Cost of airport improvements significantly rise due to design additions, low supply of contractors

The cost to renovate Long Beach Airport could rise from the original cost of $58 million to roughly $110 million due mostly to revisions to the plans and lack of construction bids, officials said.

The council on Feb. 11 is expected to approve the contract that could push the total cost to $92.1 million. When accounting for “soft costs” like airport engineering staff, construction management and overhead expenses completing Phase II of the terminal renovation could cost closer to $110 million an airport spokesperson said.

The original contract had a base-amount of $58 million with a contingency amount of $65 million. The new contract amount that will be voted on is for $80 million with contingencies running up to $92 million.

The cost of the project will be covered by the airport revenue fund, which pays for worker salaries but also maintenance and capital improvement projects. Portions will also be covered by federal grants, such as a $10.9 million grant from the Transportation Security Administration that has already been earmarked for the terminal project. The remainder is expected to be financed by a bond, according to a memo sent from Airport Director Cynthia Guidry to the City Council.

The contract to design and reimagine the airport’s main terminal building was awarded to Swinerton Builders of Los Angeles in May 2018. Among other things, the project will relocate rental car services inside, where travelers currently check in and get their boarding passes, as well as a new ticketing building and restoration of the historic terminal building that was constructed in 1941.

The cost escalation is attributed to a number of things. Kate Kuykendall, a spokeswoman for the airport, said that revisions to the original plan, such as more office space for airlines operating out of Long Beach, a bigger meet-and-greet area and a more flexible ticket counter have added to the cost.

So has the lack of bids being placed to compete for the work.

“There is a large number of very large construction projects going on in Southern California. Nationwide there’s increased demand, but especially here in the Southern California market,” Kuykendall said. “The previous cost estimates were based on getting six to seven bids per trade, and we’re averaging, so far, two bids per trade. Less competition is driving the price up.”

Part of the project will deal with the historic restoration and seismic retrofitting of the original terminal building. Early renderings show the main building’s world-map mosaic floor being showcased as passengers walk through the backdoors of the building into the scenic terminal area, one that’s currently obscured by a fence with blue tarp.

The airport will also seek to have the new structures be LEED certified, which will require the building materials, construction process and function of the buildings to be environmentally friendly and sustainable.

“Any time you’re working with a historic building it tends to cost more,” Kuykendall said. “And the sustainability aspects of going for the LEED Silver certification, those things do add up.”

To pay for the increased cost of the project, the city intends to issue a $21-million bond that will mature in 10 years. The airport would pay the debt service on the bond out of airport revenue that is derived in part from passenger fees and land leases the airport is engaged in.

There is a clause in the contract that would allow the airport to abandon construction if there’s an economic downturn or other obstacle that requires suspending portions of the project. In that scenario the airport would be required to pay 1.5% of the remaining authorized work.

Kuykendall said that the contract was written with conservative estimates from 2018, the airport’s busiest year where it had nearly 4 million passengers, and subtracting 12%. That means the airport would have to average about 3.5 million enplanements per year under the financing model.

It’s currently projected to hit about 3.7 million enplanements in the current fiscal year that ends in September. However, Mony Chhey, the airport’s financial services officer, said during an Airport Advisory Commission meeting last month that those figures could change.

The Jan, 16 meeting was held the same day that JetBlue announced that it was further diminishing its role at Long Beach Airport by reducing the frequency of some routes and eliminating service to Oakland companywide. Adjusted estimates of enplanements and airport revenue are expected to be reviewed at the commission’s Feb. 20 meeting.

The airport previously completed a re-visioning of the concourse where restaurants and permanent structures replaced the trailers that travelers previously waited for flights in. That $45-million improvement opened in 2012 and since then the airport has been consistently ranked as one of the best airports in the country.

Kuykendall said that doing the same for the area that travelers see before security screening could have a similar impact on the flight experience for travelers.

“The pre-security part of the airport needs a little TLC so I think we have this great local treasure in this terminal building that was built in 1941 and it’s really important to take care of it and do a seismic retrofit and renovation that will restore it to its old glory,” she said.

If the City Council approves the new contract, construction is expected to begin immediately, with completion expected in about two years.

The portions of the project expected to be completed first are the ticketing building, rental car area relocation and a new consolidated baggage claim area. Parts of the project that will be deferred are roadway improvements, a ready return lot for rental cars and a ground transportation center.

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Jason Ruiz covers City Hall and politics for the Long Beach Post.