The Colorado Aerotropolis: A Tale of Two Visions

Introduction

In 2011 the City and County of Denver signed a $1 million agreement with MXD Development Strategists from British Colombia to produce a plan for “Airport City Denver.” The following year, at the 2012 Airport Cities Global Conference, 800 attendees from over 30-countries heard Michael Hancock and the Denver International Airport (DEN) staff present the idea. Mayor Hancock said,

“We have a unique opportunity to take our region’s biggest economic engine and spark a new era of growth that will transform Metro Denver and revitalize the regional economy,” (emphasis added) said Hancock in his speech. “We will create a development that thrives on the airport’s natural synergy, attracting business and jobs that benefit from a close relationship to the airport and its inherent access to national and international markets.”

Well, that speech was given almost seven years ago, but few of the businesses and jobs that the “Airport City Denver” promised have materialized.  That is not because it was a bad idea, nor was it an unrealistic vision. In fact, if anything, the economic growth and prosperity of fully exploiting Denver International Airport for the benefit of the surrounding communities was undersold.  The greater Denver area has missed out on thousands of jobs, millions of tax dollars for our valued local services and rising property values that galvanizing the DEN opportunity could bring. 

Let’s face it: DEN is a great asset, but we just don’t get as much economic bang for the airport investment buck as we should.  

In this blog I am going to try to explore why I think this has happened and what we, as a community, should be doing to get ‘Airport City Denver’ on the move again.

Public Support Required

When the initiative started, it was apparent that the DEN staff recognized that public support was essential. Figure 1 from one of the DEN presentations at the 2012 conference lays this out. The stakeholders included people and organizations from the public sector, quasi-governmental organizations, the land owners, and the end users of the resulting development, all revolving around DEN.

Figure 1. Stakeholder Input

Clearly, Hancock was positioning himself and his administration as the leader of this economic development engine and was leveraging DEN to do so. Hancock was not alone. At airports around the world, community leaders are taking the reins of the airport city and the broader aerotropolis to build infrastructure, attract investment, and jobs.

The Aerotropolis Potential

The aerotropolis concept will take decades to reach its full potential. In the Denver metropolitan area, maybe that will be in 2030 or 2040. The potential jobs to be brought to the area have been estimated to be between 140,000 and 170,000. The additional tax revenue is estimated to be over $700,000,000. In all studies I have reviewed about aerotropolis development it is important to understand the economic clusters that will benefit. In Colorado there are many. The clusters that are significant users of air transportation would be the most impacted.

The U.S. Cluster Mapping Project is a national economic initiative that provides data records on industry clusters and regional business environments in the United States.  The project is led by Harvard Business School’s Institute for Strategy and Competitiveness in partnership with the U.S. Department of Commerce and U.S. Economic Development Administration. The Denver metro clusters are listed below. Many of these would be those that benefit the most from the aerotropolis project. The Institute’s recommendation is for communities is to focus on improving the existing clusters rather than trying to attract those being chased by other communities.

Figure 2. Denver’s Economic Cluster Employment Data

Cluster Name 2016 Employment
Business Services 189500
Distribution and Electronic Commerce 85048
Hospitality and Tourism 77775
Financial Services 40930
Education and Knowledge Creation 35662
Transportation and Logistics 29170
Marketing, Design, and Publishing 22115
Insurance Services 21585
Information Technology and Analytical Instruments 19603
Food Processing and Manufacturing 17358
Oil and Gas Production and Transportation 16114
Construction Products and Services 15433
Production Technology and Heavy Machinery 8736
Aerospace Vehicles and Defense 8412
Performing Arts 7974
Livestock Processing 7639
Communications Equipment and Services 6746
Printing Services 5873
Downstream Metal Products 4998
Medical Devices 4604
Plastics 4546
Wood Products 3708
Automotive 3528
Biopharmaceuticals 3301
Total 640,358

Those highlighted in yellow are the clusters targeted by the State of Colorado Department of Economic Development and International Trade.

The Management Components Necessary: Leadership, Governance, Stakeholder Alignment

In any case, in order to get there, leadership is required, but leadership alone is insufficient. Since the economic impact of the aerotropolis, and one reason for its popularity around the globe, is over a broad area covering many communities, a governance model is needed. A governance model should produce the vision and strategy, but the implementation will require the cooperation, collaboration, and communication among the various stakeholders. Stakeholder alignment then becomes the sine qua non of successful aerotropolis development.

Montreal and St. Louis are examples of failures because of a failure in stakeholder alignment. Schiphol Airport in Amsterdam and the Rajiv Gandhi International Airport in Hyderabad, India are examples of success. There are many examples of airports and communities that studied the issue of aerotropolis development and decided it was not for them. This required leadership, as well.

