Will Airport Spur Economy?

The controversial proposal to redevelop El Toro Marine Corps Air Station into an international airport is a classic 1990s struggle between proponents of economic growth and those who see it as destroying their way of life.

But would an airport really produce economic benefits as backers of the plan envision?

The answer, unquestionably, is yes.

As a driving force of economic prosperity, airports are practically unmatched, analysts say.

* They encourage new businesses to form, and older ones to stay and grow.

* They facilitate domestic and international trade.

* They are major generators of jobs, both directly--as in baggage handlers, ticket checkers, etc.--and indirectly through increased employment at hotels, restaurants, stores and convention facilities.

* And they fuel job growth as companies locate nearby to take advantage of easy access to flights and cargo transport.

Analysts point to the nation’s other major airports as evidence that these facilities act as magnets for businesses.

A prime example, they say, is the rush of development, from high-tech companies to housing tracks, ushered in by the opening of Dallas-Fort Worth International Airport in a pastoral area between the cities more than two decades ago.

Like many other regions, analysts say Orange County is now ripe for an international airport. LAX is straining to accommodate both the burgeoning demand for pleasure and business travel, and the cargo shipments from north of Los Angeles to the Mexican border.

Opponents of an El Toro airport argue that Orange County’s economy is already growing, and that the price local residents would pay in terms of increased noise, traffic, pollution and safety concerns is far too high.

But some transportation and land-use specialists say it’s naive to think the county can maintain its current quality of life without the growth that a new airport would afford.

“Very few areas can age in graceful elegance,” said Michael Meyer, managing partner of E&Y; Kenneth Leventhal Real Estate Group in Newport Beach.

“If they stagnate, they deteriorate. At some point, what some preservationists thought was going to be wonderful ends up being decrepit and behind the times.”

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The El Toro issue passed a major hurdle last week when the county Board of Supervisors voted to endorse the plan for an international airport over two competing options. They did, however, dramatically scale back its size in response to community concerns.

The issue is far from resolved and promises to be as divisive as ever as the county prepares a specific reuse plan over the coming year.

To be sure, the impassioned pleas of many nearby residents who are worried about the impact of airport operations on their daily lives are compelling and not to be taken lightly. Questions also remain as to whether El Toro is the best location for a commercial airport.

But from a purely economic standpoint, the case for a new airport is strong--and mirrors a debate taking place in town halls and county seats across the country.

The El Toro reuse plan is at the crux of a “great national issue,” said Marjery al Chalabi, president of al Chalabi Group, an economic development and transportation consulting firm in Chicago.

Demand for air transportation is growing geometrically, she said, as people travel more frequently and companies increasingly ship goods by air.

Airports throughout the United States, most of which were built 30 or more years ago, are popping buttons on their capacity limits, yet most can’t expand because of all the development that has grown up around them.

In Southern California, the problem is considered particularly acute. LAX is located in a huge economic center in one of the most populous regions of the country. Yet it’s the only major cargo airport south of San Francisco.

Trucks crawl into LAX on heavily traveled roads and freeways, while cargo shipments are increasingly funneled to airports in Phoenix and Reno because Los Angeles can’t handle the traffic.

Last week, another plan to expand LAX was proposed by city officials, although it faces certain political opposition and financial concerns, and could take years to be resolved.

“You’re just not going to squeeze a whole bunch more boxes into LAX,” said Greg Smith, vice president of Colography Group Inc., a Marietta, Ga., research and consulting firm specializing in cargo.

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For businesses in Orange County--and throughout the region--this translates into higher costs, less timely shipments and wasted energy.

Without another major airport, economists and others warn, the effects of economic inertia would set in over the coming decades:

* Companies would relocate, and new businesses would choose other areas with better access to thriving international markets.

* Job growth would stall, and tax revenues would flatten.

* Old buildings wouldn’t be renovated, property values would decline, and potholes would go unfilled.

By contrast, a new airport would attract the most desirable, globally competitive businesses, including technology companies, financial institutions and corporate headquarters, said Michael Roach, president of Hayward-based Roberts Roach & Associates, a transportation management consulting firm.

Existing businesses would see their costs reduced, enabling them to expand and hire more workers. “It wouldn’t be smokestack, it would be 21st-century stuff,” Roach said.

One local company that sees such growth ahead is Hycor Biomedical. The Irvine maker of medical diagnostic products currently derives 30% of its $21 million in annual sales from foreign markets. That share could double, particularly if a new El Toro airport offers convenient international flights and cargo shipments, said Hycor Chief Executive Rich Hamill.

