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Study makes claims for economic value of airport

By Randi Pierce

Staff Writer

According to an Economic Impact Study (EIS) completed by the Archuleta County Airport Advisory Committee (AAC), for every dollar Archuleta County invests in the Stevens Field airport, the county receives a return of $10.86.

That conclusion was based on an evaluation of funds invested in the operations and improvement of the airport, as well as on economic information provided by 43 pilots who moved to Archuleta County because of the airport. The study centers on the 10-year period from 2002 to 2011.

AAC members Michael Arbuthnot and David Patterson presented the study, in the works for a year and a half, at the Sept. 4 meeting of the Board of County Commissioners.

In introducing the report, Arbuthnot said there had been previous attempts at completing an EIS for area airports, most recently by the Colorado Department of Transportation in 2004.

That EIS, Arbuthnot said, listed the Stevens Field contribution to the community at $34 million annually, but was unprovable due to the fact that it was determined by extrapolating data from other airports.

“We have a story to tell and we think it’s a great story,” Patterson said, calling airplanes flying over Archuleta County the sight and sound of economic development.

“This Economic Impact Study was conducted in order to have verifiable numbers to justify the taxpayer funds committed to the Airport and clearly show the positive economic impact of the airport on the community,” the report’s introduction states, continuing later, “Our goal was to demonstrate the value and financial contribution the Airport makes to the community and thereby gain support for funding for future Airport growth and infrastructure.”

However, while presenting the report on Aug. 28 at an agenda review for the Sept. 4 meeting, Patterson said the group went into the study with no preconceived notions, with the goal to make every number used factual and supportable.

Methodology

To obtain the numbers used in the EIS, the AAC sent out surveys and calculation worksheets to 110 pilots in the community. According to Patterson, 46 responses were received.

Of those, 43 were determined to have moved here because of the airport (those in the aviation community who would have moved here with or without the airport were not counted in the study).

Additionally, Patterson said the study did not include information from “qualified heavy hitters” — those who fly larger jets to the area and who could skew the results.

Information gathered through the surveys included investments in homes and hangars, as well as taxes and contributions to the local businesses.

Aviator investment

According to the data from the 43 qualified respondents, for the 10-year period, the total investment in homes, including taxes paid, was $27.82 million; the total investment in hangars (representing 22 of the 52 hangars existing), including taxes, was $2.94 million; and the total contribution to local merchants for commodities was just over $9.14 million, making for a total contribution of $39,901,603 over the 10 years.

A note in the report indicates that adding in data from the “qualified heavy hitters” would add another $100,000,000.

Visitor benefits

The report then delves into visitor benefits, listing the annual direct economic impact for visitors by category: $314,320 in aircraft fuel, $11,724 in aircraft parking, $67,500 in rental cars, $168,038 in hotels, $476,000 in food, and $307,500 in activities.

“In order to remain on the conservative side, we estimated that indirect and induced spending to be on the order of 28 cents for each dollar of direct impact spending. This amounts to $479,990, providing a total impact for the past year of $1,722,473 dollars,” the EIS states, continuing, “This indirect spending of 28 cents for every dollar of direct spending is a highly conservative estimate and if we give credence to the Virginia and Michigan studies, could easily be double or triple that amount.”

The Virgina and Michigan studies cited in the report used figures of indirect and induced spending of 30 to 70 cents, according to the report.

Infrastructure investment

Next up in the EIS is the investment in airport infrastructure over the 10-year period, totaling $16,626,127 in capital projects that included land acquisition (2002), runway construction (2005), Taxiway A construction (2008) and others.

On those capital projects, the county paid 2.5 percent, in the form of a county match. The Federal Aviation Administration paid 95 percent, and the remaining 2.5 percent was paid by the Colorado Department of Transportation.

A change means that, in the future, county and state matches will each increase to 5 percent, with the FAA paying the other 90 percent.

Current and future capital projects at the airport include the acquisition of snow removal equipment, pavement coating and the completion of Taxiway B.

Between projects completed over the last 10 years and those projected for the upcoming five years, the report estimates a 24:1 return on investment for capital improvement funds.

Airport Operations

Over the 10-year period included in the study, the airport operated at a deficit of $1,117,842 — taking in $948,903 in revenues and spending $2,066,744.

“For only $111,178 per year on average, the airport provides an unparalleled gateway to Pagosa Springs for travelers who come here to enjoy our community, spend their money and perhaps become our neighbors,” the EIS states.

The report shows the deficit in 2002 as $121,080, in 2006 as $143,114, and in 2011 as $88,414.

A note in the report shows that operating costs constitute 18 percent of expenditures over the 10-year period.

At the meeting, Arbuthnot noted that revenue at the airport nearly tripled between 2002 and 2011 (from $59,250 in 2002 to $140,208 in 2011), while the expenses went up at a lesser rate (from $180,329 in 2002 to $228,622 in 2011).

Additionally, in 2014, the county will have paid off its 10-year debt on the Fixed Base Operations building at the airport — a $353,000 annual payment.

“At that time Archuleta County Airport will own a beautiful operations facility which is second to none, and which will serve our visitors well into the future,” the EIS states.

Economic impact

“The economic benefits of the Archuleta County Airport extend well beyond the boundaries of Sevens Field. Even residents who never fly benefit from the airport through the creation of businesses, jobs, income and tax revenues,” the EIS states.

Return on investment figures in the report were figured based on the 43 surveys.

“During the past ten years, $6,179,469 has been invested in Stevens Field by Archuleta County from tax dollars, which has returned a yield on that investment of $67,101,427, a rate of return of $10.89 [sic] for every $1.00 invested.”

“You can’t go to any of these markets and get a ten-times return,” Arbuthnot said of investment options.

Sustaining impact

Arbuthnot said the community receives an immediate impact when pilots move to Archuleta County and that the county could attract that impact through target marketing and developing additional infrastructure at the airport.

“If you had one dollar to invest … where would you put it?” Arbuthnot asked.

Arbuthnot said he, along with other local pilots he knows, learned of Pagosa Springs through an ad in a commercial airline magazine, noting that it was the cheapest advertising the county could do.

Open to commissioner comments, Michael Whiting said he was impressed with the work and having numbers would help the county fund future improvements.

“You set us off on the right foot,” Whiting said.

Commissioner Steve Wadley, too, commended the report, noting that, “Communities without airports die” and calling the airport a, “jewel of the community that’s vastly underrated.”

Clifford Lucero echoed the sentiments, noting that, perhaps, the numbers in the EIS were too conservative.

County Administrator Greg Schulte said the airport is often overlooked as part of the county’s infrastructure, calling it as important as roads, a hospital and a large grocery store.

Audience member Bill Hudson, though, questioned the report, calling the EIS a “sales pitch.”

randi@pagosasun.com

This story was posted on September 26, 2012.