Turning adversity into opportunity

Officials attend the ribbon cutting ceremony of the KC-46A Pegasus campus marking the first of 14 hangars that will be built to accommodate the maintenance program for the new tanker aircraft.

Editor's note: This piece was originally written for the IEDC Economic Development Journal. We thought readers might be interested in learning a bit about the Chamber's response to economic development challenges. An edited version of the original is below.

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In 2005, General Motors’ officials announced plans to close its $500 million plant in Oklahoma City. The plant opened in 1979 assembling the Oldsmobile Cutlass and quickly became a major employer for the region, employing more than 2,400. When talks of the plant's closure began, the workers were producing the Chevrolet Malibu and economists estimated that as many as 7,500 jobs in the area would be impacted by the plant’s closure.

“When you have a major employer close, your stomach drops,” said Robin Roberts Krieger, former executive vice president for economic development with the Greater Oklahoma City Chamber. “You can brood on it and give yourself 24 hours to grieve, but then you have to start figuring out what to do.”

Leaders with the Chamber knew they had to move quickly to re-purpose the 3.8-million-square-foot plant. What they didn’t know was that they were about to turn a gaping hole in the regional economy into an amazing economic development success story—the Tinker Aerospace Complex (TAC).

“This involved creating a shared vision for what was possible with a facility that size, and bringing together leaders from Oklahoma City, Oklahoma County, the State of Oklahoma, the Department of Defense, GM and Tinker Air Force Base,” said Roy Williams, president & CEO of the Greater Oklahoma City Chamber. “This was truly an unprecedented public/private partnership.”

This historic effort culminated in the citizens of Oklahoma County passing a bond to purchase the GM plant to lease it to Tinker Air Force Base, Oklahoma’s largest single-site employer, to create the TAC. The creation of the TAC ensured Tinker’s competitiveness for many years to come, making it the base the lead maintenance depot for the U.S Air Force, and creating thousands of jobs in the process.

Everyone involved recognized they were participating in a rare partnership.

“This was the most unique thing I have ever been involved in, in my 32 years of Air Force service,” recalled Debra Walker Tune, then Department of Defense assistant secretary of the Air Force for logistics at the Pentagon. “I have never dealt with a Chamber like that before. They were so aggressive and responsive. They were going to make it happen. You sensed it. It was extremely rewarding for me to be able to deal with people of that caliber.”

The journey from the November 2005 GM plant closure announcement to handing over the keys to the TAC in October 2008 required a tremendous amount of innovation, collaboration and determination, as well as patience.

TAKING THE INITIATIVE

The community’s longstanding partnership with the U.S. Air Force began in 1940 when the Greater Oklahoma City Chamber raised the funds necessary to acquire the land for an air depot that would later become Tinker. Since that time, Oklahoma City leaders have shown an ongoing willingness to support the U.S. military’s mission here however they can, and the GM closure provided the perfect opportunity to support the facility while creating new jobs for Oklahoma City residents.

Chamber officials needed to find a high-powered manufacturer to purchase the plant and create demand for thousands of high-paying jobs. They were not comfortable waiting on GM’s two-year timetable for selling the property, so they took the initiative to schedule a meeting with GM officials within 30 days of the plant closure.

GM officials were initially noncommittal, although that meeting set the stage for the future. Due to Tinker Air Force Base’s proximity to the plant, GM would have limited options for adaptive reuse and the contract GM had with the union did not allow for immediately selling the property, and even when it could be sold, there were many limitations on who could purchase the facility. The Oklahoma City team clearly stated to GM that it would need to remain an industrial property, as it was sitting on the fence line of the Air Force Base and asked if GM would consider a solution tied to the Tinker Air Force Base and/or its aerospace workload.

“It was fits and starts for a while,” former Oklahoma County Commissioner Ray Vaughn recalled. “The whole idea had to ripen before we could move forward. When you have a disaster, there is a certain period when you focus on rescue. Then you turn to recovery. In economic development disasters, there is always a parallel course. Initially, the Governor and Secretary of Commerce were working on tax incentives and trying to change GM’s mind about closure. The worst-case scenario occurred when we found out that there was absolutely no talk of reopening the plant on the GM side.”

