Inland Empire Outlook Fall 2015 Issue

Economic and Political Analysis

Volume V | Issue 4 | fALL 2015

Ontario Airport Comes Home pg. 2-8 Inland Empire Housing Market Continues Recovery pg. 9-12 Photo Credit: California Department of Corrections

Photo Credit: Kuster & Wildhaber Photography | Flickr

Clear Skies

We begin this issue of the Inland Empire Outlook with a story on the recently announced agreement between Ontario and Los Angeles to transfer Ontario Airport back to local control (p.2). Local leaders have been pushing for this for the past five years, with the hope of reversing the airport’s stark decline. Next we examine the latest unemployment data which show a healthy recovery for jobs in the Inland Empire (p. 9).

The strong jobs numbers are also reflected in the slow, but steady improvement in the local housing market (p. 13). Finally, we look at the distinguished history of March Air Reserve Base (p. 18).

On September 24, 2015, the Inland Empire Center, in partnership with the UCLA

Good Jobs Numbers for the Inland Empire pg. 13-17 The Many Lives of March ARB pg. 18-23

Anderson Forecast, will hold the tenth CMCUCLA Inland Empire Forecast Conference at the Citizens Business Bank Arena in Ontario.

Ed Leamer and Jerry Nicklesburg of UCLA Anderson Forecast will present the national and state forecasts; Professor Manfred Keil of CMC will present the Inland Empire and San Bernardino County forecasts. The conference will also feature Melissa Francis of Fox Business Network. Citizens Business Bank is the major sponsor.

We at the CMC Inland Empire Center hope you find this edition of Inland Empire Outlook a useful guide. Please visit our website, www.inlandempirecenter.org, for updates to these stories and other Inland Empire news.

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Ontario Airport comes home Photo Credit: Richard Anderson | Flickr

O

n August 6, 2015, the City of Ontario and the City of Los Angeles announced that Los Angeles had agreed to relinquish ownership of Ontario International Airport (ONT) and transfer it to local control. This agreement comes after nearly five years of effort by local officials — and several law suits ­— to wrest control of ONT from Los Angeles.

ONT is owned and operated by the Los Angeles World Airports (LAWA), a department of the City of Los Angeles, which also manages LAX and Van Nuys Airport. Ontario Airport began its life as Latimer Field in 1923. In 1929 the City of Ontario made the first of several land purchases for the airport and Latimer Field became known as Ontario Municipal Airport, renamed in 1946 to Ontario International Airport. The City of Ontario owned and managed the airport until 1967. At that time, the City of Ontario signed

a joint powers agreement with Los Angeles for the management and development of ONT. The city transferred ONT ownership to LAWA in 1985, with the broad goal of increasing airport regionalization. The regionalism theory held that ONT, LAX, and Van Nuys Airport would all be more successful if the three airports were managed together and operated as an integrated entity. In fact, ONT thrived from the early 1980s through the mid-2000s, increasing annual traffic from approximately two million to 7.2 million passengers in 2007. During this period the airport enjoyed increased business from airlines and investments by LAWA, including the completion of two new terminals in 1998.

Growth at ONT did not continue after the peak years of 2005 and 2007. As the economy soured during the Great Recession, passenger traffic dropped nationwide. At ONT the decline INLAND EMPIRE CENTER - INLANDEMPIRECENTER.ORG | 2

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was severe. Starting in 2007, passenger volume dropped every year from 7,207,150 to 3,971,136 in 2013. While traffic for 2014 is up slightly to 4,127,280, that number is still lower than when ONT was transferred to LAWA in 1985.

What accounts for this dramatic drop in passenger traffic? In addition to losses flowing from a bad economy (and suffered by all airports), the main reason that airlines steadily cut back on flights at ONT is that it is one of the most expensive medium-size airports in the nation for the airlines to use. Cost Per Enplanement (CPE) is an industry-standard measure of the cost for using an airport. ONT has one of the highest CPEs in the country at $13.50. In comparison, LAX’s CPE is $11.23, John Wayne Airport’s $9.24, Long Beach’s $6.64, and Burbank’s $2.09.

