Santa Monica Airport Economics 101
For those of you who have been following my blog, you know that under my last posting, “Score One for City of Santa Monica Over FAA!”, comments were made regarding the economic benefits of Santa Monica Airport (SMO).
The primary discussion revolved around part of a comment by Marcy Winograd, “The city of Santa Monica is literally subsidizing the airport; in other words people's hard-earned taxes are paying for corporate jets and lead-polluting flight schools to make lives miserable.”
Robert Marley rebutted with, “Marcy Winograd has it wrong. The airport brings in revenue for the City of SM, not the other way around.
SM citizens are not subsidizing corporate jets, etc. To a failed aspiring politician, Lesson One: get your facts straight.”
Natalie Mc Adams comments, “Robert you have it wrong. The airport does not bring in revenue and if you question this fact go to any of the data submitted by the City of Santa Monica on their recent studies about the future of Santa Monica. So you should check your facts.”
After several back-and-forth comments on a topic that was a spin-off to the focus of my article, I commented, “What we all need to look at to clarify the economics surrounding the operation of Santa Monica Airport is an open, honest, straightforward, thorough independent economic study. As it stands, there are seemingly contradictions in statements that have been made for many years by Santa Monica City officials. It is very easy for people to be confused. I intend on writing more about this topic on my next blog.”
So, I will now attempt to look through the airport’s toxic emissions and focus on the economics of Santa Monica Airport (SMO), and I will try not to be too distracted by the incessant aircraft noise so that I might lend some clarity to this discussion regarding SMO’s economic impact.
Since Robert introduced actual numbers to back up his claims, I'll start there. For my figures, I will refer to the figures presented by HR&A Advisors to the city of Santa Monica. The Santa Monica City Council authorized the City Manager’s office to negotiate and execute a professional services contract for $79,750 with HR&A Advisors, Inc., “to analyze the general economic and fiscal impacts of the current operation and activity at Santa Monica Airport (SMO)” at its meeting on February 22, 2011.
Robert states in 2010/2011 SMO generated $4,260,268 in revenues derived from hanger and shop rentals, tie down fees, fuel sales, landing fees, land leases and other sources according to the city budget (available online). He goes on to state that it's a figure that's been fairly constant over the last five years.
The revenue amount Robert delineates is one source of revenue from what is just recently being referred to as the "Santa Monica Airport Campus," the full 227 acres of Santa Monica Airport.
According to HR&A, $3,977,836, which, besides what Robert lists, also includes office rentals, interest and miscellaneous (This includes monies collected from noise violations) all goes into the "Airport Fund." The Airport Fund is for use only at the airport. Another source of revenue from the Santa Monica Airport Campus comes from taxes, such as property tax, sales tax, business license tax, utility user's tax, parking tax, and transient occupancy tax. These revenues go into the City of Santa Monica's General fund, and in 2010/2011 amounted to $1,027,627.
Now, so far we have been dealing with revenues collected from the SMO Campus. These revenues can be broken down into aviation and non-aviation related revenues. I'm attaching a PDF document submitted by Santa Monica Airport Commission Vice-Chair David Goddard. This document attempts to separate aviation and non aviation budget items.
Now, when one analyzes the economics of an entity, it is standard procedure to consider the expenses necessary to operate the entity. Robert left out this important factor from the equation. I am attaching the HR&A full PDF report as well as specific graphs from their report. I'm also attaching the PDF of the proposed 2011/12 fiscal year SMO Budget.
When all revenues and expenses are taken into consideration, the expenses to operate SMO exceed the revenues by $89,720. That being the case, Marcy was correct, Natalie was more right than wrong and they were both certainly more civil with their comments than Robert was, who missed their intent and the target.
Now, there are a number of other factors that come into play regarding how SMO affects the economics of the region, otherwise why would HR&A have received close to $80,000 to make their report. HR&A used a computer model to estimate how much money the City of Santa Monica makes from SMO being there. I'm not an economist, but even I knew several years ago that Santa Monica was making money indirectly from the airport. The fact is whenever I would ask Santa Monica officials about this, they would not admit to it. Hence, the confusion factor.
