Johnson Enterprises/Loop Capital, will put up the rest. The renovation will move security operations to Level 6, where ticketing and check-in are now — ticketing and check-in will still be there, but in two-thirds of the space — but operate much more efficiently with automated screening machines and a new layout.
Part of Level 5 will be restored to pleasant and spacious waiting areas, and part of Level 5 will be converted to a “high-quality,” post-security concessions area that passengers will pass through on the way to the trains. For the next 30 years after construction is complete, Great Hall Partners will manage the concessions and get 20 percent of the concessions revenue, while the airport will get 80 percent. The airport will make annual payments to Ferrovial to cover their operations and maintenance costs for the concessions area and the financing for the private equity.
There are a few concerns about the deal.
Is 30 years too long?
Here’s Councilman Paul Kashmann: “What kind of lunatic enters into a 30-year-deal? Many of us. Many of us have 30-year mortgages.”
Counterpoint from Councilman Paul López: “There are some houses I would detest having to make payments on for 30 years. There are bad deals out there.”
Further counterpoint from Espinoza: He compared the deal to letting a contractor run an Airbnb out of your house for 30 years in exchange for a kitchen renovation you didn’t even need.
Could the same project be done for less money without a private partner?
Denver International Airport has a good credit rating and is paying a premium for the private financing that’s part of this deal. In exchange, Great Hall Partners takes on a lot of the risk of cost overruns, and DIA gets to keep more of its own money for other purposes in the short-term.
“If you are someone who was troubled by the cost increases in hotel deal, you should like this deal,” Councilman Kevin Flynn said. That would be the Westin Hotel and transit center, which went $220 million over budget.
But for Ortega and Espinoza, this is one of the hurdles they could not get past.
“This approach is not about saving money,” Espinoza said. “It’s about providing predictability at the expense of hundreds of millions of dollars. I get why you guys want to do it this way, but I don’t see the need.”
Supporters and detractors agree: This deal is the first of what are likely to be a lot more public-private partnerships to build city infrastructure.
Why don’t concessions workers have the same protections as construction workers on this project?
The contract requires that construction workers — but not hospitality workers employed by concessionaires — be paid prevailing wages. In addition, workers currently employed at concessions in the main terminal will lose their jobs as those businesses close for the renovation, and while they can apply for other airport jobs, they have no guarantees.
There’s no guarantee of worker retention, and there’s no labor peace agreement in the contract. A labor peace agreement means workers agree not to strike in exchange for the company agreeing not to interfere with organizing.
Unite Here, the union that represents hospitality workers at the airport, has been feuding with Ferrovial, to the extent that Ferrovial cut off discussions. The union wants job guarantees for current workers and a promise not to interfere with organizing efforts. Ferrovial said Unite Here also wanted the exclusive right to organize workers in their concession area, something the company was not willing to grant, and that’s why they cut off discussion. Unite Here has also publicly protested the company.
“In order to have meetings, we must have a friendly approach from both sides. We did not have that friendly approach from Unite Here,” Ferrovial executive Ignacio Perez told City Council.
That prompted a sharp rebuke from Councilwoman At-large Robin Kniech, who asked if Ferrovial would cut off discussions with other community groups or stakeholders who criticized the company. The airport is a public entity, and that means dealing with harsh criticism and continuing to work with those critics, she said.
López described growing up with a father who worked as a janitor, earning minimum wage, and who had to find a new job every time his company lost out on a contract renewal — and whose family then had to find a new place to live. The turmoil at home led him to leave at 17.
“That’s what happens when you don’t have retention,” he said. “These aren’t just issues of ideology. These are real lives that we’re talking about. Thirty years is a couple generations. Are we going to sign a deal that is 30 years of prosperity for people working at our airport or 30 years of poverty?”
Kniech said labor guarantees are also a matter of protecting the city’s investment in the airport; labor disputes are bad for business.
But López ended up at yes, and so did Kniech.
Under intense questioning from several council members, Perez made verbal commitments to return to discussions with Unite Here, to make concerted efforts to find new jobs for displaced workers and to respect organizing efforts.
López and Kniech said they both reached a comfort level that the city would still retain authority to set broad policies at the airport and that the city was sufficiently protected in the deal.
Kniech had one other request for the developers: wide passageways so travelers in a hurry aren’t stuck behind those who are leisurely browsing the shops.
“It’s not like an IKEA, OK?”