With 26,000 workers, Tinker needed space for expansion and a host of defense contractors needed to locate near or on the base. And, Tinker had many older, aging facilities.

Learn more about Tinker's history and its impact on OKC. 

According to retired General Billy Bowden, working conditions at Tinker AFB at that time were less than ideal. “I remember seeing people trying to work in extremely cramped conditions without heating or air conditioning. I have always had a major interest in taking care of people and the efficiency of their ability to get the work done. The GM plant offered Tinker an opportunity to improve working conditions, shorten repair times and become more efficient.”

There was never any doubt that the innovative idea would require a lot of persuasion, trust-building and cooperation.

“We have never transferred a commercial industrial property for use by the government,” Walker explained. “We know how to do that in reverse, but it has never happened on this scale. We had to do so much research on the laws. There were many unique aspects that people had to get their arms around and we had to ask many questions that the community didn’t initially have the ability to answer.”

UNPRECEDENTED COLLABORATION

By late 2006 all partners were working on the deal transparently. The Chamber’s role was to bring the partners together from the private and public sectors and to help negotiate a deal that would benefit the regional economy and each entity involved. In addition to bringing the innovative partnership team together, they managed the project, made sure that negotiations didn’t break down, ran interference when challenges arose and eventually ran the campaign to convince Oklahoma County voters to approve a bond to purchase the GM plant and transfer it to the federal government.

“I remember the call from the Chamber,” Vaughn said. “I thought it was a brilliant idea. We immediately recognized the potential benefit of the deal. Thank goodness, the taxpayers agreed with us. We had to have a public collaboration to make it work.”

The project would not have been possible without the full buy-in and involvement of all the players. Federal, state and county officials had to clear any red tape that stood in the way of the deal, and the city had to be comfortable with the deal. Voters had to pass the bond election. And leaders at Tinker had to think differently about the base facilities and expansion.

“What intrigued us about the effort was the ability to acquire this far more modern facility than we were operating at a very low/no cost to the Air Force,” explained Tune. “We were in a very tight budgetary environment, and we were already making trade-offs in what investments we made for infrastructure improvements. At the same time, we knew that the efficiency of our operations and facilities is vital to our success on the front lines. It also seemed like such a wonderful opportunity to continue the cooperation and commitment that the community had provided to Tinker AFB over the years.”

The collaborative effort became more than just another economic development deal. “We built lifelong friendships that are great for us personally and professionally, and when opportunities arise, we know that trust and respect has been established,” Krieger said.

“I thought it was an incredibly creative and ultimately rewarding project,” Vaughn recalled. “We had no idea we would face some of the hurdles we had to face, including the economic times, gas prices, legal issues, and well, you name it, but we have a long history in Oklahoma County of providing support for Tinker.”

From Tune’s perspective, the collaboration and commitment of the team and the community made the project possible. “I have never seen a team of public officials from the state, city and county levels work so well together. They were united, not divided. I felt a deep admiration for the people of Oklahoma County when the bond election passed. Even after losing the GM jobs, people were still willing to make the sacrifice and raise taxes to benefit the military.”

When then-Secretary of the Air Force Michael Wynne visited Tinker and toured the GM facility, team members knew that there was a real shot at success. The Secretary also met with then-Governor Brad Henry, and County, Chamber, City and Tinker leaders during his visit.

DETERMINED TO SUCCEED

Chamber, County, Tinker, and business leaders decided in December 2007 to go to the voters for funding, when it became obvious that state government officials could not fund the acquisition of the GM plant. “We also kept hoping that GM might donate the plant and take a write off, but that didn’t happen. Keep in mind, this was in the months leading up to the bankruptcy filing of GM,” said Gary Pence, former senior business development manager for aerospace at the Chamber. “Finally, a price tag was set, and the county stepped in to consider purchasing it.”

