SPECIAL REPORT: Getting Airport City off the ground

EDITORS NOTE: As part of our continuing series to explain what’s working well (and what CAN work well in Michigan’s future), veteran Metro Detroit journalist Melissa Preddy goes deep on the idea of an Aerotropolis to boost Michigan’s economy.

By Melissa Preddy

Even as Michigan’s economy staggers under some of the nation’s most dire conditions – its giant manufacturers in freefall, its real estate market moribund, its unemployment rate the highest in the country — a plan is moving forward here to capitalize on what some call one of the nation’s most desirable commercial assets.

Detroit Metropolitan Airport, with two new terminals surrounded by plentiful undeveloped land, served by two adjacent expressways, a stone’s throw from the Canadian border, near major research universities and boasting superior international jet service, has all the right ingredients to become a thriving “airport city,” experts say.

Airports around the globe are coming to be seen as destinations rather than just points of departure, said John Kasarda, a professor at the University of North Carolina’s Kenan-Flagler Business School. Often credited with coining the term ‘aerotropolis,’ Kasarda says the notion of real estate near an airport being undesirable or fit only for grubby industries is changing worldwide.

“Airports are far more than places for planes to land and take off,” Kasarda said. “They are complex enterprises that touch on all commercial aspects.”

Think Amsterdam, where the expansion and transformation of Schipol Airport has turned the city into an international logistics center and in the process invigorated the Dutch economy. Or Kentucky, whose airports have become the hub for amazon.com.

Three feasibility studies conclude that Metro Airport is nearly unrivaled in potential as an engine of commerce, with ample capacity, room for growth and access to a young, well-educated workforce.

Detroit’s Aerotropolis project is decidedly long-term. Planners don’t have timetables for getting shovels in the ground on specific projects, though they are confident they will come. But they the potential is extraordinary – beginning with construction jobs that pay an average of $53,000 a year, leading to a combination of white collar and industrial employment resulting in jobs paying an average annual wage of more than $67,000.

The near-term goal is to lure more cargo and supply chain traffic to the airport, capitalizing on Metro’s unique proximity to borders, highways and railroads.

The ultimate vision for Detroit’s Aerotropolis includes Class A office space, hotels, retail outlets and gentrified neighborhoods, green spaces and recreation areas, much like North Carolina’s Research Triangle Park, a 50-year-old planned business community which employs more than 50,000 workers on 7,000 acres near the Raleigh-Durham Airport.

“This is realistic. This is not pie in the sky,” said Wayne County Executive Robert Ficano, who has made the Aerotropolis concept a priority in his administration.

But long-term visions depend on short- and intermediate-term steps. Job One is overcoming the regional turf wars and inter-jurisdictional squabbles that have killed or delayed projects in the past.

A task force led by Ficano is trying to do exactly that. Spurred by recession-fueled urgency, proponents of Aerotropolis are coming together to form an umbrella group that will market some 25,000 available acres in the region and create a one-stop shopping hub for investors and businesses.

Currently, companies that want to locate near Metro Airport must navigate a patchwork of nearby municipalities, pitching ideas and pitting the communities against one another to strike the best deal for tax abatement and other incentives.

But so far this month, three more local governments in the airport vicinity have agreed to provide funding and support for the project, which has been spearheaded by a Wayne County-led task force. And organizers hope to have a full contingent – seven municipalities along with Wayne and Washtenaw counties – on board within weeks.

The aim is to create a marketable “brand” for the region and speed up bureaucracy under a state-sanctioned intergovernmental authority called the Aerotropolis Development Corp. The authority would expedite site search, permitting and incentives and reduce other red tape for businesses interested in the Aerotropolis zone.

“In this climate and economy, we don’t have the luxury to work alone,” Ficano said. “You’ve got to sell yourself as a region before anything else.”

Tim Keyes of the Romulus economic development group says Aerotropolis gives the region a unified name and a unified effort. “It allows us to establish a brand, like Automation Alley did,” he said.

Even boosters acknowledge that such a massive transformation at Metro Airport will play out over decades. But the benefits warrant the effort, beginning with supply-chain traffic. Other practical possibilities include offices for consulting firms and overseas businesses whose staffers are frequently in flight. Metro Airport is the nation’s only major airfield complex without nearby Class A office space, a 2008 study pointed out.

“The low-hanging fruit is logistics and distribution here in the U.S.,” Ficano said. And with the success other airports have found in courting regional distribution centers, Ficano says Detroit needs to act fast to stay ahead of the competition. Metro Airport – which moved more than 420 million pounds of freight in 2008, according to preliminary data from the Airports Council International – ranks as the 26th busiest airport for cargo-hauling.

Due to the region”s manufacturing slump, Metro Airport moved only half the cargo in 2007 that it did in 1996, the task force’s 2008 study found. On the upside, that means the airport has plenty of capacity to offer prospective clients in the shipping and distribution sector.

Another selling point: The airport was ranked fifth in the nation among “logistics friendly” facilities, according to the trade journal Logistics Today.

Competition growing

State and local leaders don’t have the luxury of time. Busier regions also are working to draw more air-based services – Chicago long has contemplated a third airport, and Cleveland’s mayor recently proposed an Aerotropolis development there, while places like Memphis and Louisville have a head start due to their hub status with cargo carriers FedEx and UPS.

