City Council Approves Sears Building Purchase
On June 14, the Birmingham City Council voted to spend $1.525 million to purchase the former Sears building in downtown Birmingham. Joel Montgomery was the only councilor to vote against the transaction. The dilapidated building, owned by Barber Properties, has been appraised at $3.05 million. The Birmingham Entrepreneurial Center, currently housed in the former Tillman-Levinson building, will pay the remainder of the purchase price. The Entrepreneurial Center will combine with UAB’s Office for the Advancement of Developing Industries [OADI] to move into the Sears structure after $12 million in renovations have been completed.
UAB has decided to close OADI, currently located in Oxmoor Valley. OADI Executive Director and Entrepreneurial Center President Susan Matlock said it has been difficult trying to attract to Oxmoor Valley any emerging businesses that result from technology commercialized by UAB. She added that UAB faculty affiliated with OADI had complained that the distance from campus to the Oxmoor location was a detriment to the process. Al Herbert of the Mayor’s office echoed Matlock’s observations about proximity, adding, “The tenants [at OADI] are displeased with the amount of travel time from the facility to downtown [Entrepreneurial Center].” OADI and the Entrepreneurial Center have been associated for approximately two decades.
Upon finalization of the transaction, the city will deed the purchased Sears property to the Entrepreneurial Center, according to guidelines stipulated in securing the $12 million loan. Part of the funding involves new market tax credits, which require that the Entrepreneurial Center spend all the funds by the end of the year following the one in which the money is borrowed. The city has the right to buy out the Entrepreneurial Center’s half of the initial $3.05-million purchase should the business incubator fail to secure the loan. If the Entrepreneurial Center sells the property to an unrelated third party, the city is entitled to recoup its investment plus 3 percent interest.
Matlock said OADI and the Entrepreneurial Center have generated $1 billion in economic impact when applying economic multipliers, in addition to the revenue produced by industries in the business incubators. The “multipliers” reflect money turning over in the local economy, according to Matlock. Once the two incubators move into the Sears building, income of the expected 65 businesses that would be housed there is projected to be $334 million, with an additional $664 million when economic multipliers are factored in. Matlock said more than 1,200 are expected to be employed by the incubator. When asked how the new Entrepreneurial Center would be affected should businesses from OADI relocate elsewhere upon closure of the Oxmoor facility, Matlock said there have been 70 to 80 applicants per year for the business incubators over the past 20 years that the entities have been in operation. She did not feel that filling the new incubator should be a problem.
“I think $2.5 million to get 1,000 people to working is pretty good numbers,” said Councilor Carole Smitherman, who had been skeptical of the project during the June 6 finance and budget committee meeting. “If we’re going to capture the creative class and give them a place to work, to invent their ideas and make them work, I want to make sure that Birmingham is that place. What we are doing is fighting a battle every day to keep our young people in Birmingham.”
Councilor Roderick Royal questioned the wisdom of paying the fair market value for a property no one wants. (The Sears building has been an eyesore for well over a decade.) Royal, who supports the project, suggested, “I don’t think we ought to be paying for something, certainly at the appraisal price, that nobody else wants or has any use for at this time.” Councilor Joel Montgomery had asked for information from the city’s revenue department on June 10, regarding which graduates of the business incubators were paying property, sales, and occupational taxes to the city. As of June 20, Montgomery still had not received the information he requested. &