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Health & Fitness

Santa Monica Airport Economics 101

When all revenues and expenses are taken into consideration, the expenses to operate SMO exceed the revenues by $89,720.

For those of you who have been following my blog, you know that under my last posting, “”, comments were made regarding the economic benefits of Santa Monica Airport (SMO).

The primary discussion revolved around part of a comment by , “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.”

 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.”

 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.

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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.

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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.

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