The Change in Priorities

Today Mayor Michael Hancock is campaigning for re-election. On his website, https://hancockfordenver.com/accomplishments/,

the Mayor lists his accomplishments. The Airport City Denver and the Denver Aerotropolis are conspicuously absent. At the website of Denver International Airport, https://www.flydenver.com, it lists as one of its seven core objectives, “Maximizing our real estate.” It has even added a separate page to its website entitled “DEN Real Estate,” where it states:

Denver’s Global Gateway is an expansive and visionary development (emphasis added) surrounding Denver International Airport (DEN), one of the most iconic airports in the world. Encompassing approximately 16,000 acres, this is the largest commercial land opportunity connected to any airport in the United States. Denver’s Global Gateway is comprised of a series of commercial districts that appeal to various industry sectors and business categories. Retail, hospitality, restaurants, entertainment, professional services, technology, agribusiness, research & development, light industrial and advanced manufacturing[1] can find an ideal home here. Collectively, the districts offer unrivaled opportunities with direct access to DEN and panoramic views of the Rocky Mountains.


DEN’s management team is very strong. Under Kim day’s leadership they are creating one of the strongest airports in the world. Its growth in passengers is impressive. Its expansion of both domestic and international destinations is strong. Its leadership in the negotiations to revamp the terminal, add the hotel, and connect the lite rail all have been exemplary. Declaring the truth about the real estate potential surrounding the airport is a good thing. Trying to attract investments from companies that are large users of air transportation is another good thing. Yet there is no mention of the Airport City Denver, nor the Aerotropolis. Since DEN is under the management of the City and County of Denver, perhaps there is a connection between the Mayor’s campaign and the lack of connection to the aerotropolis on the DEN website.

CDOT Colorado Aerotropolis Visioning Study

In between 2011 and today, much has occurred in the political machinations of our communities over the issue of airport land development. Space, time and limited brain focus do not allow for a detailed review of the negotiations between Denver and Adams County and its municipalities. They have reached an agreement to share tax revenue. In our paper, “Creating an Effective Aerotropolis Master Plan,” John D. Kasarda, PhD and I used it as an example of a good effort at stakeholder alignment. Perhaps, we spoke too soon.

In 2015 the metro area communities participated in a study (the report was delivered in May 2016) led by the Colorado Department of Transportation entitled “Colorado Aerotropolis Visioning Study.” It was a federally funded study[2] expertly performed by HDR and Icenogle Seaver Pogue. The members of the study group developed a vision for the Colorado Aerotropolis:

A sustainable, efficient, well-connected, and globally recognized Colorado Aerotropolis that capitalizes on the economic opportunity surrounding the Denver International Airport through collaborative planning, development, and marketing (emphasis added).


Figure 2. 2015 CDOT Colorado Aerotropolis Visioning Study Area

The study committee members decided that the number one priority would be to establish a “super regional infrastructure entity.” They understood that infrastructure investment was critical in attracting investment and that the communities would have difficulty in managing this without such an entity. After discussing the possible funding mechanisms for the infrastructure, the members agreed it would be important to establish a process to build trust “between and among primary stakeholder governments and that works to create a cohesive Aerotropolis.”

In interviews conducted for this blog with members of the Study Committee it was apparent that they viewed the creativity of the Adams County Commissioners in the rancorous three-year negotiations with Denver that resulted in the Amended IGA to be counter-productive and deleterious. These officials did not recognize the obvious opportunity presented by an efficient development of the aerotropolis and remained focused on their parochial interests. My conclusion is that there was inadequate leadership with a vision similar to what the Colorado Aerotropolis Visioning Study team foresaw.

One former official expressed their disgust at how the project seems to have lost its way. 

“We just have lacked the leadership, long-term vision, and raw staying-power needed to drive the step-by-step implementation plan that a program such as “Denver Airport City” warrants”

The Visioning Study identified the key components of an Aerotropolis development:

  • A $750 to $800 million (2015 dollars) investment in transportation network enhancements surrounding DIA, consisting of about 75 linear miles of new roadways and/or multimodal transportation facilities.
  • Approximately 12,000 acres of off-airport land adjacent to new/improved arterials directly available for commercial development, complementing the 1,500 net leasable acres made available for on-airport commercial uses
  • Establishment of concentrated employment nodes, in which similar industries and businesses cluster together, within a Concentrated Development Area (CDA) adjacent to DIA as part of the overall study area.
  • The net increase in assessable property value of around $30 billion

The study’s conclusion said “…while the analysis indicates that an Aerotropolis Scenario may generate revenues in excess of investments, the ability of local cities and agencies to capture these revenue streams would depend on an effective governance structure (emphasis added) and a high level of regional coordination to establish uniform fee levels and special tax districts that earmark the revenue streams for Aerotropolis-related infrastructure investment.”

The Impact of the Visioning Study

The most disappointing fact in this short history is that the Mayor of Denver and the DEN management team understood which airports around the world have had the most success in the execution of their aerotropolis strategies. Amsterdam Schiphol, Dallas Fort Worth, Seoul Incheon, Dubai, and Hyderabad were, and are, great examples to learn from and emulate.[3]  They all say that leadership, a proper governance model, and stakeholder alignment are critical success factors.

