Some of you are probably going to think I’m going to blame Irondale’s financial challenges on its elected officials.
I am not.
I’m not sure there’s a human being alive who could find a painless way for Irondale or many of our other municipalities to avoid financial challenges.
Irondale is a tiny town in Jefferson County–the largest county in Alabama. Irondale’s population of 12,000 is just 1.8% of Jefferson County. Its financial challenges are shared by many Jefferson County cities–so we all need to pay attention!
Because Irondale has limited options when pressured to maintain revenues–it’s forced to punish itself or one of its neighbors.
And then there’s that head scratching decision Irondale made last month…
Irondale’s is often the ‘screw-er’ or the ‘screw-ee’
Irondale has a history of aggressively attempting to steal businesses or institutions from neighboring cities. Sometimes that works and sometimes it backfires.
Tom Williams, a powerhouse car dealership, was located in Birmingham’s midtown. In 2004 Irondale stole the dealership from Birmingham by incentivizing Tom Williams dealerships to move to the Grants Mill Automotive Mall in Irondale. That really stung Birmingham.
Birmingham struck back
In 2006—two years later–the City of Birmingham successfully hit back by offering $11 million in incentives to Walmart to move from Irondale to Eastwood Mall in Birmingham. At that time, Walmart was generating $1 million in tax revenues for Irondale. Birmingham also tried to pilfer Sam’s, but was unsuccessful.
Irondale’s next attack on Birmingham was a disaster
The following year, Irondale negotiated an agreement with Trinity Hospital (originally Baptist Medical Center Montclair) to build a $315.8 million facility on a site off I-459 at Grants Mill Road. The City of Irondale purchased the 154 acres for $6.7 million in May 2007 to lease back to Trinity.
But the City of Birmingham counter-punched.
Birmingham stopped Trinity’s move to Irondale by offering a $55 million incentive package to renovate the unfinished HealthSouth Hospital on Highway 280 within Birmingham city limits. Irondale was left with a broken contract and major cash outlays. Attorneys for Birmingham and Irondale had to grind out a settlement.
Irondale then went after Hoover
Last year Irondale successfully offered a $13 million incentive package to Nick Saban’s Mercedes-Benz Dealership to leave Hoover for Irondale. The dealership opened in February with great fanfare–and Hoover has lost the tax revenue.
Irondale received a terrible blow
But then Irondale was caught off guard when Sam’s Club announced in February that it was permanently closing its Irondale store.
Sam’s Club was Irondale’s largest sales tax generator and the loss of cash flow was going to be devastating.
The City of Irondale was now projecting a deficit of $1.6 million for 2018 and $2.1 million in 2019.
Irondale citizens voted against property tax increase
Irondale was clearly desperate to restore revenues.
The City Council quickly asked Irondale citizens to increase property taxes—but the tax increase was defeated.
Irondale Mayor Charles Moore told al.com, “We’re going to have to look at the big picture now and say that the slight majority of the residents decided that they did not want to invest in the city and the services that we have. And we’re going to have to make tough decisions going forward.”
Irondale City Council passes unpopular occupational tax
So despite a public outcry, the Irondale City Council voted to implement an occupational tax.
Several Irondale business owners spoke out against the occupational tax saying the 1 percent tax would be felt by their employees.
Tim Le Roy, chief executive officer of Peak Season, an outdoor furniture manufacturer, complained that “many employees live paycheck to paycheck, and they will notice a 1 percent decrease in their take-home pay.”
Irondale head scratcher
Because of the newly implemented occupational tax Irondale finally had at least some of the revenue it needed to stay solvent, but then it did something that many people found perplexing.
The Irondale City Council approved tax abatements to assist Motion Industries with expansion.
Motion Industries is one of our region’s largest companies–$5 billion in sales and 600 employees at its Irondale location. Irondale is lucky to have them.
But why offer incentives to Motion Industries?
What about all the Irondale small companies and their employees who just took a hit on their pay checks? Is it fair that financial incentives are not offered to small employers and their employees who also might want to expand their businesses?