It is noteworthy that ONT’s CPE is even higher than LAX’s and much higher than the mid-size airports with which it is competing. This high CPE puts ONT at a competitive disadvantage and significantly impacts the airport’s ability to attract airlines to increase traffic. As shown in Figure 1 the Ontario International Airport suffered losses in traffic across all services between 2005 and 2014, including a 42.8% drop in total passenger traffic, 17.7% decrease in freight, and a 42% drop in annual operations (including all commercial aircraft, air taxi, alternates, military, and general aviation.)

This steep decline spurred the City of Ontario to form the Ontario International Airport Authority (OIAA) in 2012 by executing a Joint Powers Agreement between the City of Ontario

Figure 1: ONTARIO International airport Ten Year Summary Year

Passenger Departures

Passenger Arrivals

Passenger Total

Freight*1

Annual Operations*2

2005

3,612,254

3,601,917

7,214,171

576,791

143,249

2006

3,533,858

3,516,046

7,049,904

545,483

136,261

2007

3,607,184

3,599,966

7,207,150

532,865

147,678

2008

3,112,219

3,120,756

6,232,975

481,284

124,242

2009

2,429,499

2,431,611

4,861,110

391,060

98,332

2010

2,406,610

2,405,968

4,812,578

392,428

93,717

2011

2,275,229

2,265,465

4,540,694

417,686

90,753

2012

2,151,046

2,145,413

4,296,459

454,880

83,352

2013

1,986,177

1,984,959

3,971,136

465,537

83,087

2014

2,065,803

2,061,477

4,127,280

474,502

83,766

Source: Los Angeles World Airports, http://www.lawa.org/welcome_ont.aspx?id=810, accessed September 9, 2015. *1. Freight is listed per year in tons. Totals include U.S. mail. *2. Includes all commercial aircraft, air taxi, alternates, military, and general aviation.

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Figure 2: Annual Passenger Volume for Ontario, Orange County, and Burbank Airports 11,000,000 10,000,000 9,000,000 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000

2005

2006

2007

2008

Ontario

2009

2010

Orange County

2011

2012

2013

2014

Burbank

Source: Bureau of Transportation Statistics, US Department of Transporation

and San Bernardino County. The OIAA sought to “provide overall direction for the management, operations, development and marketing of ONT for the benefit of the Southern California economy and the residents of the airport’s fourcounty catchment area.” The OIAA has five members: President Alan D. Wapner, Vice President Gary Ovitt, Secretary Ronald O. Loveridge, and Commissioners Jim W. Bowman and Lucy Dunn.

In 2013, OIAA released its strategic business plan to outline its goals. At the highest level, it proposed to treat the airport as a private sector entity to improve its efficiency, marketability, and ability to create strategic partnerships. As noted above, compared to other medium hub

airports, ONT suffers exceedingly high operating costs, and thus one of its most important goals was to reign in these costs. The committee proposed to reduce its current employees and generally begin contracting out services that were non-aviation-related. In addition, it hopes to work alongside the City of Ontario and San Bernardino County, as well as local agencies, to make sure all are implementing their services in the most efficient matter. It also suggests developing airport business by making use of its geographical competitive advantage to access and to distribute large volumes of cargo, freight, and express mail. Like any other airport, it also strives to make private sector contracts more accessible and optimize revenue from food and beverage and rental car services, among others.

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With respect to its airline partners, the OIAA proposes to increase demand for flights by working with local agencies to develop incentive programs to drive tourism. Finally, it aims to improve the airport experience by reassessing the revenue/collection program and conducting surveys to target customer pain points. With these clear economic objectives and a well-defined charter, the OIAA was able to demonstrate its commitment to developing the airport as a strong economic driver and move discussion forward with the City of Los Angeles and LAWA. The OIAA played a critical role in reaching the settlement terms.

Although the basic terms of the ONT transfer have been agreed upon, there are many steps that must be taken before the process is complete. The key figures in negotiating the deal have been the Los Angeles Board of Airport Commissioners, Los Angeles City Council, Ontario City Council,

the Los Angeles City Council Trade, Commerce and Tourism (TCT) committee and the OIAA. The Federal Aviation Administration (FAA) is still responsible for reviewing and approving the proposal. Los Angeles Mayor Eric Garcetti and OIAA President Alan Wapner confirmed the details of the deal in the Settlement Letter of Intent signed on July 30, 2015. The formal transfer and approval process will begin in October 2015 with the execution of a Settlement Agreement. FAA approval may take up to another year.

