New Jersey, You Should've Built That Tunnel

New Jersey, You Should've Built That Tunnel
By Matthew A. Winkler


(Bloomberg) There are lots of reasons for bondholders to love Colorado and show no respect for New Jersey. Here's a big one: infrastructure. Colorado made a huge investment in it and is getting rewarded by investors. New Jersey didn't and is being punished.

More than 20 years ago, Colorado residents defied business leaders, airline executives and not a few politicians (led by consultant Roger Ailes, now president of Fox News). They voted to borrow a lot of money -- a total of $4.4 billion by now -- to build the Denver International Airport. At twice the size of Manhattan it's the largest airport in the U.S., and it's been pumping up the economy ever since.

Denver International makes more money for the state than any other enterprise, pumping $26.3 billion a year into the economy while supplying 225,000 jobs. It gave Denver, the 22nd-largest U.S. city, the nation's third-largest domestic flight network, with a record 53.4 million passengers last year and revenue of $322.8 million.

The Denver airport is superior in the $3.6 trillion market for state and local government debt. The bonds that financed its construction returned 4.04 percent, the fifth-best weighted return during the past 12 months among the 53 U.S. airports with outstanding debt. They outperformed U.S. investment-grade and high-yield bonds, according to data compiled by Bloomberg. It costs Denver 3.77 percent to raise long-term funds right now, less than what airports in California, Florida, Georgia, Michigan and Texas are paying on their bonds, according to Bloomberg data.

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Since cancellation, New Jersey's economic performance has lagged. Adjusted for inflation, its median household income declined 12.2 percent, compared with an average drop of 3.9 percent for the U.S. New Jersey is among only 12 states with deteriorating economic health defined by jobs, mortgage delinquency, personal income, home prices, tax income and stock performance, according to data compiled by Bloomberg. The same data shows Michigan and California, where infrastructure has been a priority, as leaders in job growth. By the same measures, New Jersey is No. 6 from the bottom. ....................(more)

http://www.bloombergview.com/articles/2015-06-12/new-jersey-you-should-ve-built-that-tunnel