New terminal at New Orleans airport getting bigger price tag, footprint

Posted on: December 21 2015
By: Jeff Adelson |

The new terminal planned for Louis Armstrong International Airport is now expected to cost $50 million more and be roughly 100,000 square feet bigger than originally proposed.

The New Orleans Aviation Board on Monday approved a $599 million deal with the main contractor overseeing the project.

The new terminal is expected to result in a total of nearly $1 billion worth of construction when all the related work is taken into account, making it the largest project in the city’s history.

But it also faces questions about whether the project, which officials have touted as a significant boon for local firms and an opportunity to expand the local workforce, will meet its disadvantaged business enterprise goals, which are intended to steer work to firms run by minorities and women.

With most of the work on the project already bid out, the contractors are still below the requirement that they give about a third of the work to disadvantaged businesses, something activists said Monday showed a lack of outreach and planning.

Airport officials have been negotiating the final amount of the contract with Hunt-Gibbs-Boh-Metro, a joint venture between Hunt Construction Group, an Indiana firm, and three local companies that won the competition to build the terminal last year.

Construction is expected to begin in January, and workers will begin erecting the actual building by the summer.

“The last icon that Hunt built in New Orleans was the Superdome. That’s probably one of the most recognizable buildings on the planet,” Hunt Executive Vice President Ken Johnson said. “We’ve got the best airport in the country for the second.”

City officials initially hoped to have the new terminal up and running for the city’s tricentennial celebrations in May 2018. However, in order to avoid having to pay a premium to meet that deadline, the completion date has been pushed back to October of that year, said Aviation Board Vice Chairman Doug Thornton, who is also a senior vice president of the company that manages the Mercedes-Benz Superdome.

The final price is higher than the $546 million the airport had originally planned on spending because of a decision to expand its footprint by 110,000 square feet, to 760,000 square feet, and because of higher costs to stabilize the ground on the site.

The expansion will ensure there is enough space between the gates at the new terminal to accommodate larger, 180-passenger planes that are becoming more common as more fliers come through the airport, officials said.

The changes will increase the project’s cost by about 9.2 percent.

The project is being paid for through a combination of bonds funded by fees on the airlines and state and federal money.

Because a significant portion of the money is coming from fees on the airlines — which officials noted will still be below $10 per passenger, compared with about $16 five years ago — American Airlines, Southwest Airlines and United Airlines will have to sign off on any change orders for the project.

The structure of the deal puts Hunt-Gibbs-Boh-Metro in charge of the project from here on out and makes the joint venture responsible for any cost overruns.

But with city officials touting the project as an economic development engine — about 13,000 workers are expected to work on the job — it remains to be seen whether it will meet its goals for hiring minority firms.

The joint venture has already bid out about 89 percent of the $532.5 million in actual construction work involved in the project, with about 28.4 percent of that committed to disadvantaged businesses. To meet the goal of 33.09 percent of total construction dollars going to firms in that category, such firms would have to be awarded 69.2 percent of the remaining $57.7 million.

Members of The Collaborative, a group that advocates for more robust policies to help disadvantaged businesses, argued Monday that Hunt-Gibbs-Boh-Metro has not done enough outreach to minority contractors and has broken down its tasks into chunks too large for small businesses to handle, essentially freezing them out of the process.

“We’ve been left out a lot, which is not unusual,” said Barbara Major, a representative of the group and former chairwoman of the Regional Transit Authority. “However, maybe moving forward we can have some conversations about how you can do what you do differently, how you can do what you do better, how you can make sure everyone’s really included in the process.”

Representatives of the joint venture said they would try to break down the rest of the work into projects that could be handled by smaller firms.

They noted that Metro Services Group, a disadvantaged business, is one of the four partners in the joint venture. The joint venture also has pledged $2 million toward workforce development — efforts to find and train more skilled local workers — as part of the project.

Overall, work at the airport is expected to clock in at about $950 million. That includes $761.5 million for the design and construction of the new terminal, a 2,000-space parking garage and items such as additional parking areas and the partial demolition of the current terminal. Another $45 million will go toward other improvements at the airport, including relocating lighting and navigational aids and a new access road.

Additional work will include a new $87 million flyover ramp from Interstate 10 and a $39 million fuel system that will allow planes to fill up from pumps rather than fuel trucks. A hotel at the airport that will be built by a private developer is expected to add another $17 million to the total.

The airport plans to start advertising for companies interested in building and operating the hotel in the first quarter of 2016. The choice will be based on both the brand and experience of the interested hotel companies and the share of revenue from the hotel that they are willing to turn over to the airport, Director of Aviation Iftikar Ahmad said.

As he signed the contract at the airport Monday, Mayor Mitch Landrieu noted that revitalizing the airport has been the goal of many city administrations.

“This team of people found a way to make this dream a reality and do it in a way that is cost-effective, on time and on budget,” Landrieu said.