During the negotiations, LA city officials sought compensation for building two new passenger terminals and various property acquisitions through the years. Their initial price was $400$475 million, based on a valuation commissioned

by LAWA. The total price outlined in the Settlement Term Sheet is $190 million, about half of what LAWA initially sought and less than the $250 million the City of Ontario had offered

Photo Credit: Joe Nazarian | Flickr

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Figure 3: ONTARIO AIRPORT Settlement Timeline Date July 30, 2015 within 60 days of Settlement Term Sheet Signing within 30 days of Long Form Settlement Agreement no less than 30 days before transfer

$ Amount -

Details Settlement Term Sheet Signed by Ontario & Los Angeles Ontario & Los Angeles will execute Long Form Settlement Agreement

$ 15M

from Ontario to LAWA

$ 15M

from Ontario to LAWA LAWA will transfer funds from Ontario account to non-Ontario account from Ontario to Los Angeles for LAWA (to be paid on schedule of interim annual payments) from Ontario to Los Angeles for LAWA (to be paid on schedule of interim annual payments)

$ 40M

5 years after transfer

$ 50M

10 years after transfer

$ 70M

Total

$190M

Source: Settlement Agreement Letter of Intent, July 30, 2015

back in 2012. See Figure 3 for an outline of the financial terms of the deal. Ontario and Los Angeles signed the Settlement Agreement Letter on July 30, 2015. The parties are to execute a long form Settlement Agreement within 60 days of that date. Within 30 days of the Settlement Agreement, the City of Ontario must transfer $15 million into an escrow account for the benefit of LAWA. Ontario is then obliged to deposit an additional $15 million no less than 30 days before the scheduled transfer. LAWA will also transfer $40 million from the Ontario unrestricted cash account to a non-Ontario account, leaving Ontario with jurisdiction over any remaining funds in the ONT account.

Within five years of the airport transfer, Ontario is to pay the Los Angeles $50 million and an additional $70 within 10 years. This adds up to $190 million in total compensation.

There are a number of other provisions of the

Settlement Term Sheet worth noting. The City of Ontario will decide whether ownership of ONT will transfer to the City of Ontario or to the Ontario International Airport Authority.

Ontario and OIAA will have to negotiate with LA city labor groups regarding staffing at ONT. Any reductions in staffing at ONT that require employees to be redeployed to Los Angeles or LAWA, may require Ontario/OIAA to reimburse no more than six month’s salary. Upon execution of the Settlement Agreement, the City of Ontario and the County of San Bernardino will dismiss lawsuits filed against Los Angeles in Los Angeles Superior Court and in Ventura Superior Court.

Finally, upon transfer of ONT, the City of Ontario will dismiss the lawsuit filed against Los Angeles in Riverside Superior Court.

Alan Wapner, president of the OIAA, said “The negotiations are progressing well and are on schedule.” He noted that there are a number of

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milestones along the way to final transfer. The long form Settlement Agreement must be approved by the Los Angeles Board of Airport Commissioners and the city councils of Los Angeles and Ontario.

OIAA has to hire a CEO for the airport; the search process is underway. The Federal Aviation Administration must issue an FAA Part 139 Airport Certification to the OIAA. Finally, the OIAA will assume sponsorship of the airport.

“The negotiations are progressing well and are on schedule,” said Alan Wapner, OIAA President.

Photo Credit: Ken Lund | Flickr

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Photo Credit: Ricky Dyer | Flickr

Despite growing for the greater part of LAWA’s tenure as owner, ONT saw a continual decline in business following the Great Recession. Alongside increasing competition among regional airports, a falling demand for flights, and non-competitive operating costs, the airport could not remain on its flight path. The agreement to transfer of ownership back to the City of Ontario and San

Bernardino County marks a return to the airport management’s initial charter to help the Southern California economy thrive, and offers new opportunities for all involved parties. The newly acquired land and airport offer a tremendous promise of economic growth. As the FAA reviews the proposal, Inland Empire communities can look forward to a better tomorrow.

