Aerotropolis Draft Report Released

By Adrian Duyzer
Published July 05, 2010

Consultants for the city have produced a draft report (PDF) that predicts the Airport Employment Growth District (AEGD, or what the rest of us call the Aerotropolis) will bring 24,360 jobs and $66 million in annual revenue by the time the district is completed in 2031.

The Spec and CATCH both have articles out on the report, and both are worth reading.

The Spec takes a neutral view, leading with the payoff of jobs and tax revenue, but also outlining the hefty price tag:

[B]uilding the roads, sewers and other infrastructure needed to develop the 1,173-hectare parcel the city has dubbed the Airport Employment Growth District (AEGD), could mean the city has to make the tough call to hike industrial development charges across Hamilton, according to a report going to council committee today.

It's projected that the development's infrastructure would cost about $351 million -- $115 million of which would be paid directly by developers, with the remaining $194 million through development charges.

But that leaves $42 million that isn't recoverable through development charges.

CATCH, on the other hand, is highly critical of the report, pointing out the AEGD's enormous cost, the competition from 1700 acres of other greenfield lands in Hamilton, and several considerations that are absent from the report such as substantial water infrastructure upgrades (in addition to the ones mentioned in the report) and the loss of taxes from the 4100 properties currently within the proposed area.

I read the report (full disclosure: I skimmed the last quarter or so, because my eyes started to glaze over) and found it oddly - even bizarrely - optimistic. I came away with the feeling that this was a report that was designed from the outset to support the AEGD, and that if the same consultants had been tasked with creating a report to discourage creation of the AEGD they would be able to support much different conclusions.

What follows are are some of the parts I found noteworthy.

Given its attributes, the AEGD’s employment lands development potential is anticipated to be concentrated in advanced manufacturing, warehousing, transportation and logistics, business services, and accommodation and food services.

The attributes identified are mainly ones that have nothing to do with proximity to an airport, namely: it's a big chunk of land, it's close to highways and the US, Hamilton has unskilled and skilled labour available, and the price of land is competitive. Which of course begs the question: if proximity to an airport is just one of many benefits, why is it so necessary to put the AEGD next to the airport?

As highlighted in the Hamilton Airport Gateway Opportunities Study, proximity and access to a major airport is advantageous for an increasing number of employment sectors. Sectors such as research and development and advanced manufacturing rely increasingly on air transport in their supply chains and just-in-time delivery. This includes companies engaged in time sensitive businesses such as computer hardware/software, electronics, telecommunications equipment, apparel, automotive components, industrial equipment and healthcare/biotechnology.

What's silly about this is that any company that locates in Hamilton has proximity and access to the airport. It's a 20 minute drive from downtown Hamilton to the airport, which features plentiful parking in easy walking distance to the terminal and very few lines to wait in. It actually takes less time to get from downtown Hamilton to our airport than it does to catch a shuttle from one of Pearson's long-term lots to the terminal.

What happens if, for example, a company needs access to air and water cargo transport? Are we out of luck, because our airport is not situated next to the water? Of course not. The benefits of rail, water, and air transport accrue to any company that locates in Hamilton, regardless of their precise location (with the exception of heavy industries that require the import of aggregate and so on by water, of course).

The list of the AEGD's potential weaknesses is short - just three weaknesses, compared to thirteen strengths:

  • Height restrictions may potentially limit the built form and building options in the AEGD
  • The AEGD is unprecedented in size in the context of Hamilton and the HIA. Staging and phasing of the employment lands will need to be carefully planned and monitored to coincide with absorption rates and HIA expansion and growth (passenger and cargo)
  • A limited area of Stage 1 of the AEGD has direct access/exposure to Highway 6

Nothing on the long-term (and questionable) future of the airline industry. Nothing on energy constraints or peak oil. No mention of the many other locations businesses could choose to locate instead (although this is covered elsewhere in the park.) Nothing on the widespread community opposition to the plan.

The other thing that really jumped out at me about the AEGD is its size: at 1,173 hectares (2,899 acres), this is the biggest business park in the entire region. It's absolutely massive.

Page 38 of the report has an interesting graph. It shows the "Forecast Absorption of Employment Lands", or how quickly the AEGD will fill up with tenants that use up the land. The graph starts at 5 hectares in 2014 and grows to 45 hectares per year by 2019, continuing at 45 hectares per year until 2031, when 662 hectares are predicted to be used.

Earlier in the report, though, is a chart with actual data, not just projections. It shows the current occupancy of various other business parks. The North Glanbrook Business Park is 285 hectares in size. Of those 285 hectares, 235 are vacant, a vacancy rate of 82%. The Ancaster Business Park is 230 hectares, with 140 hectares vacant (a 61% vacancy rate).

That's 375 hectares we can work with in just two business parks. Are they filling up at the rate of 45 hectares per year? What were the forecasts for those business parks, and are they meeting those forecasts? If, not why not? If not, how does this study differ in its predictions from the ones conducted on those parks?

Adrian Duyzer is an entrepreneur, business owner, and Associate Editor of Raise the Hammer. He lives in downtown Hamilton with his family. On Twitter: adriandz

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By adam2 (anonymous) | Posted July 09, 2010 at 10:09:48

I know it is a completely different country, but take a look at what a glut of airports have been built in China in the past little while. Better to examine other situations rather than make the same mistakes here:

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