Denver Airport Is a Model for Biden’s Infrastructure Plan
(Bloomberg Opinion) -- Anyone among the two-thirds of Americans who approve of President Joe Biden's American Jobs Plan for infrastructure investment probably knows somebody in Denver, or catches a nonstop flight from its 25-year-old international airport to somewhere in North America, Asia, Europe or South America. Flying to Paris for the weekend is the latest Denver connection.
DIA, the only major new U.S. airport since the 1974 completion of Dallas-Fort Worth, was the largest public-works project in Colorado history. It is the largest airport in geographical size in the U.S., and No. 3 in the world. It led the Department of Transportation's measure of domestic origin-and-destination traffic last year for the first time.
It is also the top money maker for the state, pumping $33.5 billion into the economy with 259,084 jobs.
That's more than eight times the best year at Stapleton International Airport, the 20th-century relic it replaced with the support of 65% of Denver voters in a 1989 referendum. They had witnessed a 1980s exodus to the point where the state was losing people. The new airport helped change the trajectory of Colorado's population, which increased 15% to 5.8 million during the past decade with the third-fastest growth rate among major states since 2010, according to data compiled by Bloomberg.
“I can't imagine where we'd be without the aerial link that DIA empowers to the rest of the country and the rest of the world,'' said Governor Jared Polis, the former Democratic congressman, entrepreneur and philanthropist who took office in 2019. “Without the growth the airport has helped create, we wouldn't have the productivity and quality-of-life advantages a good infrastructure can provide,” including new transportation networks, Polis said in an interview earlier this month at the governor's mansion.
Denver International Airport wouldn't exist without its original advocate, Federico Pena, who was elected the city's first Hispanic mayor in 1983 before he became secretary of the Transportation and Energy departments in President Bill Clinton’s administration in the 1990s. Some local businessmen, led by Republican media consultant Roger Ailes, who would later manage Fox News, assailed Pena's project as a boondoggle.
Airline chief executives also were unenthusiastic. Robert L. Crandall, chairman of American Airlines, derided the project as “a field of dreams” “way out in the boonies,” telling Time magazine in 1991 that “there is no need for a new airport in Denver.”
Denver International Airport was financed with revenue bonds that turned out to be the best performers in the market for state and local government debt. During the past three years, the bonds gained the most weight — 3.8 percentage points — among those for 47 major U.S. airports in the benchmark ICE BofA U.S. Airport Municipal Securities Index, according to data compiled by Bloomberg.
At the same time, DIA bonds led the five largest airports' debt performance with a total return (income plus appreciation) of 18%, beating Chicago O'Hare, 17%; San Francisco, 16%; Los Angeles, 15%; and Dallas, 11%.
“We were the first major airport to sell revenue bonds without agreements of the airlines,” Pena said earlier this month during an interview at the downtown Denver office of his venture capital firm, which helps startups. “People thought we couldn't do it. We were oversubscribed. And people came to Denver and never left to the extent this has become the second-highest per capita college-educating community in the United States.”
Colorado's commitment to infrastructure at the end of the last century ended its traditional reliance on mining and energy and transformed the economy. Its labor participation rate, at 68.5%, increased the most in any state over the past five years and is the highest among the 45 in the country with a population greater than 1 million, according to data compiled by Bloomberg.
The 21st most populous state today punches way above its weight and is ranked No. 3 overall since 2010, measured by employment, personal income, home prices, mortgage delinquency, tax revenues and corporate equity, according to data compiled by Bloomberg. Among other things, Colorado has more professional athletes per capita than any other state, with national baseball, basketball, football, hockey, lacrosse, rugby and soccer teams.
Non-farm payrolls in Colorado have risen 20% in the past 10 years, better than in all but four other states. Personal income surged 86% over the same period, No. 3 in the nation; home prices gained 78%, the second-fastest rate, and tax revenues climbed 81%, third best in the nation. All of which helps explain the increasing diversity of the economy where the gross state product from accommodation and food services rose 132%; arts entertainment and recreation, 53%; construction, 106%; education services, 54%; transportation and warehousing, 96%, and retailing, 58%, according to data compiled by Bloomberg.
In 1995, 64% of corporate Colorado was in materials, such as coal mining, metal mining and chemicals, with industrial companies at 11% and energy at 6%, according to data compiled by Bloomberg. Since then, the tables have turned with the weighting of materials declining to 21%, overtaken by the consumer discretionary industry, including restaurants, resorts, apparel and education services. Technology at 14% is now the third largest sector, followed by communication, 12%.
When the Denver International Airport was completed in 1995, only 47 Colorado-based companies were in the Russell 3000 Index, the benchmark for large and small companies in the U.S. The 77% percent increase to 83 since then is the most of any of the 16 states with an economy similar to or larger than Colorado's, according to data compiled by Bloomberg. By giving companies easy access to domestic and international destinations, DIA made it easier for companies to expand their business.
Arrow Electronics Inc., the technology distributor which relocated from New York to Centennial, Colorado, in 2011, appreciated 5.6 times during the decade after its move, dwarfing its annual 2.27% gain during the previous 10 years, according to data compiled by Bloomberg. Chipotle Mexican Grill Inc., the Denver-based restaurant chain, advanced 69% in the past 12 months, more than 70% over its six American rivals in the same period. Crocs Inc., the Broomfield, Colorado-based maker of shoes, surged 276%, triple the return of 18 peers in the S&P 500 Apparel Index.
“We attracted the U.S. Patent Trademark Office to Denver, which was huge for us, and when we asked them why, they said because of your investment in infrastructure,'' said Michael Hancock, Denver's second African-American mayor, now in his third term. “America is behind the eight ball when it comes to investing in infrastructure.'' During an interview at City Hall earlier this month, the mayor said, “I hope that the work we've done opening the world to Denver through the Denver International Airport defines us.”
But Hancock is confident Denver’s experience will enable Biden to get some, if not all, of his infrastructure package passed. The American Jobs Plan gets support even from Republicans — for reasons that Coloradans of all political persuasions figured out decades ago.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Matthew A. Winkler is Co-founder of Bloomberg News (1990) and Editor-in-Chief Emeritus; Bloomberg Opinion Columnist since 2015; Co-founder of Bloomberg Business Journalism Diversity Program in 2017. During his 25 years as Editor-in-Chief, Bloomberg News was a three-time finalist and winner of the Pulitzer Prize for Explanatory Reporting and received numerous George Polk, Gerald Loeb, Overseas Press Club and Society of Professional Journalists and Editors (Sabew) awards.
©2021 Bloomberg L.P.