“We are starting to see the notion ‘Aerotropolis’ crop up in other cities, too,” Ficano said. “But we should be in the best position now to set up and be ready for the economic rebound.”

That’s in part because the Aerotropolis concept has been bandied about in southeast Michigan for roughly a decade, as officials and urban planners contemplate the abundant available building sites within easy reach of the airfield. Other advantages include nearby railroad lines and additional runway capacity at cargo-oriented Willow Run Airport a few miles west of Detroit Metro.

Elsewhere in the world, successful airport city strategies are being used to grow and streamline commerce. Amsterdam’s Schipol Airport, which boasts amenities ranging from first-class hotels to a wedding chapel to a branch of Holland’s storied Rijksmuseum, is an oft-cited example. At Dubai International Airport in the United Arab Emirates, retail shops alone grossed more than $1 billion last year, experts say. Other major Aerotropolis regions and planned cities are under construction in Thailand and South Korea.

Overcoming obstacles

Foreign airport cities are growing much faster than similar initiatives in the United States, Kasarda said, because overseas governments give more autonomy to the development groups. Here in the U.S. – and particularly Michigan, which by a 1909 “home rule” law protects local governments from state interference – competition between municipalities and a lack of uniform bureaucracy has stymied Aerotropolis growth.

Since 2007, the Wayne County task force has been working to ally the municipalities that surround the airport. To date, Taylor, Belleville, Ypsilanti Township, Ypsilanti, and Van Buren Township have agreed to join the intergovernmental Aerotropolis Development Corp., which must be approved by state lawmakers and signed off by the governor and the state attorney general.

Several bills related to tax incentives and other tools required for the formation of the development corporation were introduced last year but withdrawn at the task force’s request before the 2008 session expired. Organizers say that concerns expressed by other regions and other airport communities will be addressed in revised bills, which could be submitted this spring.

“We’ve been trying to come up with a set of incentives that could help other counties as well,” said Doug Rothwell, president of Detroit Renaissance, the non-profit economic growth group which champions the Aerotropolis concept in its Road to Renaissance plan. “The idea is not to take away from anybody, but we have to leverage the assets we have.”

He notes that even without the advantages an Aerotropolis Development Corp. would provide, the airport region has attracted some $1 billion in business over the past couple of years, including a thoroughbred race course and a recycling center in Huron Township.

“That shows that just starting the talk has been able to give investors confidence,” Rothwell said. “Now we need to put together the marketing strategy and put the incentive package in place to make more of these deals possible.”

“There’s no excuse why this year a development corporation can’t be formed and that we can’t get an incentive package through the Legislature.”

Wayne and Washtenaw counties are expected to sign on when the new bills are ready. Huron Township is mulling the plan, and the crucial holdout is the city of Romulus. With the airport taking up nearly a third of its host city’s 36 square miles, cooperation is key.

Keyes, director of economic development for Romulus, says none of the city leaders dispute the plan in principle.

“The airport is a major economic engine,” he said. “And despite the economy, there are still businesses out there looking to spend money. We need to attract all forms of business activity.”

However, Keyes said, Romulus leaders have expressed concerns about the makeup of the executive committee, which would run the development corporation. As proposed, one of 12 seats would be allocated to Romulus, with two seats representing the six other local governments. Four seats would be allocated to business representatives, two to Wayne County, two to the airport authority and one to Washtenaw County.

“There is a fear that local governments won’t be involved in how sites are selected for development,” said Keyes, who has been holding study sessions with council members to discuss alternative proposals. He doesn’t the see the issue as a deal breaker, however, and expects resolution within weeks. “We’re going to negotiate an agreement that is acceptable to everyone.”

A sense of urgency

Despite quibbling over some details, all of the major players in Detroit’s Aerotropolis planning agree that they must act fast to replace lost jobs and commerce and keep the region competitive.

“We’re at a tipping point. If this is going to work, it’s going to work now,” said Marsha Ennis, project manager for the Wayne County task force. “Three or four years ago, it would’ve been a harder sell. Now the jobs and investment look really attractive.”

In a nod to tough conditions, the task force slashed the membership cost for local governments by half, to $25,000, making it easier for the surrounding communities to sign up.

So far, three feasibility studies have been completed by outside consulting firms, all concluding that Detroit’s airport region is nearly unrivaled in potential. One report completed last year identified 50 prospective business sites, which the Aerotropolis task force has narrowed down to 13 near-term possibilities. The exact locations aren’t being released, Ennis said, for competitive reasons, but they would be the centerpiece of a marketing plan to be commissioned as soon as the Aerotropolis Development Corporation is a reality.

“The urgency is that in the next five to 10 years, regions without an Aerotropolis will not be on the world map,” said state Rep. Ed Clemente, whose district adjoins the airport region. He sponsored last year’s bills to create the development corporation and is awaiting the amendments for possible resubmission this spring.

Producing a cohesive marketing plan and a one-stop shopping entity in place for the nation’s eventual economic rebound will jump start Detroit’s recovery, the University of North Carolina’s Kasarda said.

Right now, “there is no competition,” he said. “Detroit is clearly in the lead when it comes to developing a master plan and governance structure to make it implementable. If you become the fastest, most agile place to do business, investment will come.”

“If there’s a brass ring to grab in the 21st century,” he added, “this is it.”