The new Denver airport hotel and related train station project are so far over budget that the project’s independent watchdog is incurring a 137% cost overrun.
Yet the airport doesn’t think it’s fair for an independent auditor to claim current projected costs (which could still rise) of $721 million off of a $500 million budget. With some creative accounting they’re ‘only’ over budget by 17%.
Airport construction is financed by tax-exempt bonds (yet somehow Delta, United, and American claim only UAE and Qatar aviation receives subsidies) and the auditor ties their estimates to the airport’s own bond documents.
Nonetheless, the airport contends that
- Costs that were added to the project ‘at a later date’ shouldn’t be included (isn’t that kind of the ‘definition’ of an overrun?)
- Necessary work to roads and bridges around the hotel and station site shouldn’t be included, because they’re only necessary for the project and not part of the project (which might have been fair if they had been separately budgeted at the start)
- And really you shouldn’t hold higher costs against them since they’re to “take advantage of the efficiencies of having the same contractor do this work” (no explanation of how efficient it is if it costs an extra quarter billion dollars
- They could have done it for less but had to increase costs given “the need to get the station finished in time to meet an agreed-upon deadline” (again, the definition of an overrun if it’s more expensive to complete the project as agreed to)
The Denver airport contends that none of this should matter, after all they aren’t using taxpayer dollars, only tax-exempt bond financing (which is somehow not a tax expense) and will be paid for by airport passengers in the future.
And why criticize them since they already announced cost overruns last year?
United Airlines — which operates a hub in Denver and which is critical of Gulf spending on airports — is not quoted for the piece.