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Open Letter to Community/Passengers


Nov. 24, 2014

An Open Letter to our Community and Passengers:

There has been much in the news over the past week regarding Denver International Airport’s Hotel and Transit Center Project. Unfortunately, the recent media attention suggests that our budget for the project has recently increased and that costs are continuing to rise. That is simply not the case. Last March, DIA very publicly announced that recent projections indicated we would likely end up 5-10 percent over our budget. Today, we remain confident in those projections, and nothing has changed since we announced this earlier in the year.

There are many numbers that have been floated by different sources, including some that erroneously combined multiple projects, giving an inflated false impression of the costs of the Hotel and Transit Center. Here is the history of how we have progressed to where we are today. The original $500 million estimate for the Hotel and Transit Center Program was based on data and projections for passenger traffic and revenues in 2011. This was our best estimate at the time of what the project would cost. When the contract was bid, the project came in at $544 million. This is the amount on the contracts we executed in March of 2013. Upon contract execution, Mayor Hancock initiated a Change Management Committee to provide independent oversight of the program. And this committee is doing its job.

In March of 2014, the Change Management Committee informed us that it had completed an analysis that projected the project would close out at cost of 5-10 percent above our budget of $544 million, which is within the industry norm for a project of this size and complexity.

Reasons for the increase include: allowances in the contract that have proven more complex than anticipated, the regional economic recovery that resulted in the increased cost of labor and materials, some unforeseen site conditions and our need to meet RTD’s schedule for the East Rail Line. Today, we remain confident of our ability to complete the program within 510 percent of the $544 million budget.

While we were building the project, leaving a large part of the terminal area disrupted by construction, and having contractors on site, we decided to take advantage of the efficiencies of moving ahead on some additional capital projects that are not necessary for nor do they serve the Hotel and Transit Center but are needed for future terminal and concourse development.

This additional $75 million in work, which would have been completed at a later date – and at a higher cost – includes: replacing the pickup and drop-off roadways, extending the terminal to concourse train system for growing airport capacity (not to serve the hotel) and making improvements to the terminal baggage system. Some of these items were envisioned as part of the original concept for the Hotel Transit Center but were cut as we value engineered the program, and they are not required for the project to function. Additionally, there is $53 million in work necessary for the East Rail Line. We are going through legal proceedings with RTD to determine the cost allocation for this work.

We are committed to building a project that reflects the standards for quality and longevity that our community expects of our landmark facility, which is the largest economic engine in the region, bringing in more than 26 billion dollars to the economy annually. And even though the project is not being funded by taxpayer dollars, we remain committed to cost efficiency and accountability. We have – and will continue to be – open and transparent about all costs related to the project.

We welcome any questions you have about this project or our overall finances. After all, we are your airport.

Thank you for your support.

Kim Day

CEO, Denver International Airport

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