Denver: Colorado’s economic black hole

Filed under: Economic Development,Photo,Print | Tags:, ,

DIAShould we view Denver as a beneficent economic sun glowing just over the northern horizon, helping to bring jobs, prosperity, tax dollars and big-city amenities to Colorado Springs?

Or is it a baleful black hole, its massive gravitational pull sucking in smart young people, startup companies, airline passengers, entertainment and transportation dollars from the Pikes Peak region?

Denver has certain inherent advantages over Colorado Springs. As the state capital and transportation hub, located at the intersection of Interstates 70 and 25, Denver has long been Colorado’s major business and governmental center. The Denver metro area’s population of 2.6 million is more than four times the 660,000 of the Colorado Springs market area.

Such advantages secure and enhance Denver’s economic base. Do they also create an unfair playing field, one that makes it impossible for Colorado Springs to thrive in the shadow of its northern neighbor?

Lack of investment

It seems clear that lack of public investment in Colorado Springs during the past 25 years has put this city at a severe disadvantage. Ironically, the city’s major infrastructure investment in this period, the $100 million airport passenger terminal that opened in 1994, failed to create a major regional airport that could serve as a low-cost alternative to Denver International Airport.

In 1996, passenger traffic at DIA was just short of 31 million, while traffic at Colorado Springs Airport amounted to 2.4 million. But while traffic at DIA eventually grew to more than 50 million, Colorado Springs fell into a long period of decline.

In 2013, Colorado Springs projects that passenger traffic will fall to less than 700,000, while DIA is expected to hold steady at 53 million.

Many factors beyond the city’s control contributed to this long slide. Accounts during the construction of DIA questioned its cost and its rationale, predicting that competition from Colorado Springs would severely damage it. In an article dated May 11, 1994, a New York Times writer summarized the prevailing wisdom.

“The airlines’ cost of using the new airport will be the highest in the nation,” wrote Times reporter Adam Bryant, “rising from $6 per passenger at Stapleton to $16 per passenger at Denver International, about twice the national average.”

But the rise in costs declined as bonds were paid off, seemingly proving the words of Tucker Hart Adams, then-president of a Denver economic research and forecasting company, who was also quoted in the Times story. Her remarks were prescient.

“We really did look at the world as it’s going to be,” said Adams, “and take an action that prepares us for the next 40 years.”

Even the most optimistic DIA proponents didn’t anticipate the airport’s spectacular performance. DIA is by far the largest economic generator in Colorado, generating more than $22 billion for the Denver metro region.

Denver’s risk pays off

In 1988, voters in Denver and the six surrounding counties created the Scientific and Cultural Facilities District and funded it with a 1/10 cent regional sales tax. Two years later, Colorado Springs voters rejected a similar proposal, reasoning that such facilities should be supported by private donors.

Thanks in part to that tax, Denver dramatically expanded the Museum of Nature and Science and the Denver Art Museum. Institutions such as the Denver Center for Performing Arts, the Denver Zoo and the Botanic Gardens have also benefited, as have scores of smaller organizations.

Recent years have brought the construction of the Museum of Contemporary Arts-Denver and the Clyfford Still Museum, both significant institutions.

Denver and metro-area taxpayers have consented to taxes that helped fund Coors Field, Sports Authority Field, the expanded Denver Convention Center, the new library, as well as major investments in parks and transportation.

Denver is one of 12 American cities with teams in all four major professional sports, and one of three that has all four facilities within the city proper. Sports, culture and arts entertainment dollars flow from the Springs to Denver, but there is little here to draw Denver visitors.

In the period during which Denver invested billions of public dollars in infrastructure projects, Colorado Springs voters approved only the $88 million municipal bond issue that funded the Springs Community Improvement Plan. SCIP funds paid for the creation of America the Beautiful Park, but Springs voters have forbidden the city from spending tax money even to plan a publicly funded convention center, much less build one.