The text of an earlier version of this article mis-stated 2013 and 2014 passenger traffic on page 3 and the amount of the fund transfer on page 6.

By Manav Kohli ’16

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Inland Empire Housing Market Continues Recovery Photo Credit: Rober Couse-Baker | Flickr

H

ousing has traditionally been an important source of economic activity in the Inland Empire. The health of the housing market is regarded by many economists as a barometer of the overall economic health of a region. Builders

build houses if they believe that someone is going to buy the house. Consumers, on the other hand, buy houses if they believe that they have the income to service their mortgage.

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Figure 1: Median home price in the inland empire, 2007Q1-2015Q2 $450 $400

Thousands of USD

$350 $300 $250 $200 $150 $100

$-

Source: DQNews

2007Q1 2007Q2 2007Q3 2007Q4 2008Q1 2008Q2 2008Q3 2008Q4 2009Q1 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011Q2 2011Q3 2011Q4 2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4 2015Q1 2015Q2

$50

The housing sector continues to improve in the Inland Empire. Figure 1 shows that the median home price in the Inland Empire peaked at a value of $398,000 in the first quarter of 2007.

Prices bottomed out at $165,000 in the second quarter of 2009. Over the last couple of years, the median home price of single family homes has started to recover. The median home price rose from $175,000 to $210,000 in 2012 an increase of nearly 20 percent. In 2013, the median home price increased from $216,000 in the first quarter to $257,000 by the end of the year, a rise of approximately 20 percent. In

2014, the median home prices of a single family home rose more than 8 percent to $282,000.

Median home prices continued their upward rise with almost a 5 percent increase in the first two quarters of 2015. The steady rise in the median home price indicates that the housing market as well as overall economic conditions in the Inland Empire have significantly improved. The increase in the median home price should be followed by the construction of new single family homes in the next couple of years to meet the rise in demand.

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Photo Credit: Nancy Nance | Flickr

Figure 2: Distressed Sales as a % of Existing Home Sales in the Inland Empire, 2007Q1-2015Q2 80% 70% 60% 50% 40% 30% 20%

0%

2007Q1 2007Q2 2007Q3 2007Q4 2008Q1 2008Q2 2008Q3 2008Q4 2009Q1 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011Q2 2011Q3 2011Q4 2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4 2015Q1 2015Q2

10%

Source: DQNews

Another indicator of the improved performance of the housing market in the Inland Empire is the large decline in the number of foreclosures and short sales over the last several years. Figure 2 shows distressed sales (foreclosures and short sales) as a percent of total home sales for the period 2007-2015Q2. Distressed sales as a percent of total home sales peaked in the first quarter of 2009 at nearly 75 percent after a large decline in median home prices. Since then, distressed sales have gradually become a smaller percentage of overall home sales. Distressed

sales constituted 63 percent of sales in 2010 and 61 percent of sales in 2011. In the last three years, distressed sales as a fraction of total sales has fallen to approximately 10 percent by the second quarter of 2015. Overall, we interpret the evidence that the housing market has continued to gradually recover in the Inland Empire even though distressed sales as a percent of home sales remains significantly above the level of 3 percent in the first quarter of 2007. We expect the housing recovery to continue.

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25,000

Figure 3: Home Sales in the Inland Empire, 2007Q1-2015Q2

20,000 15,000 10,000 5,000 0

Source: DQNews

Existing Homes

Figure 3 shows quarterly data on sales of existing and new homes in the Inland Empire from the first quarter of 2007 through the second quarter of 2015. Sales of existing home sales have generally remained in the range of 14,000 to 16,000 per quarter since 2011. The housing data provide a less rosy picture of the housing sector in the Inland Empire given that new home sales have remained at a low level for the last few years.

Sales of new homes have risen from a low of 834 in the first quarter of 2011 to 1,856 in the second quarter of 2015. Although this represents more than a 100% increase, the level of new homes sales is still less than 40 percent of new home sales in

By Marc Weidenmier, Ph.D.

New Homes 2007. Nevertheless, the trend in new home sales since the first quarter of 2011 is encouraging and we expect this trend to continue as the housing sector in the Inland Empire recovers.

