Aerotropolis Case Study Analysis

Prepared by The Gateway to Milwaukee for the Milwaukee Gateway Aerotropolis Corporation

2/9/2012

“Aerotropolis Community” Defined

The designation of a community as an “intentional Aerotropolis community” is subjective. The criteria for such designation include:

1. Presence of or future planned development of aviation-linked commerce in the airport area,2. Intentional branding or designation of the airport area as an

“aerotropolis”, “airport city”, or “air logistics hub”.

Notable omissions from the analysis include LA-Ontario, Los Angeles, O’Hare, Miami, Washington-Dulles, John F. Kennedy, Hartsfield-Jackson, Newark Liberty, and Ted Stevens Anchorage International Airports and airport business districts. • Economic growth appears unrelated to any intentional approach to

promoting an aerotropolis in these areas.

Aerotropolis Communities Examined

• Buffalo• Chicago• Dallas-Ft. Worth• Denver• Detroit• Duluth • Huntsville, AL• Indianapolis• Jacksonville, FL• Kansas City

• Lansing, MI• Louisville• Memphis• Milwaukee• Phoenix-Mesa, AZ• Piedmont Triad, NC• St. Louis• Toledo, OH• Tulsa, OK

Aerotropolis Governance Structures

1. Airport-lead land use planning exercise A. In the case of these Aerotropoli, an airport owns

vast tracts of land adjacent to its facility or within the fence of its facility. At some point, the Airport decides that it must create an intelligent development model for its land and facilities to maximize value.

i. Dallas-Ft. Worth, Denver, Huntsville, Indianapolis, Jacksonville, and Tulsa.

Indianapolis, IN

Aerotropolis Governance Structures

2. Chamber of Commerce-lead economic development effort

A. In an attempt to enhance the economic competitiveness of the community that they serve, various chambers of commerce have identified their airports as economic engines that would benefit from Aerotropolis coordination.

i. Memphis, Jacksonville, Kansas City, Piedmont Triad, Phoenix-Mesa, and St. Louis.

Memphis, TN

Memphis Aerotropolis Steering Committee

Memphis Airport Area Development Corporation

Aerotropolis Governance Structures

3. Private carrier hub cities A. Certain communities are fortunate to be major

hubs or headquarters of private air cargo carriers. These communities experience many spin-off commercial benefits from the presence of such carriers, though some level of external coordination of the Aerotropolis exists.

i. Huntsville (Panalpina), Louisville (UPS), and Memphis (FedEx).

Louisville

UPS Worldport

LIA Passenger terminal

Aerotropolis Governance Structures

4. Traditional port communities A. These communities have traditionally been hubs

of transportation activity, primarily being developed along railroads or waterways. These communities have maintained a legacy of transportation employment and activity, most recently having attempted to leverage their assets into air cargo development near their airports.

i. Chicago, Detroit, Duluth, Jacksonville, Kansas City, Louisville, Memphis, and Toledo.

Aerotropolis Governance Structures

Other communities examined in this document are not as easily categorized. • Buffalo - Chamber/Airport Authority hybrid

structure to attract expanded hospitality and international air service providers.

• Lansing, MI - similarities to other airport-lead efforts, this Aerotropolis appears to have emerged entirely because the State of Michigan made tax credits available for such a purpose.

Aerotropolis Governance Structures

• Of the “intentional Aerotropolis communities” outlined in the document (excluding Chicago), 14 of the 18 have airports that are operated by single-purpose Authorities. Only Denver (City), Duluth (City), Kansas City (City), and Milwaukee (County) are operated by general purpose governments.

• Governance of an airport by an independent authority does not necessitate the transfer of ownership of an airport as 5 of the 14 Airports governed by Airport Authorities are owned by a general purpose unit of government (Dallas-Ft. Worth, Detroit, Huntsville, St. Louis, Tulsa).

Aerotropolis Funding Sources1. Airport-lead, Airport-funded – For those communities whose Airport has taken a lead

role in the creation of an Aerotropolis, those efforts are also primarily, if not entirely, funded by that Airport.

A. These communities include:, Dallas-Ft. Worth – DFW, Denver – Denver International Airport, Duluth - Duluth Seaway Port Authority, Huntsville - Huntsville-Madison County Airport Authority, Indianapolis - Indianapolis Airport Authority, Jacksonville - Jacksonville Airport Authority, JAXPORT, Louisville - Louisville Regional Airport Authority, Toledo - Toledo-Lucas County Port Authority, Tulsa - Tulsa Airport Authority

2. Large scale private developers – Like much of the development in America’s Sunbelt region, these Aerotropolis communities have benefitted from vast tracts of available, developable land and the participation of a few real estate developers. These developers have privately financed large scale communities, business parks, industrial facilities, and logistics parks where there once was desert or farmland.