Competition, partnerships

Denver has never viewed Colorado Springs as competition, says Tom Clark, vice president of the Denver Metro Chamber of Commerce and CEO of the Denver Economic Development Corp. Instead, the two cities were isolated islands of development. The Springs created a military economy, while Denver focused on more diverse industries.

“In the 25 years I’ve been involved with economic development on the Front Range, Denver and Colorado Springs have never competed for the same project. So there were never any hard feelings,” Clark said. “We each did our own thing.”

But times are changing, he said. And companies no longer are interested in just the Denver market or Springs market. Instead, they look at the entire length of the Front Range. That pressure is forcing the two groups to collaborate.

“In the past two or three years, we’ve had a great relationship,” he said. “We’ve even investigated bringing them onto our website, like we have Larimer County. Unfortunately, it was cost-prohibitive to us, and cost-prohibitive to the former EDC down there. Maybe we’ll revisit that.”

Colorado Springs took what Clark called a “courageous” step in backing a Colorado spaceport at the Front Range Airport in Aurora, southeast of DIA. Once it was apparent that a horizontal launch spaceport could benefit the state, both cities wanted it.

“But we did the analysis. Front Range is 18 minutes from the Denver International Airport,” he said. “It makes sense to have it here, where people could fly into DIA and then go to the spaceport. Fortunately, the Springs people saw that as well.”

Joe Raso, president and CEO of the Colorado Springs Regional Business Alliance, also says the two groups are partnering to benefit the whole region.

“Businesses don’t go down to the community level,” he says. “They look at the transportation system, at the quality of life. They ask about the workforce. And they look at all of that along the entire Front Range. It’s a broader level.”

Raso said the Business Alliance plans to grow its relationships with the Denver Metro Chamber of Commerce, but it also doesn’t plan to shrink from competition.

“We’re going to compete with Denver, and we do, all the time,” Raso said. “We have to do some work to get competitive in our market — transportation, infrastructure, workforce. We need to meet those challenges to attract and retain businesses. There’s always going to be work to do.”

Unequal promotion

But the partnership is uneven. The Business Alliance pays to be part of the Space Coalition, but the Springs is barely mentioned in its marketing materials, which cite the city as home to the U.S. Air Force Academy. Even Kim Jong-Un thinks the Springs’ military assets are important enough to be targeted — but the Space Coalition doesn’t.

The other military assets are mentioned: home of Space Command, home of Northern Command, home of the North American Aerospace Defense Command. But they’re just mentioned as being in Colorado — not in the Springs.

Geography is also a factor. A February report by the Brookings Institution analyzing Colorado’s space industry noted that Colorado Springs is geographically and culturally isolated from the Denver Metropolitan Area.

“Stakeholder interviews repeatedly remarked on the prominence of the ‘Palmer Divide’ — a ridge of land between Denver and Colorado Springs — that separates the Colorado Springs and Denver-Boulder space clusters,” the report stated. “… the two sub-clusters do not engage with each other.”

So while companies might consider the whole Front Range, the reality is different. And it seems jobs and opportunities have migrated north.

Prosperent, a software startup company once headquartered in downtown Colorado Springs, moved to Denver three weeks ago.

“Our business in Denver is exploding,” said one of the partners. “We should have moved there a year ago.”

The sunny, glass-walled office space that Prosperent once occupied is still vacant, a mute testimonial to the gravitational force of black holes.

Amy Gillentine contributed to this story.

7 Responses to Denver: Colorado’s economic black hole

  1. Thank you for another fine article. Although, I do think our regressive Springsian culture plays a larger role in this phenomenon than geography,as the CSBJ has noted in several other articles. I don’t really care what the airport in Detroit looks like. I am not moving there.

    Tom Clark
    April 23, 2013 at 8:37 am

  2. Great insight into the ways you can look at the situations. One thing to note is that Denver could not have predicted the large national and global trends toward urbanization. NYC for example is vastly different than it was 30 years ago, and it’s caused almost every other large city to begin downtown development.