The housing sector is improving in the Inland Empire. Housing prices have significantly increased over the last couple of years. The number of distressed sales has fallen dramatically.

We expect the number of new homes sales to increase as economic activity in the Inland Empire improves over the next couple of years, tracking the overall housing market’s slow recovery.

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Good Jobs Numbers for the Inland Empire Photo Credit: Jorg Schreier | Flickr

T

he July 2015 jobs data show good news all around for the Inland Empire. They show the Riverside County unemployment rate to be 6.6% and San Bernardino County to be 6.3%.

All rates are seasonally adjusted. Those rates for both Inland Empire counties, as well as the overall Inland Empire rate of 6.4%, are lower

than the Los Angeles County unemployment rate of 6.9%. The Inland Empire rates are now also approaching the statewide rate of 6.2%. Orange County at 4.7% and San Diego County at 5.4% are doing better still and are among the lowest in California.

By Manfred Keil, Ph. D.

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Figure 1: Unemployment Rates, U.s., California, And the Inland Empire January 1990 - July 2015 15.0 14.0 13.0 12.0

Unemployment Rate (%)

11.0 10.0 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0

U.S.

California

Source: Bureau of Labor Statistics, Employment Development Department

Figure 1 shows the behavior of unemployment rates across the U.S., California, and the Inland Empire since 1990. This figure serves several purposes. First, we see how much more severe the Great Recession was in terms of jobs lost compared to the two previous recessions. This is especially true for the Inland Empire where unemployment rates peaked at close to 14%.

Second, the graph suggests that unemployment rates return to a level of between 4%-4.5% for

Inland Empire

the U.S. at the peak of business activity, with California and the Inland Empire experiencing slightly higher levels of around 5%. This is what we are heading for. Third, we can see from the ‘90s recession that unemployment rates can remain at an elevated level for quite some time if there is structural change. Recall that Southern California received a negative peace dividend, with a drastic cut in military expenditures in the area and the departure of significant parts of

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Photo Credit: Nancy Nance | Flickr

Figure 2: Percentage Change in Employment, Current Employment Statistics, July 2007 - July 2015 6.0%

Phase II

Phase I

Phase IV

Phase III

4.0%

Jul-15

Apr-15

Jan-15

Jul-14

Oct-14

Apr-14

Jan-14

Oct-13

Jul-13

Jan-13

Apr-13

Oct-12

Jul-12

Jan-12

Apr-12

Oct-11

Jul-11

Apr-11

Jan-11

Oct-10

Jul-10

Apr-10

Jan-10

Jul-09

Oct-09

Apr-09

Jan-09

Jul-08

Oct-08

Jan-08

Apr-08

-2.0%

Oct-07

0.0%

Jul-07

Cumulative Percent Change in Employment

2.0%

-4.0%

-6.0%

-8.0%

-10.0%

-12.0%

-14.0%

U.S.

California

Inland Empire

Source: Current Employment Statistics, Federal Reserve Economic Data (2015)

the aerospace industry. Finally, it is not always true that the Inland Empire experiences higher unemployment rates than California as a whole.

When recessions are more regionally centered within the state, such as during the dot-com recession at the turn of the millennium, then unemployment rates in Southern California, including the Inland Empire, can actually be lower.

Figure 2 indicates that employment returned to pre-recession levels first in California as a whole in March 2014 and within the Inland Empire in September 2014. Not only have these jobs been recovered, but employment growth has now outpaced that of the U.S., as a whole. Note that the progress made so far is not slowing down.

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Figure 3: Employment Gains, Ten Largest California MSAs and U.S. July 2014 - July 2015 7.0% 6.0%

6.0%

5.6%

Percent change in employment

5.0%

4.0%

3.6% 3.3%

3.3% 3.0% 3.0%

3.0% 2.4%

2.6%

2.5%

3.4% 3.1%

3.1%

3.2% 3.2%

3.2%

2.6% 2.6%

2.1% 2.1%

2.0% 0.9% 1.0%

1.0% 0.4% 0.0%

-0.1%

Bakersfield

Oxnard

United States

Stockton

Los Sacramento Angeles

-1.0%

CES

Fresno

San San Diego California Francisco

Inland Empire

San Jose

CPS

Source: Current Employment Statistics

Figure 3 shows employment gains of the ten largest MSAs in California and the nation over the last year. Job growth for the Inland Empire is on par with the San Francisco MSA and the San Diego MSA. It outpaces Los Angeles and is among the strongest in the state. Only the San Jose MSA, which includes much of the Silicon Valley tech industry, is stronger.

