100 Show Up As Airport Seeks Private Deal To Redo Terminal
Written by Risa Polansky on July 30, 2009
By Risa Polansky
Redeveloping Miami International Airport’s outdated central terminal could end up a bigger job than the ongoing north terminal project, aviation officials told developers and other industry players at a workshop last week.
Still, the private sector is interested.
A crowd of nearly 100 turned up for the introductory meeting: developers, investors, engineers, consultants and others from Miami, to Washington, DC, to San Francisco — all here to learn more about the proposed central terminal revamp.
Officials are exploring whether to work with a private-sector player to upgrade and redevelop the 1950s-era terminal as a way to avoid saddling Miami-Dade Aviation with more construction debt.
The developer would design, build, finance and operate the terminal — or transfer operations, potentially to the county — in exchange for a long-term concession agreement.
The prospect drew representatives from such companies as construction firm Dragados USA, contractor team Parsons?Odebrecht and financial firm UBS Securities.
"This is important to us, but it’s big and complex," Aviation Director José Abreu told the crowd, joking that it doesn’t get any bigger unless you’re tackling world hunger.
He stressed the need for a private partner if the project is to be done.
"We do not foresee a scenario where we [the aviation department] would borrow the money… That just isn’t going to happen," he said.
Financing emerged as one challenge for developers.
A county memo pegs the overhaul at $2 billion-plus, though aviation’s Planning Director Sunil Harman said no cost has been determined yet and estimates floating around now have no "rational basis."
Architecture and engineering will also be challenging, he cautioned.
The idea is to rehabilitate the aging facility, focusing on a new, revenue-generating commercial concept while maintaining gate capacity.
"The real challenge is going to be planning and programming the facility," Mr. Harman said, adding later that, "in terms of development complexity, it’s going to rival the north terminal."
The north terminal revamp, which began in the ’90s as an American Airlines project that the county ended up taking over in 2005, is years overdue and hundreds of millions over budget — and it’s a more traditional terminal redevelopment.
Should the central terminal be rebuilt, emphasis would be on the commercial operation, though flight capacity would remain a priority.
Mr. Harman called it "fairly difficult and very expensive."
The project would need Federal Aviation Administration and state development approval.
Operations and Maintenance Deputy Director Max Fajardo agreed a central terminal project would be quite a task, amending Mr. Harman’s comment that it would rival the north terminal redevelopment.
"This is more difficult than north terminal," he said. But, "from an engineering perspective, this is an exciting thing."
Phasing can be done, Mr. Fajardo encouraged, though he noted it won’t be easy for engineers and architects.
For example, no matter the commercial development concept, developers can’t destroy ticket counters that may be needed later.
A developer would also have to work around existing infrastructure like a telephone room and utility corridor.
"You’re going to have to deal with a lot of utilities," Mr. Fajardo said. "Does that mean it can’t be done? No."
And the proposed development must generate revenue and at least keep costs to airlines level, if not reduce them.
If the project would mean increased landing fees to airlines, "that’s a show stopper," said Miguel Southwell, aviation deputy director of business retention and development.
Despite the laundry list of challenges officials laid out, private sector representatives didn’t walk away discouraged.
Gino Valderrama, an engineer with T.Y. Lin, said the obstacles outlined aren’t deterrents, though there’s "still a lot of thinking and planning ahead."
The project should draw high interest in light of the slow economy and lack of work now, said Geno Jaramillo, project executive with builder MCM Corp.
Throwing a slot machines operation into the mix and offering developers a chance to share that revenue would also sweeten the pot, he said.
The aviation department is exploring installing slots at the airport, though they wouldn’t necessarily be in the central terminal.
The idea now is for gambling profits to offset expected escalating aviation debt payments and keep fees down for airlines, though aviation officials won’t rule out offering a private partner a cut.
Though Director Mr. Abreu said he’s open to any and all ideas for redeveloping the terminal — including a hotel, convention center or hospital, so long as the development connects the entire airport post-security — a mall concept dominated last week’s workshop.
One idea: a central holding area with minimal seating for passengers, who wouldn’t find out which gate to head to until close to flight time.
A full-scale shopping center — past security — would offer entertainment in the meantime.
"We don’t want them to head to the gate. We want them to shop," Planning Director Mr. Harman said.
Mr. Abreu noted that the concept would apply only in the central terminal, as the other terminals are designed differently.
"You obviously cannot inconvenience the passenger for the sake of keeping them in a shopping area," he said.
Aviation began developing a central terminal retail concept in the ’90s, but it never took off.
Officials shared old renderings at the workshop to get developers’ wheels turning.
"It’s got to go vertical. There’s really no opportunity to go laterally," Mr. Harman said, laying out a scenario for a terminal whose focal point is a multi-story mall with Bal Harbour-esque shops.
"Miami is a huge shopping destination," Deputy Director Mr. Southwell said.
Already, you see international passengers flying out with outside purchases such as microwaves.
The airport could provide the chance to do the same kind of shopping — but duty free, he said.
In that case, warehousing could come into play, and the project developer might work with airlines to ensure purchases arrive on time with passengers.
Some airlines already have shopping-oriented flights, Mr. Southwell added.
"If this can work anywhere, it can work here," he said.
Workshop attendees said they see potential.
Eric Zichella, who works in business development for OHL USA in Davie and designed the Dolphin and Falls malls in Miami-Dade, called it "really an interesting project. It has a captive audience of 40 million passengers a year and it’s an excellent opportunity to do business and get other sources of income for the county and the airport."
Bradley Tollefson, development director for Westfield Concession Management in Wheaton, MD, said his company "has taken on large projects like this."
Westfield now has central terminal retail and handles marketing for the shops there.
"We’re very interested, but there are some serious hurdles that [the aviation department] needs to work through," he acknowledged, such as financials, federal clearance and what the partnership would entail.
Still, he said, "we’re definitely going to be interested in going through the process with them."
One attractor: the expected focus on the commercial development.
"The approach here is different," he said. "Usually from a concession standpoint we come in second."
But here, concessions rather than aviation is the priority, "and that has a lot of potential," he said, noting the full house at the workshop.
New Yorker Job D. Kunkel, senior aviation associate with global consultancy The Louis Berger Group, said the retail scenario is a promising revenue generator.
"The most successful airports today and the most successful airports in the future will embrace that," he said.
Walter Miros, senior consultant with local firm International Construction Consulting Services, said not to discount opportunities outside of the mall concept, such as a convention center, hotel or hospital.
There will be more time for project input.
Deputy Director Mr. Southwell said he expects a handful of workshops over the next 18 months.
Solicitation could begin in two years. If the project gets the go ahead, developers could break ground in 2017.