Construction boosts Academy’s economic impact

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In 2010, the Air Force Academy had the greatest economic impact in its recent history for the Pikes Peak region: $851 million.

The reason: long-term, large scale construction projects.

“It’s a 9-percent increase from last year,” said Lt. Col. Burke Beaumont, director of financial management and comptroller at the academy. “The primary reason is the increase in renovation costs. And it’s definitely the highest number we’ve seen in the past decade.”

The Academy was built in the 1950s and is undergoing its first major facelift. Most of the work done in 2010 was on the student dorms, cafeteria and lecture halls.

Beaumont estimates that local companies did much of that work, as contractors or subcontractors.

“We have a pretty strong partnership with the community,” he said.

The Academy’s budget increased temporarily for the construction, he said. But Congress is currently wrangling over the 2012 budget, and Beaumont doesn’t expect the higher budget to continue. The academy spent $17.5 million on construction projects this year, and $147.5 million on military family housing projects.

“It’s going to be more challenging, certainly,” he said. “The Air Force is tightening its belt and we are part of the Air Force. We’re planning on a smaller budget next year. Projects will still happen, they’ll just take longer.”

The $851 million doesn’t just include construction projects. It also covers payroll for both civilian and military workers, as well as an estimate of the number of indirect jobs created by the Academy. It also includes annual base expenditures.

For the 10,308 military and civilian jobs at the AFA, there are 3,580 indirect jobs created, according to the report. The estimated dollar amount of those jobs: $154.3 million.

Not included in the analysis was the Academy’s sports teams and its draw as a tourism destination, said Academy spokesman John Van Winkle. USAFA has 17 varsity sports for men and 10 for women. The events draw 297,000 people each year and brings in $5 million in revenue and $940,000 in labor costs, according to the report.

But even with the higher-than-usual number given by the academy — some think the estimate might be too low.

“I would estimate that the effect of the USAFA … is probably higher by some 10 to 20 percent,” said Fred Crowley, professor of economics at the University of Colorado at Colorado Springs and director of the Southern Colorado Economic Development Forum.

“This is especially true of the construction effects,” he said. “Construction normally carries a higher multiplier unless a relatively high proportion of the contracting goes out to out-of-the-area vendors.”

The academy was unable to say how much of the contracts for construction went outside the community. Its contracting office awards contracts based on “bang for the buck,” said Sgt. Chris DeWitt, a spokesperson for the academy.

“It doesn’t really track how much of the contracts are local,” he said.

Another reason for the lower multiplier is the number of cadets at the academy. Although they get paid — the 2010 payroll for the 4,528 cadets is $66.4 million — much of that money goes to tuition and uniform costs.

“It’s kind of a wash,” Crowley said.

But having the Air Force Academy in the Springs effects the economic climate in a variety of ways not immediately noticed, he said. For instance, cadets and staff go to local retail stores, restaurants and use other services.

“Quite often, (this effect) happens when the cadets are graduated,” he said. “Sometimes it happens years later, as their graduation anniversary or wedding anniversaries comes around. This is something that often slips through the cracks when determining economic impact — but it’s important.”

And the Air Force Academy isn’t alone in bringing both jobs and cash to the area. The state’s six military installations — five of which are in the Springs — have a total economic impact of $6.43 billion and add more than 72,000 jobs to the region, according to the Colorado Springs Chamber of Commerce.

According to their figures, Fort Carson has the largest economic impact, at $2.1 billion in 2009, the last year figures were available. It estimates that Schriever Air Force Base and Peterson both have economic impacts of roughly $1.2 billion.

$851.3 million

Total annual economic impact

$321.4 million

Total annual payroll military and civilian workers

$165 million

Construction expenditures

$154.3 million

Value of indirect jobs created by the AFA

Source: AFA