Getting back to our discussion, I think it's easy to understand that the city of Santa Monica reaps indirect economic benefits from the real estate taxes, sales taxes etc. from businesses that grew up after the corporate and private jets took over SMO. It's not a coincidence that major business real estate blossomed on Colorado and Olympic Boulevards when they did.
But, there is another aspect of economic theory that often is, but should not be ignored, especially by a City with such an environmental commitment as Santa Monica. Externalities, which are consequences often ignored, such as environmental damage. Is there anyone who thinks that breathing jet emissions on a regular basis is not a threat to public health? Anyone who believes that constant noise with particles of lead showering down on those living under the path from old clunker piston aircraft is OK probably believes that smoking cigarettes is OK, too.
But I digress. The point is, neither the city of Santa Monica nor the FAA is taking into consideration the harm being done due to Santa Monica Airport, both directly and indirectly.
Lastly, we know that if SMO were to close permanently, there would be new avenues to pursue for economic gain with less externalities. Those need to be properly investigated.
I hope this clears up some issues and sparks new vigor for those of us who feel we can do better than having an airport crammed into our precious Westside.
natalie mcadams
6:46 pm on Monday, January 23, 2012
Well said! All economics aside, the point really is that who cares if the airport makes tons of money. It can't do that at the expense of the health and welfare of its neighbors.
Sherri Akers
6:17 am on Wednesday, January 25, 2012
We were at Cloverfield Park this weekend walking our dogs. In about 1/2 an hour, 2 jets landed or took off and 3 small planes. They were literally just a chain link fence away from kids playing softball, having birthday parties and playing on swings and jungle gyms. The ultimate irony is that the park has fitness equipment for work outs all around the perimeter. Jet fumes as a companion to physical exercise. It was surreal.
Nan
10:02 am on Wednesday, January 25, 2012
I am going to my rheumatologist today. I don't know exactly what is wrong with me, but am convinced nothing good happened to me the day I was sprayed by jet fuel at Cloverfield Park near the baseball diamonds.
Why we even have jet fuel spraying into a park is beyond my understanding.
Please do NOT go to that park and DO NOT let children play on the bicycle path or near the southern part of that park. It is too close to the fumes. I am sorry for everyone experiencing the physical symptoms I am (I am in pain).
I beg anyone reading this to STOP the politicking and START changing REALITY now. Close the airport.
Close the airport.
It's just in the wrong place.
Susan Griffin
1:26 pm on Wednesday, January 25, 2012
Thanks for doing the research, Marty. A related issue might be who benefits from the economic stimulus that the airport represents and who suffers from the environmental damage that it inflicts. Whatever indirect financial benefits accrue from the easy access to private jet travel at SMO, I'm fairly certain that they aren't public benefits. They don't do most of us much good.
Nate
1:17 pm on Wednesday, February 15, 2012
Of all uses for a given parcel of land, airports have one of the highest levels of "negative externalities" of any use. An airport's activity is not limited to the confines of its borders. Aviation activity spreads pollution and noise over a wide area. Airplane noise is not blocked by walls, vegetation or buildings because the planes rise above those obstacles. Airport supports love to talk about how loud the freeway is, but thousands of people use the freeway every hour and you can't hear it from a mile away like you can hear a plane, which might have one passenger. I would argue that SMO is the single largest contributor to background noise pollution on the westside from Montana to Jefferson and the 405 to the beach. For anyone who doubts that, I would encourage you to test the hypothesis, by taking a walk on a residential street and paying attention to the source of background noise. The city and the general aviation industry don’t like to talk about these things because they know it’s a losing argument for them. They say it’s too hard to measure or quantify and so ignore it. The reality is that a very small number of people actually use the airport, and thousands of residents have to suffer its ill effects. It is not fair, equitable or democratic for a small number of people to so blatantly benefit at the expense of so many, particularly as the airport is on PUBLIC property and subsidized by the very residents who endure the onslaught of its noise and pollution.