Oklahoma County Commissioners approved a resolution to call for the bond election in May of 2008 and everyone rolled up their sleeves to enlist support for the bond election. Thanks to ongoing transparency during elections and the positive impacts of other bond and sales tax elections, the Chamber and local government officials have a strong, trusting relationship with voters. That trust made it logical to go to the voters with the unusual request to purchase the GM plant and lease it to the Federal government. Further complicating this timing were three tax elections in the seven months prior (city GO bond in December 2007, school bond in October 2007, and a sales tax vote to upgrade the city’s arena to attract the NBA in March 2008, all of which passed).

Gen. Bowden, Commissioner Vaughn and the Chamber played pivotal roles in getting the bond election passed. Vaughn alone made over 60 speeches in support of the election. The Chamber spent countless hours and substantial money to pass the measure.

The campaign for gaining the support of Oklahoma County voters for the $55 million bond issue included an advertising effort; earned media in newspapers, radio and television; presentations to civic groups; and an aggressive direct mail and phone program with voters.

The vote passed solidly. “Election night was such a high point,” Krieger said. “The results were being texted to us throughout the evening, while we were at a client dinner with our mayor. We could not have done it without the taxpayers of Oklahoma County and their trust.” After the vote, during the summer of 2008, the governor, state treasurer and Secretary of Commerce Natalie Shirley notified the County that $10 million would be provided by the State of Oklahoma toward the purchase price, much to the delight of all parties. This reduced the amount of bonds the County needed to sell for the GM plant, from $55 million to $45 million.

ONE LAST PUSH

In addition to needing a positive election outcome, there were several hurdles to overcome before Oklahoma County bought the plant and the long-term lease to Tinker was signed in September 2008. According to Krieger, the timing as the economy was slowing, the bond markets coming to a halt and the tenuous financial position of GM created some sleepless nights. And to top it off, the Secretary of the Air Force left right after the election, so a new Secretary of the Air Force needed to be informed and brought up to speed on the project.

“A lot of work had to occur in order to be able to prove that the value was there, and that GM had properly cared for the facility and its environmental liabilities,” Walker explained. “We had to do a lot of legal work and due diligence to ensure that the Air Force was making a wise decision in moving our workload into that facility.”

There were also many political considerations. Due to the competitive environment brought on by a potential future base realignment or closure process, there was concern about how the GM facility’s 3 million+ square feet could create a risk for Tinker, because excess capacity could be an issue. That concern was resolved with the County leasing the property to the Air Force until old buildings could be demolished, and workload transferred to the new building.

“Once we had the same language and knew we wanted to achieve the same goals, we knew we would succeed,” Tune said. Tune believed the breakthrough in the process occurred when the lawyers stopped talking and the discussion and final decision landed at a senior level. With key senior players from each entity at the table, the question became “What is left to do and what is it going to take to get it done?” She also credited the work of the Oklahoma Congressional delegation, and particularly Sen. Jim Inhofe and his military liaison, Tony Lazarski.

LASTING IMPACT

It was a triumphant moment when the first business unit moved into the Tinker Aerospace Complex in June 2009, according to Krieger.

The TAC assures Tinker's competitiveness, creating thousands of new jobs to bolster the community’s regional economy. The Air Force invested between $50-$100 million over five years to transform the GM facility, a fraction of the cost of construction to meet those same needs. The TAC improves operations, making work more efficient, saving energy, and creating a better work environment for its military and civilian employees.

The TAC hosts some of the current 76th Maintenance Wing operations, as well as other Department of Defense missions. The facility provides the base with the flexibility to address future depot maintenance workloads and the jobs that go with them, including work on the C-17 engines, joint strike fighter engines, and core work on the KC-46A tanker.

Purchasing the GM plant for the Air Force was not the end of the story but the beginning of a decade plus of growth for Tinker Air Force Base that is still happening today. The relationships and trust built on this project led to even more partnerships between the community and base.

THE POWER OF PARTNERSHIP

More recently, these strong ties were evident with the acquisition of 156 acres of land north of Tinker from Burlington Northern Santa Fe (BNSF). The former rail yard was created to serve the former GM facility, and with the plant’s closure and subsequent transfer to the Air Force, the yard transitioned to a storage yard. Its presence next to the Air Force base presented a security concern, but also another opportunity to expand the footprint of the base.