“When you’re working in markets overseas, ready access to those markets . . . is the key,” he said.

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That airports can stimulate the kind of growth that Hamill foresees is demonstrated by the blossoming of the area near Dallas-Fort Worth International Airport since it opened in 1974, analysts say.

Built on a former cow pasture about 17 miles from the cities’ financial centers, the airport generated an estimated $9.7 billion in economic activity in 1995, and has added 185,000 jobs to the region. More than 450 corporations have located near the airport, including such titans of business as J.C. Penney Co., GTE and Exxon.

The Las Colinas mixed-use development about two miles away is an often-cited example of the airport’s positive impact. The area is home to high-tech companies, golf courses and some of the most desirable residential property in North Texas, from million-dollar homes to multifamily projects.

“Las Colinas probably would not exist today if not for the success of the airport,” said Ed McLaughlin, vice president of the North Texas Commission, an economic development agency.

Even Denver International Airport--the first major airport built in the United States since Dallas-Fort Worth International--is beginning to exhibit the same patterns of growth. Despite operational and financing troubles that plagued the facility when it opened nearly two years ago, businesses have begun to migrate nearby, and several development plans are on the boards.

That airport was also bitterly contested by local residents, who believed it would foster urban sprawl.

“Don’t Californicate Colorado” bumper stickers were plastered on cars throughout the state during the late 1980s.

Today, airport spokesman Chuck Cannon says the furor has died down, and many are championing the new growth.

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Other areas are undergoing similar debates over their future airport needs. In Chicago, a battle over a proposed third major airport has raged on for a decade, with no resolution in sight.

Al Chalabi, who has studied the effect of more than 50 airports on economic growth, said the question in Chicago isn’t so much whether to build a new airport, but where.

The region around the city’s main airport, O’Hare, long ago surpassed the famous Loop financial district as Chicago’s main employment center. But, like LAX, it is bursting at the seams.

Now various factions are arguing over whether to place a new airport within city limits, or outside the city where land is plentiful.

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The draft environmental impact report on the El Toro reuse plan predicted similar economic benefits to those seen at other airports.

The projections contained in the report, however, were based on a far larger facility than that approved by the Board of Supervisors. The consulting firm that prepared the report said that revised figures won’t be available for some time.

The plan contained in the draft EIR called for El Toro to become the fifth-largest international airport in the United States, five times larger than John Wayne Airport, and bigger than San Francisco International Airport.

It would have pumped $9.9 billion into the local economy annually, drawn 38.3 million passengers and 1.64 million tons of cargo a year, and generated 143,100 jobs by 2020, the report projected.

As big as they are, those numbers greatly underestimated the full effect of an airport that size because of the difficulty in measuring all the business activity it would encourage, said Steven Erie, a UC San Diego professor specializing in urban politics, infrastructure and regional development.

He thinks the economic impact of an airport as large as the one outlined in the EIR would be at least $12 billion by 2020.

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Some airport foes contend that such claims are overblown.

Bill Kogerman, executive director of Taxpayers for Responsible Planning, which opposes an airport conversion, noted that the EIR also projected an alternative plan for a mixed-use development--with offices, industrial facilities, retail, hotels, an educational institution and possibly a theme park--would have provided a similar economic boost by 2045.

Now that the county has compromised on a smaller airport that would limit the number of passengers to either 10 million or 25 million a year, the mixed-use option looks even better in comparison, he said.

What’s more, some aviation specialists--while agreeing that the region needs a new international airport--argue that El Toro is the wrong place for it.

Rick Russell, director of strategic development at Avitas, a Reston, Va., aviation consulting firm, said that it makes little sense to have two passenger airports--El Toro and John Wayne Airport--so close to each other, particularly after the completion of a new terminal at John Wayne in 1990. And an expansion of Ontario Airport that began recently promises to relieve some of LAX’s cargo crunch and provide another outlet for Orange County businesses, he said.

The El Toro decision “has come 10 years too late,” Russell said.

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While these issues will continue to be debated, the point remains that airports ignite economies, analysts say. The impact of an international airport in Orange County would probably be on the high side of estimates, many believe, because of the area’s other attributes--good weather, a well-educated work force and a business community that’s positioned to compete globally.

“Building a fabulous airport in a cornfield in North Dakota is not going to stimulate tremendous economic activity,” said transportation consultant Roach. “But you guys are in a place that has everything going for it,” and therefore would likely see the greatest economic growth possible from a new airport.

“Whether the people of Orange County think that’s good is up to them to decide.”