“Automobile Alley in Oklahoma City” by katsrcool/Flickr. Licensed under CC BY 2.0
When I traveled to Oklahoma City for the first time a few years ago I was shocked to discover that in the civic narrative of the city’s transformation – it’s origin story if you will – the triggering event for change was losing a competition for a United Airlines maintenance facility in 1991 to Indianapolis.
This United Airlines maintenance base was like a Foxconn or HQ2 of its era. It was a big deal because the thousands of jobs would be very high paying union mechanics and there were going to be a lot of them. It was anticipated that many people would be moving from the San Francisco area, where UA’s main maintenance base was, to this new facility. Here’s how the Chicago Tribune described the deal back at the time.
Score another one for Indianapolis. United Airlines chose Indiana’s capital Wednesday for its $1 billion aircraft-maintenance center, ending a 21-month bidding war among several states for the economic plum.
It was the latest of several recent development coups establishing Indianapolis as the pre-eminent growth city of the Midwest.
Just two weeks ago the U.S. Postal Service chose Indianapolis over 30 other Midwestern cities for its Express Mail sorting facility, which is expected to create up to 700 jobs. Four years ago the city, which has become the national center for amateur sports since the construction of the enclosed Hoosier Dome stadium in 1984, hosted the Pan American games.
The United maintenance hub, however, is by far the largest economic development project captured by the central Indiana metropolis in several decades.
The 3 million-square-foot complex of airplane-maintenance hangars and other buildings, to be built on a 300-acre site at Indianapolis International Airport, will employ up to 7,000 workers paid an average of $45,000 a year.
It will be, in fact, one of the largest aircraft-maintenance facilities in the world.
In addition, the center, to open in late 1994 to service United`s growing fleet of Boeing 737 jet aircraft, is expected to generate another 5,000 jobs at Indianapolis firms that will provide supplies and services to the center and its employees.
Construction of the facility, scheduled to begin next August, also will provide jobs for about 5,000 construction workers and will funnel millions of dollars of additional revenues into the tax coffers of Indianapolis and Indiana.
At the time this competition was ongoing, Oklahoma City had been struggling during an energy bust. The city went all in to win it, putting $300 million in incentives on the table. They made it to the final two, only to be told they’d lost out to Indianapolis.
The city pressed UA to give them a post-mortem analysis on the loss, and the airline eventually told them that even though they had the best bid, their employees had given Oklahoma City the thumbs down. They were unwilling to move there.
Ron Norick, the mayor at the time, went to Indianapolis and saw the downtown developments there. I can assure you, downtown Indianapolis was not that great in 1991. Most downtowns weren’t. However, the level of activity they did have – the relatively new to town Colts, the Pan Am Games, the restored Union Station – was much better than many other places of that era.
Norick ended up proposing what became the first iteration of MAPS – Metropolitan Area Projects – in which city taxpayers agreed to a limited time sales tax increase to fund downtown improvement projects. It was only after MAPS passed that the 1995 bombing occurred, and completing the projects was part of the city’s healing process from that trauma.
What I find interesting about this is that an event which looms so large in the leadership consciousness of Oklahoma City is completely unknown in Indianapolis. I never even knew that it was OKC Indy had beaten to win the deal in the first place. Presumably almost no one in Indianapolis did. Nor did they know the transformative impact this loss had on OKC.
But there’s a reverse side to that. The people I talked to in OKC also had no idea what had become of that maintenance facility in Indianapolis. As it turns out, that United base never achieved its promise. In fact, United closed it only a decade after it opened in 2003. According to the New York times from that era:
A huge, light-gray building, trimmed jauntily in blue, rises from the rolling, grassy fields on the far side of the runways at Indianapolis International Airport. From the approach road, the building seems active. But the parking lots are empty and, inside, the 12 elaborately equipped hangar bays are silent and dark. It is as if the owner of a lavishly furnished mansion had suddenly walked away, leaving everything in place.
That is what happened. United Airlines got $320 million in taxpayer money to build what is by all accounts the most technologically advanced aircraft maintenance center in America. But six months ago, the company walked away, leaving the city and state governments out all that money, and no new tenant in sight.
The shuttered maintenance center is a stark, and unusually vivid, reminder of the risk inherent in gambling public money on corporate ventures. Yet the city and state are stepping up subsidies to other companies that offer, as United once did, to bring high-paying jobs and sophisticated operations to Indiana. Many municipal and state governments are doing the same, escalating a bidding war for a shrunken pool of jobs in America despite the worst squeeze in years on their budgets.