It’s great that Motion Industries wants to grow—but should tax payers, who just got slapped with a tax increase, be required to help fund that growth?
As I stated at the beginning of this piece, I’m not blaming Irondale’s City Council–it has an obligation to keep the city solvent.
And I’m not blaming Motion Industries. Motion has a responsibility to its shareholders to maximize profits. If Motion can convince a government entity to give it money, then it would be foolish not to.
Cities must begin to collaborate
Neither Irondale— nor any city in Jefferson County—is going to prosper and grow by stealing businesses from its neighbors, raising taxes, and going it alone.
It’s time to ask our mayors to work together for common solutions.
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David Sher is Co-Founder of AmSher Compassionate Collections. He’s past Chairman of the Birmingham Regional Chamber of Commerce (BBA), Operation New Birmingham (REV Birmingham), and the City Action Partnership (CAP).
Invite David to speak to your group about a more prosperous Birmingham. dsher@amsher.com
I would like to get your thought on being a metro plex with the police and fire departments, there seem to be too much overlap with fire departments in the cities because of how they are sliced up. Also police just how many jails do we need and the staff in a city too guard , holding areas then transferred to confinement, In several locations . How many city halls do we really need can we share the meeting space , as we look at cutting cost not service? Why has Irondale not used sanitation out source like other cities, and why does Irondale have 168 employees , when Leeds has 98 to service 14,000 residence and Trussville with 208 and 25,000 employees.
Ray, you have some telling statistics. We could obviously save millions of dollars with no degradation of services if we worked together.
Motion Industries is needing to grow operations but are currently landlocked in a building that was last renovated in the 1970s. It is not a facility designed for high capacity like more modern open plans are. In order for them to grow the headcount in Irondale it would require an expensive renovation of the facility.
The cheaper alternative in this case was for them to locate the support services in Atlanta. Motion Industries’ management wanted to grow in Irondale but their parent company didn’t quite see the benefits outweighing the costs and pushed existing space under their control in Georgia.
If the company put this next round of hires in Atlanta then most future corporate functions could possibly follow suit wishing could ultimately result in a full relocation of the HQ.
The abatement the city offered was done to keep Motion’s current growth in the city and allow for work to be done to accommodate future capacity needs.
It was also done after a revenue analysis was performed that factored in all sources of revenue from the expansion. The analysis showed a net gain in revenue over ten years after abatements.
Also keep in mind that the city is not paying out anything. They are only partially abating future tax revenue on the project itself. If the project went elsewhere they got nothing. With the project they gain more revenue than that abated.
So Irondale Mayor Charles Moore says that .”..the slight majority of the residents decided that they did not want to invest in the city and the services that we have…” so they expect outsiders to do that for them? How about developing or selling the property they gambled on trinity with. Me…I am done. This town won’t receive one more nickle from me for gas, food or otherwise until my illegally obtained funds are returned to me or I receive a vote that counts. This is tantamount to theft because its own citizens wont pay for what the City deems necessary. To have one of its own Council members vote after a hearing or change their vote because they didn’t understand the process makes me feel less better about my money being taken from my family.
The slight majority was larger than the vote for mayor in Irondale. The fact were not conveyed to the public as for where the money would have been spent. It was more of the same from Irondale elected officials . The fact is we now have 168 employees up from 148 when the vote for property tax was defeated. Outsiders to do what ? Out source public works, cut cost, and reduce abatements by keeping property tax low, and maybe reduce sales tax, back to 8%. The new political plat form that is growing from grass roots is doing away with the occupational tax in two years. The problem with Irondale is the residents do not vote , so you just continue to get more of the same dead in street.
There has been no timeline placed for removing the Occupational tax and i am unfamiliar with the new platform much less their actual success in getting elected in two years, What I have heard said by Spivey is they would like to do away with it but there has been no mandate for such. The Mayor has publicly said he would like the deficit handled then prop up the general fund. This is here to stay. #boycottirondale