After months of tussling over costs and delays, Denver International Airport took a dramatic step Tuesday, revealing it fired the private partners responsible for renovating the terminal and overseeing new concessions for the next three decades.

The decision — reached Monday in a late-night conference call that included Denver Mayor Michael Hancock — will send the project team packing in coming months, along with private funders that include former NBA star Earvin “Magic” Johnson. The contract was worth $1.8 billion, with the renovation accounting for $650 million.

Much remains up in the air, including exactly how much DIA will pay the spurned Great Hall Partners in breakup fees. DIA finance chief Gisela Shanahan says that’s still subject to negotiation and will start with the roughly $200 million DIA must repay under the contract for the partners’ up-front costs.

There’s also the question of how soon DIA can select a new contractor to finish the work and how much the renovation project will cost in the end.

And an overarching question lingers for the thousands of travelers who navigate around construction detours each day in the nation’s fifth-busiest airport: When will this mess be over?

The short answer: Not for years.

“It doesn’t do anything for your confidence” in government, Westminster resident Ed McCarthy said Tuesday as he waited to greet his adult son’s arriving family near the concourse train’s exit. “It’s a shame that this stuff happens this way — either the choice was wrong in the beginning, I guess, or they didn’t manage it well, and that happens. I guess there’s no choice but to cut your losses.”

Decision “not arrived at lightly”

That’s essentially what Hancock and airport CEO Kim Day say they’re doing.

“This was not a decision arrived at lightly,” Day said during an airport news conference, noting that it followed months of failed negotiations. “We are very far apart on cost and schedule and our values,” including prioritizing safety and the needs of travelers.

“I actually feel a sense of relief,” Hancock said in an interview later, citing the end of months of increasingly public disputes with Great Hall Partners.

While he acknowledged his administration had learned some lessons from how the arrangement soured, the mayor said he still has confidence in Day, who has led the airport for more than a decade.

“Our No. 1 responsibility right now is to get the project back on track,” Hancock said. “I’ve asked the leadership of DEN to lead us through that process, and I expect them to do just that.”

DIA officials have a big advantage as they face the uncertainty: the airport’s deep pockets. It doesn’t draw on city taxpayer dollars and pays for its projects using a surplus of revenues, including airline fees.

Shanahan says other projects won’t suffer, including a separate $1.5 billion expansion of the concourses that’s adding 39 gates to meet airline demand.

In the letter sent to Great Hall Partners late Monday night, DIA terminated the public-private partnership terminal contract using its “for convenience” clause, rather than citing a “for cause” reason that could have resulted in a legal battle. It takes effect Nov. 12, giving DIA and Great Hall time to negotiate its exit, potentially with more of the project’s first phase finished by then.

While the contract set the project’s completion date in November 2021, Great Hall Partners had warned that it might not be able to finish the project until as late as 2025. It also projected costs could soar by more than $300 million.

All Day would say Tuesday is that her aim is to finish the project using the original budget, along with its $120 million contingency fund — even if that means scaling the project back. She said she doesn’t think the project will take until 2025 to finish but added that delays past the original target date are unavoidable.

“There is no way we can be back on that timeline, because we are now having to go through a (contract) procurement,” she said.

Her goal now is to seek new bids, win Denver City Council approval for new contractors and have them step in by early next year.

Great Hall Partners is led by Madrid-based Ferrovial Airports, with equity interests also held by Centennial-based Saunders Construction and JLC Infrastructure, an investment fund started by Johnson and Loop Capital. Their contract was set for 34 years, with four years of construction followed by three decades of oversight of new food and retail outlets in concession spaces throughout the terminal building.

As part of the project reboot, Day said, the new contract will be much simpler. It will cover just the renovation, with DIA planning to oversee the new concession spaces in a more traditional arrangement.

“We are going to take control,” Day said.

DIA officials still defend the need for the project, both to increase capacity and address security vulnerabilities at the TSA checkpoints. The renovation includes the relocation of security screening to the upper level and the consolidation of airline check-in counters, which is underway.

Great Hall rejects allegations

Great Hall Partners, shocked by the timing of the termination, said in a statement Tuesday afternoon that it was “committed to a professional and smooth withdrawal” — but it took DIA leaders to task for many of their assertions.

“We are disappointed with DEN’s decision and strongly disagree with their characterizations of how we have arrived at this point,” the statement says. “We categorically reject their allegations around safety and change directives. As a firm, we have among the best track records in the world for adhering to the highest standards for safety.”

The two sides started a short-lived mediation in late June. For much of this year, they have disagreed about the extent of the fallout from the discovery last fall of weak original concrete in the main level’s flooring, though that concern has dissipated.

Great Hall also contended that its work was set back by a litany of airport change directives involving designs, materials and other elements.

“The reality is that the project’s time and cost overruns are a direct result of the discovery of weak concrete in some areas of the terminal, which DEN did not disclose to GHP at the outset of the project, and more than 20 large-scale, badly timed and unnecessary change directives issued by DEN to the design they had previously approved,” Great Hall’s statement says.

Day disputed that charge, saying the Great Hall team repeatedly failed to detail cost and delay implications at the time each decision was made.

She said many of the changes were to address the needs of airlines and the Transportation Security Administration.

Attempts to save deal faltered

Attempts to save the partnership included a convening of Great Hall representatives in the mayor’s office downtown in early July. But even as both sides recommitted to working out their differences, Hancock said, he had directed DIA and city attorneys to prepare for Plan B.

“We had issues that just seemed to get deeper after (the meeting),” Hancock said. “It didn’t get better, it didn’t advance — it just seemed to grow into more and more concerns.”

The airport became increasingly vocal last month, lobbing allegations of safety and contract violations.

The way DIA handled the contract process in 2016 and 2017 drew criticism from Diana S. Parks, an attorney with the law firm Dorsey and Whitney who specializes in public-private partnership deals. That’s because DIA sought bids at the conceptual stage but then negotiated the details only with Ferrovial’s bid team, the preferred bidder, effectively shutting out true competition.

But she said Tuesday that ending the deal early might have been the right call — and isn’t, in her view, a catastrophe.

“You very rarely see a contractor on a job this size terminated,” Parks said. “It sounds like it was the only choice they had to try to get the project completed within their budget and on an earlier time frame.”

At its core, the 15,000-page labyrinth of a contract set up a cost-sharing arrangement for the terminal renovation, with Great Hall and its investors chipping in about a quarter of the $650 million cost. DIA would repay that investment gradually over the 30-year concession period, while also paying Ferrovial to oversee and maintain the concessions. Both would share in the revenue the outlets generated.

By blowing up the contract, DIA must repay Great Hall for its borrowing now rather than over time, Shanahan said, and with interest. A silver lining, she said, is that jettisoning the concession oversight part of the contract will save DIA money later.

Document: DIA’s Aug. 13 disclosure filing for bondholders