The buildings have subsequently be re-leased, but last I checked the city was still paying off the bonds it issues for the gigantic subsidies it had doled out to win the deal. From the Indianapolis perspective, the deal was a big underperformer and arguably a money loser.
It’s very interesting to me that a shared event of that nature can have such an impact yet produce no shared consciousness.
I think the real story here is not the unrealized dream that Indianapolis paid a price for, but the catalytic effect on OKC of losing that competition. That effect was similar in many ways to Chattanooga being named as the place having the dirtiest air in the U.S., something that got the community to come together in reclaiming its waterfront. The HQ2 competition is another “me too” event, with so many cities justifying the time and money they put in as a way to “pull the community together”. That’s like firemen patting themselves on the back after putting out a blaze- they haven’t actually planned or built something new yet. Maybe the lesson here is that the community has to really want something or feel the sting of a loss to get it to really act constructively and be effective in getting results.
Your absolutely right
You can’t win if you don’t play. The alternative is Cincinnati’s approach of not even trying in the first place. Then, you know you’ll never achieve anything.
But Cincinatti HAS achieved many nice things. A series of lovely, if sometimes ragged, neighborhoods. An active “real” downtown. Attractive riverfront development. A growing university campus.
I know your litany of woes about Cincy, but don’t undersell it in your gloom. I would guess most people would still not even consider Oklahoma City but would consider Cincy.
Cincinnati’s (one t) “achievements” are long past. This report suggest that Cincinnati is among the worst cities for startups in America…only Detroit and Cleveland are worse….http://www.startupsusa.org/americas-rising-startup-communities/It's coasting on it’s legacy now and keeps slowly drifting downward on the list of american metros in terms of its economic importance. It does have some visually interesting spots but they don’t pay the bills. This isn’t about what individuals prefer, but where investors will invest. Lovely neighborhoods are beside the point. Lovely neighorhoods are like gold, you can’t eat them, pay for anything with them directly, and they have no practical use in the real world.
Downtown’s level of activity is Cincinnati’s one economically valuable asset, but it ironically exists because of the metro’s lack of growth and ambition in creating any other urban commercial centers as has happened in most other American cities. The only future I can see for Cincinnati is as a sort of New Orleans or Charleston style place to have a good time, not a place to start or grow a business.
Jesus Christ Matt, can you not comment on anything without your constant, tired, Cincinnati bashing? Give it a rest already.
I comment on lots of things here…crime, taxes, transportation, politics, culture….and I use examples from my own experience in Cincinnati to illustrate them. If you disagree with my use of these examples respond. Make a case for Cincinnati that you think should be made. I’d welcome that. Cincinnati needs all the PR it can get.
There may have been an additional catalytic effect for Indy. In 1998, while the United hub was still operating, FedEx tripled the size of its operations at the Indy airport and made it the “national hub” for the US since they were out of expansion space at Memphis. As a result, IND is the 8th-busiest US freight airport (behind Memphis, Anchorage, Louisville, LAX, Miami, O’Hare, and JFK).
I would argue that OKC has done a excellent job of transforming itself since losing out on that facility. I was very impressed by the city on my last visit in 2006. They’ve gained a competitive NBA team, downtown has many new developments, and the Bricktown section of the city is impressive.
Excellent story. It should serve as a warning to those so willing to dole out tax monies to corporations. If the business plan fails or comes up short, citizens for many years afterwards will be paying the tab.
What a strange and compelling tale. Like an O Henry story.
Also, it seems like every community I have ever known has some kind of civic narrative usually involving a kind of intensely local economic trauma. “X happened to us, and we learned the lesson and have been living it down ever since.” The funny thing is that the community half an hour down the road usually has no knowledge of it.
This is the odd case where two parties each had their own trauma and lessons they drew from it, and probably thought the other had all the luck.
Exactly. Cincinnatians learned the lesson that efforts at development are hopeless and that they shouldn’t try when they should have learned the lesson that when incestuous in-bred local elites use development efforts to benefit themselves, they don’t benefit the place they claim to represent. That’s why Cincinnati area governments gave up on the development game and allowing a private redevelopment company led by the corporate leadership to show Cincinatians how successful economic development is done. If only the same could happen for all of metro Cincinnati. All successful efforts at economic development in Cincinnati have one thing in common…they aren’t led by native Cincinnatians.