Despite the comparatively strong job growth for the Inland Empire, the region is still far behind where it would have been in the absence of the recession. Figure 4 gives a sense of how devastating the Great Recession was in terms of lost employment. It shows the trajectory of hypothetical 1% and 4% employment growth since 2007 (the start of the recession). Compared to the 1% projection, the Inland Empire is still some 48,500 jobs short of full employment.

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Photo Credit: Nancy Nance | Flickr

Figure 4: Percent Change in Employment During the Last Three Recoveries

Percent Change in Employment from Start of Recession

40%

30%

20%

10%

0%

0

6

12

18

24

30

36

42

48

54

60

66

72

78

84

90

-10%

-20% IE Employment At 4% Growth Rate Defense Recession IE (1990)

IE Employment At 1% Growth Rate Great Recession IE (2007)

dot-com Recession IE (2001)

Source: Bureau of Labor Statistics

Compared to the 4% projection, it is a whopping 408,000 jobs short. Incidentally, 4% growth is optimistic, but not unrealistic. The Inland Empire saw an average 4% annual growth in employment from 1990-2006. We believe that in reality we lie somewhere in between in terms of full employment. Regardless, this is a significant shortfall. The earlier two recessions in 1990 and 2001 (the only data points for which we have employment figures for the Inland Empire),

appear to be minor slowdowns in employment growth in contrast to the deep and lasting drop in employment experienced during the last recession. While we rejoice in having returned to pre-crisis employment over a year ago, Figure 4 reminds us of how much work there is left before we can say that we have returned matters to where they ought to be.

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The Many Lives of March ARB Photo Courtesy of March Air Reserve Base

N

estled between the cities of Riverside and Moreno Valley, the March Air Reserve Base (March ARB) is of the oldest airfields operated by the United States military. It covers some 6,700 acres and its 13,300-foot runway is the longest in California. March ARB was one of thirtytwo Air Service training camps established at the onset of World War I. In addition to being home to the Force Reserve Command’s 4th Air Force, headquarters and host to the 452d Air Mobility Wing (the largest air mobility wing of the 4th Air Force), March ARB also includes units from the Army Reserve, Navy Reserve, Marine Corps Reserve, and the California Air National Guard.

March ARB (originally Alessandro Flying

Training Field) was one of nearly two dozen training fields activated in 1917. Frank Miller, then owner of the Mission Inn in Riverside, Hiram Johnson, California senator and former governor, and other local leaders persuaded the War Department to accept Alessandro Field as an aviation training camp in February 1918. The base was renamed March Field one month later in honor of Second Lieutenant Peyton C. March, a young aviator you died in a flying accident, who was also the son of the army chief of staff. The first cadets arrived at the base in late April 1918.

Captain William Carruthers, then commander of the 818th Aero Squadron detachment, took over as the field’s first commander. Though operations began from an office in the nearby Mission

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Inn, within a record 60 days, the area had been transformed with the construction of twelve hangars, six barracks (for 150 men in each), mess halls, a machine shop, post exchange, hospital, supply depot, repair building, officer’s quarters, and a residence for the commanding officer. It covered over 700 acres and could accommodate up to 1,000 personnel. For the rest of World War I, March Field served as a base for an eight-week primary flight training course.

When the war suddenly ended in November 1918, the future of the operational status of March Field was unknown. Ultimately, cadets were allowed to complete their flight training, although no new cadets were assigned to the base, and separate training squadrons were consolidated into a single Flying School detachment. By 1921, however, all operations at the base were scaled down in accordance with sharply reduced military spending and in the spring of 1923, March Field was deactivated as

an active duty airfield. A small caretaker unit maintained the facility for administrative reasons and the base remained quiet for a few years.

