Is Davis-Monthan’s Economic Impact Analysis Overblown?

http://www.dm.af.mil/shared/media/document/AFD-110420-020.pdf

FY10 DAVIS-MONTHAN AFB ECONOMIC IMPACT ANALYSIS

Unfortunately, the FY10 D.M. Economic Impact Analysis is misnamed. While it grossly overstates the positive economic impact to Tucson’s economy, it completely ignores the negative impacts. It is a sales document rather than a factual analysis of benefits and costs to the Tucson Community.

The Analysis states that a facility economic impact analysis is no longer required. What is the reason for DM producing this report?

One clear example of exaggeration in this analysis is the deviation from Air Force policy. AF regulations exclude the use of retiree pensions in the economic impact analyses of their facilities. Yet, in the DM analysis, the area’s total annual pensions of all military retirees, some $477 million, is presented as a DM contribution to Tucson’s economy. Is DM the main reason most military retirees settle in the area? If it is, then they probably spend a significant amount of that money at the commissary, exchange, pharmacy, recreation and other facilities on Base. These expenditures have already been counted in the Analysis in terms of local purchases. The Maguire Report in their study of the state-wide impact of military facilities estimated that only some 25% of income for retirees living within 50 miles of the facility are spent locally.

Another example of exaggerated economic impact is the inclusion of the total amount of the payroll of those living on Base. It stands to reason that they don’t spend their total salaries in the local economy. What is a reasonable estimate of what those individuals spend locally? What state income tax, sales tax, and personal property taxes do they contribute to local services received?

There is no estimate of City and County services spent to support the Base – wash maintenance, roads, courts, police, parks, etc. for which little taxes are paid.

This Analysis doesn’t take into account any of the substantial costs to the Community. The loss of property values of those living under the flight paths is one obvious cost, although difficult to document short of a major study. In 1994, the FAA had Booz-Allen & Hamilton evaluate the impact of noise on housing values near LA International. In two paired moderately-priced neighborhoods north of Los Angeles International Airport, the study found “an average 18.6 percent higher property value in the quiet neighborhood, or 1.33 percent per dB of additional quiet.” A 1996 Study of Seattle-Tacoma Airport expansion found that 5 nearby cities would lose $500 million in property values and $22 million in real-estate tax value. In Tucson, we have the example of the Julia-Keen neighborhood property loss, compounded by the closure of their school in 2004 due to danger and noise of military aircraft. Yet the analysis does not even mention this.

There is also no assessment of long term costs. Tucson is undertaking a major downtown make-over to attract tourism. Increases in air traffic diminish Tucson’s attractiveness. What will be the cost specifically to facilities under or close to the flight paths such as: the Double Tree Hotel, the Arizona Inn, Lodge on the Desert, B & Bs, Tucson Botanical Gardens, etc?

Tucson is trying to attract high paying industries such as bioscience and other technological companies based on UA research. Increases in air traffic diminish the attractiveness of Tucson for potential professional staff and other high-end employees.

As currently written, the FY10 DM Economic Impact Analysis is biased and misleading, and is therefore not acceptable as a depiction of the actual total economic impact of DM on the Tucson area. What would be useful would be for the City of Tucson or UA economists to conduct an unbiased, factual analysis of the annual benefits and costs of DM AFB to the Tucson community.