Coming from the success with GM, the team launched a new process that would turn out to be equally complicated. The three-year process took a lot of creative problem-solving at many distinct levels – federal, state, and local governments and private entities – and a lot of teamwork, phone calls, meetings and trips between Washington, D.C., and Oklahoma.

“It was really an incredible confluence of activity to make this (happen),” Lt. Gen. Bruce Litchfield, former Air Force Sustainment Center Commander, said. “I would call it a ‘let’s get to yes’ kind of approach. There were a million reasons why it could not be done, but no one focused on that. What people focused on was how it could be done.”

The BNSF acquisition made all of Tinker’s land contiguous and paved the way for the maintenance home of the new KC-46A air refueling tanker. It also is expected to help insulate the base against future Base Realignment and Closure (BRAC) commissions because it adds an important new mission to Tinker and resulted in efficiency savings of more than $500 million over the next 50 years for the U.S. Air Force. The project will bring at least 1,321 new jobs to the community with an average $62,000 annual salary and a $75 million annual payroll.

The deal once again reiterated to the U.S. Air Force that the Oklahoma City region supports Tinker and is a willing partner in helping it succeed.

THE BEGINNINGS

Gen. Litchfield first called the Chamber in March 2012 to ask for help in acquiring the BNSF space for its new maintenance facility because of the Chamber’s experience in acquiring the former GM plant four years prior.

“We’re extremely appreciative of the efforts of the Chamber and Oklahoma Industries Authority and members of the community and the base really working to try to find solutions, really being forward-leaning and looking at every potential roadblock as a challenge to be solved,” said Jennifer Miller, then the deputy general counsel, Installations, Energy and Environment for the U.S. Air Force. “We do have the benefit of having a lot of strong communities around our installations, but it’s hard to think of a community that’s as supportive (as the one surrounding Tinker).”

The request from Tinker to the Chamber came when Tinker Air Force Base leaders learned the base was going to be the home of maintenance for the U.S. Air Force’s new tanker, the KC-46A. The KC-46A is designed to replace the Air Force’s current tanker workhorse, the KC-135; this mission is key to Tinker’s future.

“The way I say it is that the KC-135 has been the bedrock for Tinker for the last 50 years. And the KC-46 maintenance is going to be the bedrock for the next 50 years,” Litchfield said. Tankers give the Air Force the global capability to respond to any place, any time worldwide.

They knew they needed to find the best place to put the new facility and decided the BNSF rail yard north of the current TAC was ideal. The BNSF location would give Tinker the ability to connect maintenance facilities and make all of Tinker’s land contiguous.

TOO HIGH A COST

To get the deal started, the Chamber reached out to BNSF, which had been using the area as rail yard storage.

BNSF’s answer: Buying the property was going to cost $75 million.

The U.S. Army Corps of Engineers had appraised the property at about $5 million or $6 million, said Pence. At the time, the Chamber-Air Force-city coalition had about $30 million available for the acquisition.

Ironically, in 1979, the Chamber “sold” the property for $10 and “other valuable considerations” to the Atchison Topeka & Santa Fe Railway Co., which later became BNSF after a merger with Burlington Northern Railroad. Chamber records do not show what the “other valuable considerations” were. However, Pence believed that the land was essentially donated by the Chamber for economic development. It had not been used as a rail line for about 12 or 13 years, Pence said.

So, Pence said, the group started negotiating, led by Pete Delaney, who was then the Chamber chair, and CEO of OGE Energy Corp.

Delaney said he got involved to negotiate directly with BNSF, chief executive to chief executive. After their conversations, BNSF came down from its original $75 million asking price to $55 million, and then finally to the final $44 million final number. Delaney said BNSF wanted to be able to replace the rail storage facility at Tinker with a similar one elsewhere, and possibly purchase another rail line.

Litchfield praised Delaney for advancing the negotiations and keeping the deal on track.

“The Chamber was the orchestrator to make all this happen,” Litchfield said. “You know I give great, great, great, great credit to Pete Delaney, who was at that time acting as the lead for the orchestration of what had to happen from the business side. I would simply say that this wouldn’t have happened without the Chamber.”