    For CS, on the other hand, the time is passed. The people chose what they wanted to do, and you can see what they chose in the poverty all over that town. Pueblo and CS are likely to get poorer over the next 20 years and Denver is likely to get much richer. It’s a global trend that only the savvy and smart little to medium towns will even have a chance in heck to combat. It’s not just CS but many places. Some in much better shape with better economies than here.

    Since we all know CS is neither smart nor savvy, I guess CS will eventually see a population stagnation or decline.

    Thank God We Left
    April 23, 2013 at 7:42 pm

  3. Very very very well written. Denver is awesome. Nuff said. We loose young professionals by the car load to Denver. Denver can take a down and out neighborhood twice as bad as any of our rough corridors into downtown and make them hip, cool places in less than 3 years. As someone who’s spent a lot of time over the last 7 years in Denver I’ve watched it happened first hand multiple times…hell my Denver Young Professionals group is often the first to get called!

    Know what the big secret is of Denver’s revitalization and prosperity? They believe it can happen. They support the efforts of those willing to take risks. Great minds will come out of nowhere to see how they can help you in Denver vs mediocre minds fighting to uphold status quo down here.

    That’s what’s find is very exciting about the Ivywild School Project that Joe Coleman and Mike Bristol took on. It’ll prove the Denver model of revitalization can work here. It’s what’s exciting about what people in Old Colorado City and Manitou are doing.and more can be done if we just look to our neighbors to the north.

    And you know what? There are a lot of really amazing people up there willing to help if we’d just accept it.

    Jon Severson
    April 24, 2013 at 12:10 am

  4. It is the Colorado Springs “exclusive” culture that is hindering economic growth. Denver is a much more inclusive and collaberative business enviornment.

    As a 25 year old young professional who grew up in Colorado Springs, I
    realized early Colorado Springs doesn’t offer a business enviornment that is conducive to my career progressions. That is why myself and others like me have relocated to Denver.

    Raymond
    April 24, 2013 at 7:20 am

  5. The problem with Colorado is its “exclusive” culture. If you are not in the “know” you stand little chance of ever getting there. I am a 25 year old young professional who was raised in Colorado Springs. I have watched the economy deteriorate right before my eyes. Right out of college I realized pretty quickly that the business environment is not conducive to career progressions for the millennial generation. That being said, My peers and I have all migrated north to Denver where opportunities are endless, and the business environment is not only inclusive, but extremely collaborative as well.

    Colorado Springs is on a crash course to an economic disaster, and I do not see it ending until the clickyness dissipates.

    up and out
    April 24, 2013 at 8:51 am

  6. As a young professional myself I have to say the previous two posters are pretty accurate from where I stand. It has nothing to do with the city itself, but rather with the entrenched people who control the flow of business in the city. People talk all the time about luring young professionals, but they don’t have the foggiest idea of what it takes to get them here. Their actions are mostly anti-young professional.

    Young professionals need meaningful work to do. They need a business climate that respects them as peers in the business world. They need a certain level of autonomy to do what it is that they do. None of that exists in the Springs, and no amount of gum flapping by the politicians or EDC braintrusts is going to fix it.

    Chad
    April 28, 2013 at 1:05 pm

  7. not sure why all is no negative, sure we have to do things like develop downtown into a place where people can mingle, socialize, work and have fun.. what needs to be done would be fairly inexpensive:
    1. widen sidewalks by making Tejon a one way street
    2. make Arcacia park into a plaza with cafes and restaurants and plenty of out door seating.
    3. Develop the southern part of downtown but make plazas and wide sidewalks a must to approve plans
    4. work on a long term plan to make the downtown to manitou springs corridor a cultural heart for our city

    About the guys that population will fall.. I see (and most experts and predictions agree in 25 years the colorado springs metro district growing to over a million people and we will have much more infill

    What else should we do? how about marketing southern colorado (i.e. pueblo and colorado springs and then the whole frontrange as a place with affordable cost of living, great outdoors and a fantastic labor pool.

    peter smith
    April 29, 2013 at 4:55 pm