In 1926, Congress established the nation’s Army Air Corps. As part of the Army’s fiveyear expansionary plan, funds from the Air Corps Act were appropriated for the reopening of March Field in March 1927. Over the next decade leading into World War II, March Field’s appearance and purpose transformed to that of a permanent military installation. The Air Corps expansion program allowed March Field to usher in a second phase of construction of permanent facilities that reflected the regional topography, climate and history. New construction was in the Spanish Mission architectural design. As the key training and bombardment facility on the West Coast, the base generated considerable publicity, resulting in visits from prominent political figures and Hollywood celebrities alike during the interwar years.

Photo Courtesy of March Air Reserve Base

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The attack on Pearl Harbor in 1941 triggered a new era of importance for March Field.

Throughout World War II, many well-known bombardment groups completed their final training (on B-17 and later B-24 heavy bombers) at March before departing for duty in the Pacific.

The base grew to double in area and supported 75,000 troops. A number of smaller airports and airfields, including Buffalo Springs Airport on Catalina Island and Needles Army Airfield in San Bernardino, were set up as sub-bases and auxiliaries used for training during these years as well.

After the war, March Field maintained its strategic significance. When the U.S. Airforce was activated in 1947, March Field became March Air Force Base. March AFB was assigned the new Tactical Air Command (TAC) and was initially allocated to TAC’s 12th Air Force. The first TAC unit, the 1st Fighter group, replaced the wartime 412th Fighter Group. Under the Photo Courtesy of March Air Reserve Base

command of Colonel Frank S. Perego, the group’s three squadrons flew America’s first operational jet fighter. The base’s innovative role also led to a number of Air Force reforms. For example, after 412th Fighter Group struggled with a number of technical and practical difficulties, the military prescribed a new organizational standard for all Army Air Forces bases worldwide. In addition, the 1st Fighter Wing was activated as part of the new organization (which became known as the Hobson Plan).

In the following year, the military reassigned the 12th Air Force and March AFB from Tactical Air Command to Continental Air Command (ConAC). Simultaneously, ConAC assumed jurisdiction over both TAC and the Air Defense Command (ADC) in an effort to concentrate all fighter forces deployed within the continental United States to strengthen the air defense. The units assigned to ConAC were dual-trained and expected to revert to their primary strategic or

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Photo Courtesy of March Air Reserve Base

tactical roles after the air defense battle was won. in North Korea and by October of that year, it Accordingly, the size and scope of activities at had amassed fifty-seven missions against Korea.

March continued to expand. In May 1949, In March of 1951, the government also activated March became a part of the Strategic Air the California Air National Guard 106th Command and the 15th Bombardment Group to Air Force moved there from service at March ARB. In Frank Miller, then Colorado. In the same move, the Korean War years, the owner of the Mission the military reassigned the wing conducted global Inn in Riverside, 22d Bombardment Wing bombardment training and Hiram Johnson, from Kansas to March. air refueling operations.

California senator The 1st Fighter Wing and former governor, of the Twelfth Air Force Following the return of the and other local subsequently attached to the 22d Bombardment Group leaders persuaded 22d Bombardment Wing. In from Korea, the wing trained the War Department April 1950, the 1st Fighter for proficiency in global Wing was re-designated as strategic bombardment. In to accept Alessandro the 1st Fighter-Interceptor 1954, the 22d Wing flew Field as an aviation Wing and detached from the the longest non-stop mass training camp in 22d Bombardment Group. flight in history: 5,840 miles February 1918.

(9,400 km) from England In July 1950, as tensions with to California. The 452nd Korea heightened, the 22d Bombardment Group Troop Carrier Wing was activated at March in deployed its B-29s to Kadena AB, Okinawa. 1960, establishing the presence of the Air Force Later that month, the group flew its first mission Reserve on the base. The wing absorbed a second

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tanker and bomber squadron in addition to adding the 486th Bombardment Squadron from the 340 Bomb Wing at Bergstrom AFB. The growth made the 22d a “Super� wing.

During the Vietnam War, the military began transferring operations to camps located in Asia.

In 1967, the 22d Wing was reduced to a nontactical organization with all tactical resources and support resources loaned to other SAC organizations. The wing continued to support SAC operations in Southeast Asia through 1975, although few tankers returned to wing control after that.

