The Des Moines Airport Authority voted Tuesday to award a contract for design work on the airport improvement project, which has seen its estimated costs increase by as much $180 million because of inflation and other factors.

The airport has struggled with capacity to handle increased air travel, which hit record levels in Des Moines in 2019, and officials say a new terminal and related improvements are an integral component to continuing the economic development momentum the region has seen in recent years.

On Tuesday, the board approved a recommendation to enter into an agreement with Kansas City, Mo.-based HNTB Corp. to do the design work. No cost was attached to the contract because airport officials will designate individual tasks under the agreement with the cost of each task being individually negotiated, airport Executive Director Kevin Foley said.

A recent review by consulting firm Anser Associates of a document called a program definition manual that was created in 2018 shows that costs have increased because of the effects of the coronavirus pandemic, technology and inflation. An updated document outlining the increased costs and possible design options will be presented to the board next month. The update will also include revised passenger estimates as the number of people passing through the airport has grown faster than projected in the 2018 plan.

Foley said the consultant’s findings show that costs from 2018 to this year increased $82 million, and will increase an additional $92 million by the midyear 2025 construction target date.

“There were some other tweaks in there, but we were literally looking at $180 million of inflated costs,” he said.

That would bring the total cost of the project, including the construction of a new terminal, to $583.5 million.

Foley said the revised plan will also consider options on how to proceed based on available funding for phase one of the project that would include 14 gates. The airport currently has 12 gates.

That update on passenger traffic was based on a survey done by the Federal Aviation Administration called a Terminal Area Forecast, which showed that based on the numbers of passengers that are forecast to pass through the airport, it would need 17 gates.

According to statistics on the airport’s website, through February, 357,467 passengers passed through the airport so far this year. That is up 90% from 2021 numbers for the same period. The airport is currently at 90% of its 2019 levels.

Foley said rapid growth in Central Iowa caused airline travel in Des Moines to exceed projections, hitting levels that were projected for 2027 in 2019.

“Our terminal area forecast was clearly off,” he said. “We grew much faster than what was projected. And with the growth that we’ve experienced and the anticipated growth going forward, instead of needing 14 gates in that first phase, it’s now 17 gates. So not only do we have an inflation factor, we have an increased size that we’re building. So how do we match a budget to a need? How do we make these two things fit together? The proposal was, instead of building it all at once, can you utilize part of the existing terminal and phase this in?”

The consultant asked airport staff to identify its most critical issues. In addition to the myriad issues that affect passengers, at the top of the list, Foley said, is a lack of space to park aircraft that remain overnight.

“That’s really, in my mind, the primary issue here,” he said. “Those other things, it’s not how you want to treat people and we need to address them. We are running into long lines at times and those sorts of things. If you can’t park airplanes, it’s a barrier to entry. It’s a barrier to competition.”

That means it becomes more difficult to attract new airlines, or accommodate additional flights or routes by current carriers, Foley said.

Another change suggested by the consultant is straightening out the terminal.

“It will better utilize the space we have in this area and it’s cheaper to build a straight line than a curved line,” Foley said. “That is cut number one, and all the way through they were looking at ways of reducing costs for construction without jeopardizing efficiency and effectiveness down the road. We still need to be as efficient as effective as we can and still have room to expand down the road. We can’t give any of that up.”

Preliminary plans would include the addition of five or six new gates. The airport would likely lose four of its current gates, so the new gates plus the eight existing gates that would remain would bring the airport to the 14 gates it would initially need.

That would bring the overall cost down to about $411 million, Foley said.

“2032 is when we would absolutely have to have the 17 gates, according to the new terminal area forecast, and hopefully funding would continue to come in that would accommodate much more quickly than that the additional gates,” he said.

Currently, the airport has about $336 million available for airport improvements, which includes a new terminal and entrance road and a parking garage expansion, among other things. The cost estimate of $583 million can be reduced if the airport uses part of the existing terminal, including ticket counters, baggage systems and TSA screenings, and those areas beyond security.

The $336 million includes the airport’s own bonding capacity ($70 million), cash reserves and $58.7 million the airport received from the state from American Rescue Plan Act funds.

It also includes money that area municipalities have committed. So far, 19 communities have signed resolutions committing a total of $28.6 million to the project.

Foley said he expects a few more communities to sign on and bring that total to around $30 million.

The airport has also applied for funding through the federal infrastructure plan, he said.

There is a deadline that would need to be met under requirements of the $58.7 million the airport received from the state using funds from the American Rescue Plan Act.

According to Foley, that money has to be committed by December 2023 and spent by Jan. 20, 2026.

“So that’s part of this timeline, where and how to apply those dollars,” he said. “We want to put them into the terminal, but it may be wiser to put them into the parking garage expansion.”

Foley said the ARPA money is restricted to hangars, parking structures and terminals. Roads are excluded.

“We do have some flexibility in trying to figure out the timing and making sure we don’t go past that deadline. We want to put it into the terminal, but we’re not 100% sure we can do that yet,” he said.

Foley said the architectural firm hired on Tuesday will “burn the midnight oil to see how we can get this cost estimate down.”

He also said a construction management at-risk bill awaiting the governor’s signature will allow the airport to bring a construction firm on board sooner and help staff get closer construction cost numbers than current estimates.

Foley said the next step is for the airport board to accept the updated program definition manual, which would become the basis for design and allow HNTB to move forward.

Foley compared the current progress to a young child transitioning from crawling to taking its first steps.

“We’re just now starting to walk and have a plan to get it done,” he said. “But because of the timeline [of the ARPA requirements] we’re going to have to learn quickly how to run. It isn’t the way we would like to have done it, but it does address the most critical issues.”