A. Dallas-Ft. Worth – Trammel Crow, AMB are 2Real Estate Investment Trusts (REITs) that partnered with DFW to construct “high velocity flow-thru” cargo facilities. Hillwood Development Company manages the facility and real estate around Love Field.

B. Denver – Newmark Knight Frank, Porteos development

Aerotropolis Funding Sources

3. Fundraising from Public and Private sectors – In those communities where private sector involvement is strong but available land is at a premium, companies and units of government have tended to make financial contributions to the Aerotropolis organization operating in their interests in that community.

A. Buffalo - Seneca Gaming casino is contributing $1 million to their campaign, other financial contributors include Niagara County, the city of Niagara Falls, the Niagara Tourism and Convention Corp., Niagara Wine Trail, Fashion Outlets, the Niagara Falls Hotel/Motel Association and the Niagara County Industrial Development Agency.

B. Detroit - Membership fees by local government signatories (who compose the Corporate Board) and private-sector contributions include Business Leaders for Michigan, Detroit Regional Chamber, Southeast Michigan Council of Governments, NextEnergy, UPS, and Walbridge Aldinger

C. Memphis – MAADC operates with private-sector funding from FedEx, Medtronics, and Elvis Presley Enterprises. The Memphis Chamber coordinated $1.6 million from City of Memphis for Plough Blvd. beautification and in-kind work by the City.

Aerotropolis Funding Sources

4. State and Federal grants/tax incentives – For a number of Aerotropolis communities, the ability to offer tax incentives or the award of grant money has been given by their State or Federal Government.

A. Detroit – Next Michigan Development Act tax incentiveB. Lansing – Next Michigan Development Act tax incentiveC. Memphis – $1.26 million HUD Community Challenge grant, $45,000

State Forestry grant

Other efforts not mentioned in the 4 categories above include those without a substantial budget dedicated to Aerotropolis development (Kansas City, Phoenix-Mesa, St. Louis). In these cases, the effort was put forth by the local Chamber of Commerce, which may have a substantial budget in itself, though these funds have not been devoted to significant projects.

Types of Aerotropoli – Export vs. Distribution Communities

Community (MSA)

Total employment

Manufacturing employment

Manufacturing LQ

Piedmont Triad 656,306 124,014 1.7109Milwaukee 755,162 115,989 1.3907Huntsville 168,302 25,613 1.3779Toledo 262,624 36,847 1.2703Tulsa 388,992 53,465 1.2445Detroit 1,732,051 229,456 1.1995Louisville 525,101 64,018 1.1039Buffalo 458,110 53,065 1.0488Lansing MI 153,933 16,561 0.9741Chicago 3,918,027 408,017 0.9429Indianapolis 762,105 77,202 0.9172Dallas Ft Worth 2,548,049 239,057 0.8495Kansas City 893,093 80,978 0.8210St. Louis 1,205,316 105,606 0.7933Duluth 109,890 8,656 0.7132Memphis 519,483 38,446 0.6701Phoenix-Mesa 1,497,003 102,312 0.6188Denver 1,062,780 58,325 0.4969Jacksonville 508,838 25,291 0.4500

Community (MSA)

Total employment

Transportation and Warehousing Employment

Transportation Warehousing LQ

Memphis 519,483 57,604 3.0426Louisville 525,101 41,020 2.1435Indianapolis 762,105 48,107 1.7320Jacksonville 508,838 28,995 1.5635Dallas Ft Worth 2,548,049 121,683 1.3103Kansas City 893,093 40,156 1.2337Chicago 3,918,027 167,560 1.1734Phoenix-Mesa 1,497,003 61,921 1.1349Piedmont Triad 656,306 26,450 1.1058Toledo 262,624 10,398 1.0864Tulsa 388,992 15,296 1.0789Lansing MI 153,933 5,986 1.0670Denver 1,062,780 41,230 1.0645Milwaukee 755,162 26,121 0.9491St. Louis 1,205,316 41,286 0.9399Detroit 1,732,051 55,425 0.8780Buffalo 458,110 14,258 0.8540Duluth 109,890 3,382 0.8445Huntsville 168,302 3,779 0.6161

JacksonvilleDenver

Phoenix-MesaMemphis

DuluthSt. Louis

Kansas CityDallas Ft Worth

IndianapolisChicago

Lansing MIBuffalo

LouisvilleDetroit

TulsaToledo

HuntsvilleMilwaukee

Piedmont Triad

0.00 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 1.80

Manufacturing LQ

HuntsvilleDuluthBuffaloDetroit

St. LouisMilwaukee

DenverLansing MI

TulsaToledo

Piedmont TriadPhoenix-Mesa

ChicagoKansas City

Dallas Ft WorthJacksonvilleIndianapolis

LouisvilleMemphis

0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50

Transportation Warehousing LQ