The CDOT Colorado Aerotropolis Visioning Study asked Jeff Fegan, who was CEO of DFW for 19-years, to speak with the Study Group about DFW’s success. If you were to study successful aerotropolises around the world, you would see the best example in DFW, in my opinion. The build out of the infrastructure, the expansion of long-haul wide body flights to global destinations, the integration with the local communities, the identification and execution of development opportunities, and the facility with which investors, developers, and tenants can work with DFW is impressive.

He laid out a brief list of the components of a successful stakeholder alignment strategy. It’s unfortunate those ideas were not adopted by our leaders.

Local Communities Continue to Work on Development Strategies

Denver, Adams County, and its municipalities were, and are not, sitting still during the Colorado Aerotropolis Visioning Study. They were creating their own transportation infrastructure studies, reviewing their zoning regulations, and developing their own strategies on how to attract investment, businesses, and jobs. Aurora’s “Aurora Places” document is a wonderful, comprehensive plan, for example. It captures what is unique about Aurora and how it can leverage what sets it apart to converse with the targets about investing there. The Aurora Economic Development Council is composed of members similar to those listed on Figure 1 above. The Adams County Economic Development Council’s President, Barry Gore, was one of the most active and insightful members of the Study Committee. Clearly, the communities recognized the potential of the aerotropolis.

The vision held by Mayor Hancock, the staff at DEN, the various communities, Chambers of Commerce, and economic development organizations were consonant. The aerotropolis would be a good thing for the metro area’s economic development. For example, the Denver real property tax rates for commercial (29%) is 3.8 times greater than the rate for residential properties (7.69%). The targeted industries would pay those higher taxes and bring jobs and investments that over the long-term, would pay for the investment infrastructure many times over.

Today, the only venues that are addressing the aerotropolis issues are the Aerotropolis Area Coordinating Metropolitan District (AACMD), the Aerotropolis Regional Transportation Authority (ARTA), and the Aurora Highlands (AH) development.  ARTA has registered the names Colorado Aerotropolis and Aerotropolis Regional Transportation Authority, all with the .com, .org., and.net included. The name Colorado Aerotropolis that was the title of the CDOT Aerotropolis Visioning Study is now in the hands of the quasi-municipal corporation whose immediate actions are focused on securing bond financing for the Aurora Highlands development.

I attended the last ARTA Board of Directors meeting in Brighton and was impressed with the leadership for the Aurora Highlands project that was demonstrated by Matt Hopper, Board Chair, and Aurora Councilman Dave Gruber. They understand the process to get from point A to point B.

In Figure 3 the estimated impact area of the aerotropolis covers a radius of 20-miles. The location of the Aerotropolis Regional Transportation Authority area that benefits only the Aurora Highlands project is also shown.

Figure 3. The Colorado Aerotropolis Economic Impact Area

Are the interests of the Aurora Highlands development and those of the metro area’s communities the same? Did the vision of the CDOT Colorado Aerotropolis Visioning Study intend to grant the aerotropolis designation to one special district? Is today’s vision the same as Michael Hancock’s in 2012? Is it the one contained in the CDOT Colorado Visioning Study?

A review of what has happened since 2012 leads to the conclusion that a lack of leadership, a governance model, and a process to continuously align the interests of various stakeholders contorts a good idea into a tool for unintended objectives. Aurora Highlands benefits. The entire metropolitan area does not.

This is a tale of two visions. The one that would have benefitted the entire Denver metro area was abandoned and the one for the Aurora Highlands emerged as the winner.

The management of the Aurora Highlands recognized the opportunity presented by the lack of leadership and the Colorado statutes that allow for the creation of Special Districts to fund infrastructure. On November 7, 2017 Ballot Question D asked for and was granted authority to issue $600,000,000 in bonds for the development of the infrastructure within the boundaries of the ARTA (the boundaries of the Aurora Highlands).

The Aurora Highlands project will probably do what the developer says it will do. It will bring a good mix of housing options to the community that needs those options. The roads and infrastructure being developed by the ARTA will benefit the area around the airport.

Yet it is lamentable that the Denver Metro community, with its highly educated workforce, an ex-governor and current US Senator running for President, an influx of new residents arriving for new jobs at the companies in our emerging economic clusters, with our airport, and natural resources cannot find the leader who is committed to the vision with a single-minded, driven will to maintain momentum and integrate the individual constituencies in order to improve our economic cluster development, and, consequently, the lives of our residents.

If that leader had emerged, he surely would have been able to find the resources to develop the governance model and to continuously work to keep the stakeholders aligned.

Perhaps it is not too late. After all, the aerotropolis development will take decades. When 2040 arrives, how will we define the Colorado Aerotropolis? From where is the leadership coming?



[1] Note the absence of the bioscience industry in the list. Is this a concession to Aurora because of the bioscience cluster at the Fitzsimons campus? Boulder and Fort Collins have bioscience clusters. There are bioscience companies and their suppliers all over the metropolitan area.

[2] Funded by the Department of Transportation

[3] A consultant friend of mine once advised, “When you run out of ideas steal shamelessly from others.”

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