natalie mcadams
1:28 pm on Wednesday, February 15, 2012
Bravo Nate. I could not agree more. One step that we are taking is to create a petition on change.org (http://www.change.org/petitions/us-epa-director-ban-the-use-of-lead-in-aviation-gas-avgas) that petitions the head of the EPA to do something about one of the sources of pollution - the lead in the avgas of the piston aircraft. Please sign the petition so that maybe some of the minority will be forced by the watchdog organization that is supposed to be safeguarding our health to make some changes. It's not enough and it doesn't address every issue - like the noise or the ultrafine particulates from the jets - but it is an important issue. Lead causes brain damage in children, which is why it has been outlawed in car fuel and the paint in our homes!
PB
1:02 pm on Wednesday, February 29, 2012
My daughter lives in the area with her husband and small kids, and yet I grow frustrated at reading these anti-airport posts based on lead and sprayed fuel etc - if people would just study the alternatives they would learn that airport usage is minor compared with the high rise, mixed use development that is the alternative.
The El Toro EIR was a guide - the air quality of airports is excellent, as compared to other uses. Traffic takes only a small area, and the planes operate at less than one per minute. The amount of lead presently burned in taxi and departure is minuscule when compared to emissions from the 10 vehicular trips a day to every home, shop and office that will be built on the airport site (re El Toro Airport EIR).
We're lucky to have that use there - the alternative is clogged traffic arteries (as if the traffic isn't already awful) and horrible air quality. I vote to keep the airport since, while many don't like it, it is better than the alternative.
PB
1:03 pm on Wednesday, February 29, 2012
My daughter lives in the area with her husband and small kids, and yet I grow frustrated at reading these anti-airport posts based on lead and sprayed fuel etc - if people would just study the alternatives they would learn that airport usage is minor compared with the high rise, mixed use development that is the alternative.
The El Toro EIR was a guide - the air quality of airports is excellent, as compared to other uses. Traffic takes only a small area, and the planes operate at less than one per minute. The amount of lead presently burned in taxi and departure is minuscule when compared to emissions from the 10 vehicular trips a day to every home, shop and office that will be built on the airport site (re El Toro Airport EIR).
We're lucky to have that use there - the alternative is clogged traffic arteries (as if the traffic isn't already awful) and horrible air quality. I vote to keep the airport since, while many don't like it, it is better than the alternative.
natalie mcadams
1:22 pm on Wednesday, February 29, 2012
To the woman whose grandchildren live near the airport, you should really go on the CRAAP website (http://home.earthlink.net/~jetairpollution/id22.html) and check out the findings from Senator Ted Lieu's recent California Senatorial Hearing on the pollution coming from Santa Monica Airport. Read the reports of the UCLA Pediatricians. I would hope once educated you would change your vote. By the way, much of the airport land is dedicated to park use so it cannot be developed as a high rise.
NIMBY Watch
9:35 am on Sunday, March 25, 2012
FOLLOW THE $$$- Real estate developers want the airport property to build another Playa Vista-type behemoth. They have been trying to buy the land for years--unsuccessfully. So they created a Plan B: circulated flyers and petitions and sent "concerned citizens" into the neighborhoods to stir up controversy. Very clever and effective! The developers remain in the shadows, while emotional residents do the dirty work for them. It's sad to witness this manipulation, but Big Business has learned to influence public opinion to serve its own selfish goals.
If you don't believe that developers are behind this push to close the airport, go to City Hall and do a little research in the permits department.
natalie mcadams
9:45 am on Sunday, March 25, 2012
First in order for anyone to use the airport land it will have to be cleaned. It is currently a toxic waste site. Second, much of the land is zoned for park use only in perpetuity. Yes, sad as it is an airport is considered a park. Third, I am not convinced that some development would not be better than the toxic waste created by the jets and the lead from the small prop planes. Fourth, one would hope that since the City of Santa Monica vehemently fought the Playa Vista development and allegedly considers themselves a green city, they would oversee measured development. Fifth, sounds to me more like the pilots are well organized and spreading rumors about what worse things will happen if the airport closes in 2015. I say it can't be worse!!!