Thursday, January 11, 2018

Economic Impact of the Airport Numbers

Cities talk a lot about economic impact and how spending tax dollars on certain things (like sports teams, stadiums, airports) will get others to spend money in our city, thus creating positive economic impact. Now that the city has ramped up spending on the airport again with the $22M land purchase, new hangars, and the FBO redo, we need to look at the numbers we are being given to justify the spending and have an honest discussion about our expectations.

The city is touting this quote here and here
“In 2010, an economic study conducted by the University of North Texas found that McKinney National Airport generates more than $44 million annually in economic impact to McKinney. “

The study was published by UNT’s Center for Economic Development and Research and the study was posted on TXDOT. The study is being used by most of the airports in Texas as proof that airports are a major economic development driver. However, economic impact numbers with this kind of study are all about estimating and assuming positives.
Here are a few reasons why you might want to take this airport economic impact study with a grain of salt:
  1. The study was completed using information from 2006-2010. Everything has changed since the FBO purchase in 2013**, the new 190-acre land purchase for $22M, and the FBO redo project that’s another lease-to-own deal like the downtown parking garage.
  2. Capital outlays (i.e. large, one-time expenses, like runways or the 2013 FBO purchase) were not included in the $44M annual economic impact number.  Capital outlays were estimated separately in the report. If we look at the $44M number without taking account of how much money the city had to spend to get to the $44M economic impact estimate, we’re kind of missing a large part of the story.
  3. The study used SELF-REPORTED surveys* from airport managers, airport tenants, and pilots. Basically, they did their calculations with non-verified surveys.

When a small business opens in McKinney, that business has economic impact. One business affects the economy in many ways. Said business requires suppliers, employees, etc. who trickle the benefits on down to others in the chain. We can sum up those to get to economic impact numbers.  In the case of a private business getting no tax incentives, taxpayers don’t care about capital costs (construction costs, investment, fees, etc.) the business had to incur because tax payers didn’t pay for any of it. The business assumed the financial burden, unlike with government projects where the taxpayers pay the start-up costs.

*I have done an ORR for the self-reported airport manager survey. I have also contacted the UNT department to ask for the full report that contains the technical information not included on the TXDOT website.

*10-year CIP is $71M, the FBO purchase was about $25M

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