Be interesting to see how this sort of ordinary corporate welfare (subsidizing the United maintenance hub) compares to the more flashy sports franchise corporate welfare (subsidizing the Colts in Indy and the Thunder in OKC).
Do cities get a bigger bang for the buck by subsidizing industry or sports franchises? Or are they ultimately both money losers as I suspect?
Depends, but at least industry grows high paying jobs in a metro. Stadiums typically only shuffle around income in an existing community. If you dont go to see sports team X, you’ll do something else locally.
It is probably highly situational, and probably depends some on whether it’s a total new “lure” or an expansion of an existing site.
Indianapolis has given some tax-break subsidy to Eli Lilly as well as Rolls Royce (formerly Allison Gas Turbine), its major high-wage STEM employers. FedEx expansion has been helped over the years (not least by the new long runways at IND), and they’ve been here for 30 years continuing to invest and grow and turning the airport into their “HQ2”. So maybe subsidizing a long-time major employer’s expansion is not the same as betting on a new arrival.
Even in the realm of “new lures”, there are successful examples of incentives creating long-term jobs and secondary employment effects in Indiana. Subaru, Toyota, and Honda each built assembly plants here in the past 30 years, and each also induced key suppliers to locate nearby; Subaru (Lafayette) and Honda (Greensburg) are each around an hour’s drive from downtown Indy and both draw employees from the Indy suburbs/exurbs where commutes are closer to 30-40 minutes. This is important in Indiana because we pay local income tax based on our residence, not our location of work.
Aaron has written extensively on the Indianapolis sports strategy (first to build all its stadiums downtown), and old studies by Mark Rosentraub from the 90s (can’t find links online any longer) suggested that Indy was probably the only city that made it pay off because we had an early mover advantage. Here’s an article from 2012 on Cleveland.com that quotes Rosentraub (who started at IUPUI, then went on to Cleveland State and Michigan): https://www.cleveland.com/metro/index.ssf/2012/10/indianapolis_downtown_sports_s.html
Note that a part of the Indy sports strategy that now is a “wide moat” is the attraction and retention of sports governing bodies, not least of all the NCAA. That means our athletic facilities are not entirely reliant on the pro sports teams, and the strategy contributed a fair number of well-paying niche jobs to the city.
The NCAA relocation deal loosely required the basketball Final Four to be held here every 5 years on average, along with regional and 1st/2nd round games in between. This helped bring the B1G Basketball and Football championships also, as well as the first (only) cold-weather college football championship game in 2022 despite the fact that no B1G or football-factory school is in Indy.
There was a book written by a professor, then at IUPUI, about using incentives and sports as a development tool. It was called “Major League Losers.”
At the time I read and wrote about it, Cleveland was a few years removed from building Gateway (the Cavs and Indians stadiums) and was ponying up for a new Browns stadium. I saw the original estimates put forth by Gateway in terms of the economic ripple effect, and they were laughable — they were talking billions of dollars.
That’s not to say the development had zero benefits. But the point of “Major League Losers” is that often the money spent at stadiums was money that would have been spent somewhere else. Of course, the modern version of this stadium game is youth sports complexes, because at least with travel sports, everyone is coming from out of town, so you’re tapping into a pool of money that would otherwise not exist.
Rosentraub wrote that book in 1997, and it doesn’t seem to be cited much any more.
Thing is, Indy isn’t just rearranging local entertainment dollars. It is playing the sports-tourism game at the adult, national level. In addition to hosting major sporting events (Final Four, Super Bowl, NBA All-Star game, college football championship, etc., mostly in the dead of winter) the complex has attracted several large recurring annual conventions (FFA, GenCon, Firefighters, DCI) that bring tens of thousands of visitors.
That’s the second-order economic-development win, though it is susceptible to the “low-wage jobs” criticism on the direct effects. But, as the people in OKC realized, those sports-tourism attractions also help attract and retain companies that hire higher-wage people, a third-order effect.
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I haven’t been there in a number of years but visited OKC fairly frequently a decade ago. They had finished the first round of “neat stuff” (downtown streetscapes, Skirvin Hotel, bombing museum/memorial, canal) and were starting to relocate the downtown interstate so they could connect and activate the riverfront. It reminded me a lot of Indy in the 80s/90s.
