Here’s something all of divided America should be able to agree on: Smart infrastructure investment works. For evidence, look at Colorado, where elected officials of both parties trace an economic boom to a decision 27 years ago to spend more than $2 billion on a new Denver airport.
The Denver International Airport was the brainchild of Federico Pena, who was elected mayor in 1983 and who would become the secretary of the transportation and energy departments in the Clinton administration. It was assailed as a boondoggle by some local businessmen in a campaign led by Roger Ailes, then a Republican media consultant and later the impresario of Fox News.
The airport was financed by revenue bonds, which proved to be among the best performers in the market for state and local government debt. Today it is the linchpin of Colorado’s transition to a global 21st-century economy flush with high-paying jobs and enhanced by daily nonstop flights to Asia, Central America and Europe.
Colorado has many economic advantages, from shale to ski resorts and beyond, but state officials say the new airport was the catalyst needed to set off the boom. “It’s foundational,” Gov. John W. Hickenlooper said in an interview last month in his Statehouse office. “I mean we look at infrastructure” as the central element “to build our new economy around.”
The airport is seven times the size of Stapleton Airport, which it replaced in 1995 as the largest public-works project in Colorado history. It still is the only major new U.S. airport since Dallas-Fort Worth in 1974. Even though the plan for the new airport was approved by 65 percent of Denver voters in 1989, some airline executives resented its cost and didn’t think it was needed.
On the contrary, the DIA’s annual economic impact today exceeds $26 billion, more than eight times Stapleton’s in 1984, according to George Karayiannakis, the airport’s director of financial risk and analysis.
Denver’s population during the past five years surged 10 percent to about 700,000 as the fastest-growing major American city after Austin, Texas, overtaking Baltimore, Boston, Detroit and Washington as it climbed to No. 19 from No. 22 in 2010, according to data compiled Bloomberg. As the Denver population booms, the city’s and state’s unemployment rates remain among the lowest at 3.8 percent, more than a percentage point below the national average of 4.9 percent, according to Bloomberg data.
The DIA’s success helped put Denver at the top for U.S. homeowners with above-average growth and below-average price fluctuations. During the past 30 years, the housing market for Denver produced the second-best return after Portland, Ore., adjusted for price swings of the 20 major cities in the U.S., according to data compiled by Bloomberg. Denver, unlike any other major city, has been among the top five performers over 10 years and five years, reflecting its capacity for both fast and steady growth. During the past year, mortgage delinquency in the state declined 22 percent, the fourth-best result after Florida, Oregon and the state of Washington.
Colorado’s bet on infrastructure has been a bonanza for investors as well. The DIA’s bonds during the past five years provided a total return (price appreciation and income) of 19 percent, better than Atlanta, Orlando and Houston, according to data compiled by Bloomberg.
“We had Republicans, Democrats and independents coming together to get the airport approved, financed and built,” Pena said. “We understood we had to diversify from what for the past 90 years was referred to as the boom and bust economy.”
The 2016 presidential election is looming, and both candidates have urged a greater commitment to national infrastructure. Colorado shows why this national priority could be the gift that keeps on giving. •
Matthew A. Winkler is a Bloomberg View columnist.
