Information About the Sale of Some Birmingham Parking Decks
In September and October, the Department of Innovation and Economic Opportunity (IEO) received two unsolicited proposals to purchase certain parking properties owned by the City of Birmingham and managed by the Birmingham Parking Authority (BPA). IEO investigated the viability of these proposals and recommended to Mayor Woodfin to pursue the strongest one, involving the sale of the following six parking decks:
- Parking Deck 3, 401 – 20th St. North
- Parking Deck 4, 2128 – Fourth Ave. North
- Parking Deck 5, 2012 – Fifth Ave. North
- Parking Deck 6, 2010 – Second Ave. North
- Parking Deck 7, 509 – 17th St. North
- Parking Deck 8, 2021 – Third Ave. South
Given the constrained fiscal position of the City and the potential to utilize cash from the sale for neighborhood investments and to address some short-term funding gaps associated with the $63 million shortfall caused by COVID-19, Mayor Woodfin decided to further explore the sale, informing the Birmingham Parking Authority (which manages the parking decks) and the City Council, respectively.
Following a presentation to the City Council Committee of the Whole and discussion on Monday, October 26, the City is pursuing information for a more in depth understanding of current parking management practices and fiscal position. The City remains open to further proposals until Monday, November 9 at 12pm CT. Following that deadline, IEO will evaluate all proposals received to date based on the criteria below to qualify the strongest proposal.
Background
The following presentation was provided to the City Council to assist in their consideration of the recommended proposal from Birmingham Economic Development Partners, LLC on Monday, October 26. City Councilors were also sent a draft purchase and sale agreement. The Council requested additional information from the Birmingham Parking Authority (BPA) on this date.
Council Presentation_Parking Deck Sales_2020 10 26Timeline
September to October: IEO received two unsolicited proposals to purchase certain parking properties owned by the City of Birmingham and managed by the Birmingham Parking Authority (BPA).
Early October: IEO evaluated the proposals on their merits and presented a recommendation to Mayor Woodfin to pursue one of the proposals: an offer of $40+ million from a local investor to purchase six decks. Mayor Woodfin deemed it was appropriate to bring the potential sale to City Council for consideration. The City sought preliminary information from the BPA to assist in evaluating the City’s existing parking strategy.
Wednesday, October 14: The City informed BPA of the potential sale and requested information from them in order to better vet the deal, including: outstanding tenant arrangements, debt and operating statements from each parking deck, and information related to key personnel.
Thursday, October 22: IEO and Mayor Woodfin informed City Councilors of the opportunity of the sale. Mayor Woodfin also informed legal counsel for the BPA of the same information.
Subsequently, BPA shared with the Mayor’s Office its financials, as well as an updated balance sheet (January to September 2020).
Monday, October 26: IEO and Mayor Woodfin presented the potential sale to the full City Council at the Committee of the Whole. Council requested additional information from the BPA in an effort to more fully evaluate the sale. Those questions were written and compiled by Council administration and leadership before being directed to the BPA.
Additional unsolicited proposals were sent to IEO following the Committee of the Whole meeting.
Friday, October 30: The City received additional information from BPA, including some tenant information and information related to debt for newly purchased equipment.
Monday, November 9, 12 p.m. CT: Final deadline for any additional proposals to be submitted to IEO.
*The City will conduct a process to qualify all submitted proposals.
Tuesday, November 17: Mayor Woodfin will present his recommendation to the City Council.
Consideration of Additional Proposals
Given the urgency of the City’s fiscal position and the volatility of commercial markets in light of COVID-19, the City has deemed it prudent to proceed with an expedited process for considering proposals in this case, rather than a standard competitive request for proposal (RFP) process. Additionally, the magnitude of this sale is much greater than typical City property sales, so the potential sale of the six parking decks is being handled as a unique case.
In an effort to best evaluate other proposals on an expedited basis, the City will accept additional proposals for the six parking decks under consideration through Monday, November 9 at 12pm CT. Proposals may be submitted to Dr. Josh Carpenter (josh.carpenter@birminghamal.gov), Director of IEO, and Yamini Bhat (yamini.bhat@birminghamal.gov), Special Projects Manager for IEO.
Proposals must detail the following information and will be evaluated on these criteria:
- Sell price and earnest money
- Up-front investment into the decks, especially to activate commercial and retail space
- Rate caps and willingness to honor current lease arrangements
- Ability of purchaser to close without issuing debt
- Length of due diligence period needed prior to closing
- Financial statements to demonstrate cash position
- Past history of investment in the City of Birmingham
- Past history of collaboration in economic development in the City of Birmingham
- Past history with commercial and retail job creation in the City of Birmingham
- Stated purpose and rationale for purchasing the decks
- Efforts to create opportunities to save jobs of BPA employees that service deck operations
- Efforts to create opportunities for minority-, women- and other disadvantaged business enterprises (MWDBEs) as managers or partners in the sale or operation of the decks
Relevant Documents
- Audited BPA Financials – As of June 30, 2020. Includes independent auditors’ report; statement of net position; statement of revenue, expenses, and changes in net position; statement of cash flows.
Frequently Asked Questions
Why is the City considering offers?
The City receives about $1 million (+/-) combined in revenue from the six parking decks under consideration for sale. Selling those decks would produce funds that could be used for neighborhood revitalization, as well as annual property tax of $357,000. We estimate that investment to activate 25,000 square feet of office and retail in those properties, which will generate an estimated $247,000 in additional tax revenue.
The remaining five properties the City would retain under BPA management would continue to generate roughly $1.2 million in annual revenue. Holding the BPA’s current administrative costs constant (~78%), that provides $264,000 in revenue to the City.
Therefore, in selling the decks, the City will still receive $868,000 annually, or ~87% of current revenue from all City-owned parking properties. Coupled with funds captured from downtown to reinvest in neighborhoods during one of the worst economic crises in our lifetimes, the City believes this is a unique opportunity worthy of serious consideration.
After the sale, will these parking decks remain as parking decks or be torn down?
The buyer has indicated an intent to invest in the decks to upgrade and modernize them, including activating much of the retail space that has remained vacant.
The Birmingham Parking Authority operates these decks. Are the people who work at these decks City of Birmingham employees?
No. They are Birmingham Parking Authority employees.
Are BPA employees going to lose their jobs after this sale?
The proposed purchaser of the decks has indicated that it intends to keep employees of the BPA to service the decks. Not all employees will move with the new purchaser. The BPA will still control five of the eleven parking properties.
How will this whole deal affect the Birmingham Parking Authority?
The BPA will manage the City’s remaining five properties. Those five properties produce an estimated $1 million, collectively, in revenue each year and will still need to be managed. One of those remaining properties is the Boutwell deck.
Will the Boutwell deck be sold?
No. The City will retain ownership of the Boutwell deck.
Does this deal affect metered parking?
No, we will not be giving away any control of our meters. Metered parking is not for sale.
Is Birmingham planning on adding additional parking?
It’s a possibility, especially in areas where there is growth. We are listening to community members about where parking is needed.
What could this deal mean for company employees parking in the decks?
The drafted agreement is for rates to remain the same for at least two years or longer based on the remaining term of the parking licenses or leases.