I live in Indianapolis and have been aware of the OKC story and its resolve to improve itself after losing out to Indy for the United Airlines Maintenance facility. Not having pro sports teams was one of the specific things mentioned that was a big negative for OKC. My understanding about the incentive monies provided to United is that, a large portion of the payments were contingent on the jobs actually being produced. Since most of the expected jobs did not happen, the incentive payments were much less than the approximately $280 million initially stated. Fairly soon after United left, other airplane maintenance companies moved into the building – and continue to operate there. They never came close to reaching the number of jobs United initially said they would put in place – but there have been several thousand new airline related jobs created that have filled a good sized portion of the facility. There were incentive monies paid out, but much less than $280 million — and there have been a large number of jobs created out there adjacent to the airport. Fed Ex also continues to expand there — and now Infosys is planning to build a major North American facility for its new tech related US expansion – on another large piece of land adjacent to IND.
Yes, I neglected to mention also the growth of Republic Airlines, based in Indy and one of the four largest US commuter-jet operators, which uses part of the old United maintenance hangar.
“My understanding about the incentive monies provided to United is that, a large portion of the payments were contingent on the jobs actually being produced. Since most of the expected jobs did not happen, the incentive payments were much less than the approximately $280 million initially stated.”
I’m glad to hear that, as it’s something that gets my blood boiling. I do wonder how much subsidy was guaranteed, with no strings attached, which should be a crime in itself. There does seem to be a trickle-down sort of mentality to all this, whereby if we just throw money to the poor corporations they might throw some crumbs our way. Of course if the goal is jobs, then reward the actual job creation, not the promise of it. So kudos on that part of the equation.
It is interesting that the narrative of “the one that got away” is mostly forgotten. That’s probably why various governments keep going after these silver bullet projects rather than trying to grow from within. I think the term the Strong Towns folks use is economic gardening, basically cultivating what you already have rather than going after some pig in a poke.
It’s a long time ago, but IIRC the “guaranteed” subsidy was the land and use of the building, and possibly some business personal property (equipment) installed in it. So Indy, not United, ended up owning a big aircraft maintenance building at the airport when United closed down its operations.
When you think about it, that’s pretty low risk since the improvements are useful to anyone with airplanes to repair/maintain, and indeed, several companies do exactly that: Republic and AAR (an outsource airframe maintenance company). From the AAR website “History” page:
“2004 AAR leases over 1 million square foot world-class Indianapolis Maintenance Center featuring 10 hanger [bays] designed for and formerly operated by United Airlines. Receives contracts from United, Southwest, Delta, and other airlines to conduct heavy maintenance on their fleets.”
AAR received a limited amount of performance based state EDGE credits ($16 million) for creating 1,471 jobs from 2006-17. A little over half the credits have been paid, which suggests they created about 750-800 jobs in that period.
As part of the United deal, Vincennes University created a 2-year aircraft maintenance degree program that is still in business at the airport.
Not a full replacement for all the United jobs, but not a total loss, either.
Perhaps germane to the conversation, I took the opportunity after dropping my daughter off at the U. of Iowa to make a detour to one of America’s great interstate boondoggles — Interstate 180 in north central Illinois. It was built in the late 1960s to a recently opened steel mill in Hennepin so the company could have a direct interstate route to I-80. Of course, the mill closed soon after the road was built. (It re-opened again — not until 2002 — and closed and reopened under various names and was finally demolished in 2017.)
On the 12-mile route from I-80 to Hennepin, I counted nine other cars and one semi on the road — two of them heading south like me, the rest heading north. I saw nobody entering or exiting from the five exits on the expressway. It’s also the only freeway I’ve seen that has ZERO businesses along the route. No gas stations, no hotels, no “adult” bookstores, nothing.
I-180 has done nothing to spur development at all. There’s still an industrial park in Hennepin at the end of the route, but there’s not much there. The most active facility is an ethanol plant that opened in 2005, but that doesn’t help the interstate. On its website, the company notes that it ships the vast majority of its output down the Illinois River to the Mississippi. In fact, as you pass over the Illinois River, you can see active barge traffic and agricultural shipping sites. There may be more traffic on the river than there is on I-180
There’s been talk of knocking it down or downgrading it, but it hasn’t happened. Certainly, the route hasn’t been a priority to maintain. It’s not horrible, but you can tell it hasn’t been touched in a while. Then again, wheels barely touch it, so how much damage could traffic possibly do?
The last I heard of anything newsworthy about I-180, was that a south-southwesterly extension to Peoria along one bank of the Illinois River was one of 2 or 3 alternates being considered for a more diagonal/direct connection between Chicago and Peoria – this was late 90s/early 2000s.