Cherry Capital Airport's Billion-Dollar Future
June 15, 2017
A new Michigan Department of Transportation (MDOT) estimates Traverse City’s Cherry Capital Airport contributes almost $1 billion annually to the state and local economy. The report’s release comes as airport officials gear up this summer to create a new business and strategic plan for the facility – one that will explore whether the airport should eventually become self-governing and what types of developments might follow Costco on airport property.
MDOT released a first look at its draft 2017 Michigan Aviation System Plan (MASP) last week. The report, which was last updated in 2008, analyzes aviation infrastructure needs throughout the state and measures the direct and indirect economic impacts of more than 100 Michigan airports. “This information is critical in competing for and justifying aviation funding in Michigan, as well as demonstrating to individual communities the benefit of their airports,” according to MDOT.
The study found that Cherry Capital Airport has an estimated $921 million impact on the Traverse City economy and $991 million on the state economy. While many of the local and state impact categories were counted identically – for example, the airport’s 1,377 on-site jobs and estimated contribution to another 3,169 off-site jobs were counted in both the local and state tallies – state sales tax generated from visitor spending in Traverse City drove the state impact to nearly $1 billion.
The report estimates Cherry Capital Airport generates more than $53 million in state sales tax, as well as more than $6 million in state income tax, through aviation-related activity.
“I was shocked at the numbers,” says Airport Director Kevin Klein. “I knew we were close, but I was not expecting that high of a number. It goes Detroit, Grand Rapids and then Traverse City (in terms of impact). We’re very pleased and enthusiastic.”
Not surprised by Cherry Capital Airport’s economic impact is Grand Traverse County Administrator Tom Menzel, who is pursuing restructuring the county’s economic development corporation board to include – in addition to six citizen seats and two seats for the county administrator and Traverse City manager – a ninth seat for the airport director.
“The airport is such a critical component for economic development, and they’ve been left out of most of the discussions that have happened,” says Menzel. “The two things that will have the biggest impact (on economic development) is quickly bringing fiber to the community and having the airport be a center part of the economic development of the city.”
Klein says the Northwest Region Airport Commission (NRAC) – which oversees Cherry Capital Airport operations – is also ready to proactively explore the airport’s role and future in the region. NRAC officials will meet in July to finalize a contract with airport management consultants Steven Baldwin Associates to create both a strategic and business plan for Cherry Capital Airport. Those reports, expected to be delivered in the next year, will help NRAC develop a long-term master plan for the facility.
“(The consultants) will incorporate the overall goals of our board and then put together a plan to ensure our aeronautical needs are met – hangar development, aviation tenants and how those fit our long-term goals – as well as non-aeronautical development, including how we can develop the area around Costco,” says Klein. “That will give us the foundation to go through our master planning process.”
Among the issues Steven Baldwin Associates will evaluate is whether Cherry Capital Airport could or should eventually become self-governing as an independent airport authority. The airport is currently owned by Grand Traverse and Leelanau counties, a governance structure that’s in place through an operating agreement through 2040. Cherry Capital Airport could potentially break away before that date, but even if it doesn't, airport officials must look to the future now as they sign long-term leases with tenants like Costco. The national retailer just finalized a 20-year lease with the airport and is set to open its doors in November on South Airport Road.
“Our leases are typically 20-year terms, so we’re now getting close to a period of leasing property that would go beyond our operating agreement (with Grand Traverse and Leelanau counties),” says Klein. “We need to look at our future: whether we continue the agreement with the two counties, modify it, or become our own separate entity. We want to make sure since the counties own the property that whatever we do, it’s the most advantageous business decision for them.”
Becoming an independent airport authority would allow Cherry Capital Airport to establish its own ordinances, regulations and zoning, issue debts and bonds, and pursue a millage. Under the existing county operating agreement, “any time we add or subtract property at the facility, any time there are zoning issues, we have to take those to the two counties,” says Klein. “An authority eases those burdens. It’s something we’re going to look at, but we don’t know yet if that’s the best option.”
Steven Baldwin Associates will also help the NRAC identify how to “maximize the right revenue opportunities,” according to Klein, by fleshing out a development plan for future tenants to join Costco. High on the list of potential options are a hotel, a restaurant, a high-end retailer, and/or an office complex.
“The strategic and business plan will aid us significantly in developing those options,” Klein says. “We’re going to be very patient with it, because we want tenants that have the same level of commitment (as Costco). We don’t want to rush into something. But the airport on a daily basis has real estate reps for housing, retail, hotels continuing to call us to ask if we’re ready for discussions. We want to get Costco open, and then we’ll go from there.”