Photo Courtesy of March Air Reserve Base

From 1973 to 1982, the 22d Wing maintained a strategic bombardment alert posture and in 1978 it began taking on conventional warfare missions.

The 22d Bombardment Wing was renamed 22d Air Refueling Wing (22d ARW) in 1982, losing its bomber mission. In 1992, a major Air Force reorganization resulted in the disestablishment of the Strategic Air Command and the 22d ARW was assigned to the new Air Mobility Command.

By the end of the era, the wing completed mainly humanitarian missions.

In March 1993, the Base Realignment and Closure (BRAC) Commission recommended

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March AFB for closure or realignment. In August of that year, the 445th Military Airlift Wing transferred to March from the closing Norton AFB in nearby San Bernardino. In addition, the 22d Air Refueling Wing was reassigned without aircraft to Kansas in 1994, thus deactivating the 384th Bomb Wing.

The assets of the reassigned 22d ARW were absorbed by the Air Mobility Command’s 722d Air Refueling Wing. When realignment took effect on April 1, 1996 March officially became March Air Reserve Base, bringing to a close 78 years of active duty. Although the base had by then decreased to about one-third its previous size, it still employed over 8,000 full-time employees.

As a result of the downsizing, March ARB transferred land no longer being used to the March Joint Powers Authority, a commission that represents the county and the base’s adjoining cities of Moreno Valley, Perris, and Riverside. The group contracted with March GlobalPort to develop the land on the south of the airfield into an air cargo center. In 2004, the air freight corporation DHL/ABX Air chose the March GlobalPort site as its new Southern California hub. It operated for a few years, but

in 2008 DHL shut down the facility due to low profitability. Close to 1,300 acres have been developed into a business park and plans for a 236 acre medical complex are slowly moving forward.

The March ARB currently has 20 units, most of which are part of the 4th Air Force Units and the 452 Units groups. Additionally, 17 brigades and squadrons inhabit the area as tenant units.

According to the 2010 United States Census, March ARB had a population of 1,159 with a population density of 97.0 people per square mile. There were a total of 563 households with 16.2% of them having children under the age of 18. These numbers increased from the 2000 census, which reported a total population of 1,016 and 93 families.

March ARB is in the 31st Senate District and the 61st Assembly District in the California State Legislature. Democrat Richard Roth represents the base in the California Senate while Democrat Jose Medina is the Assembly representative. March ARB is California’s 41st congressional district in the United States House of Representatives, represented by Democrat Mark Takano.

An earlier version of this article mis-stated the 2000 census population.

By Francesca Hidalgo ’17

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EDI TORI A L BO AR D Andrew Busch, PhD DIRECTOR, ROSE INSTITUTE Marc D. Weidenmier,

PhD

DIRECTOR, LOWE INSTITUTE

Manfred Keil,

PhD

Kenneth P. Miller, Bipasa Nadon,

JD, PhD JD

Marionette Moore

ST UDEN T S TAF F

Manav Kohli ’16 Lakshay Akula HMC ’17 Sophie Chou ’16 Francesca Hidalgo ’17 Wesley Edwards ’18

THE INLAND EMPIRE CENTER The Inland Empire Center for Economics and Public Policy is based at Claremont McKenna College. It was founded as a joint venture between the Rose Institute of State and Local Government and the Lowe Institute of Political Economy to provide business and government leaders with timely and sophisticated analysis of political and economic developments in the Inland Empire.

The IEC brings together experts from both founding institutes. Marc Weidenmier, Ph.D., director of the Lowe Institute, is a Research Associate of the National Bureau of Economic Research and a member of the Editorial Board of the Journal of Economic History. Andrew Busch, Ph.D., director of the Rose Institute, has authored or co-authored eleven books on American politics and currently teaches courses on American government and politics. Manfred Keil, Ph.D., an expert in comparative economics, has extensive knowledge of economic conditions in the Inland Empire. Kenneth P. Miller, J.D., Ph.D., is an expert in California politics and policy who studies political developments in the Inland Empire.

Bipasa Nadon, J.D., has worked in municipal government and specializes in local government policy.

To receive issues of the IEO electronically and news from the IEC, please e-mail us at contact@inlandempireoutlook.org