Once the negotiations were finished, it was then time to figure out how to pay for it.

Congress had appropriated $8 million for the property acquisition. Oklahoma County offered $12.5 million, which included $10 million in surplus funds from the bond issue that voters approved to buy the GM plant to protect Tinker and $2.5 million from another economic development-related bond issue.

Finally, Oklahoma City was able to contribute $23.5 million to the deal, as long as funds could be paid back by the Oklahoma Quality Jobs Program, creating another legal wrinkle, and a call to state legislators for help.

IN THE HANDS OF THE OKLAHOMA LEGISLATURE

If the Air Force used the Quality Jobs tax credits for bringing 1,321 new jobs to Tinker, those tax credits would have been disbursed throughout the entire U.S. Air Force and not to Tinker. The Air Force had to agree to let the rebate come to a proxy organization within the community to pay back the city.

But to use them, state law had to change.

Former Oklahoma Rep. Earl Sears, R-Bartlesville, introduced House Bill 1416, co-authored by Sen. Mike Mazzei, R-Tulsa and others, to amend the state’s Quality Jobs Act to allow a public trust to receive the benefit by proxy of the tax incentives on behalf of a military installation. This bill gave greater flexibility for communities to use funds generated through the incentive for new job creation, land acquisition and infrastructure development.

It passed in May 2014 with a unanimous vote in the Senate and a nearly unanimous vote in the House and paved the way for the Oklahoma Industries Authority to accept the Quality Jobs funds that will be used to pay back both the county and the city for their contributions to the BNSF transaction.

The Department of Justice approved the final negotiations about a week before the Feb. 4, 2015, closing date.

ONGOING COMMUNITY SUPPORT

On these projects, the community and federal, state, and local governments had to work together to make it happen – starting with the Congressional appropriations to acquire land and build the facility and working its way through the leadership teams of the various organizations and governments involved, including the Chamber. Most importantly, the citizens of Oklahoma County saw the vision and voted overwhelmingly to approve the bonds.

The results created a win for not only the U.S. Air Force but Oklahoma.

“Of course, we were fortunate to have the GM facility that was closing, and an unused railyard located near an Air Force base,” said Williams. “But the real takeaways from our experience apply to communities of any size when faced with adversity. None of this just happened. We had to work together as a community at every level, from state government to the voters to make this a reality. It truly took a unified effort from everyone to turn the loss of a major employer into a success story that helped solidify our future.”   

Cleared to land, Tinker AFB prepares for KC-46 sustainment. 

Construction on the KC-46 campus began in 2019 and is expected to last more than a decade and result in more than $600 million in construction. The construction project is the single-largest at Tinker Air Force Base since its founding in the 1940s.

The first of 14 hangers officially opened in October 2020.

“This is an incredible space that is a result of a partnership between the state, city government, the Chamber, obviously the federal side, as well,” noted U.S. Senator James Lankford at the opening ceremony. “When the Air Force looked to where the best place to do this maintenance would be, they looked at the professionals here in Oklahoma and said they’re doing excellent work. This is an incredibly significant moment for our state and the jobs in our area.”

Today there are more jobs at the TAC facility than there were when it was a GM plant.

The work brought in by the TAC has reinforced Tinker as the key cog in the region’s economic engine. The base employs more than 26,000 workers, making it the largest single-site employer in the state. The opening of the TAC has also led to a substantial increase in non-military workers at the base. Now more than 75% of those employed at the base are non-military.

The work done at the TAC has also contributed to big employment growth among private companies outside of Tinker’s gates. Private sector employment has risen drastically in the past decade and now represents 39% of aerospace employment in the region. Since 2016, the industry has added 55 new aerospace establishments and more than 6,640 employees.

When Oklahoma City faced the reality of a major employer shutting its doors 15 years ago, it was hard to imagine the triumph that came as a result. Through innovative thinking, a willingness to partner and a determination to succeed, the Greater Oklahoma City Chamber modeled how disruption can become opportunity when everyone is working toward the same goal.