State tourism to give CVB $3 million to support $50 million amphitheater at Carraway

The Alabama Tourism Department received approval from Gov. Kay Ivey to provide $3 million over three years to the Greater Birmingham Convention & Visitors Bureau to mitigate the loss of lodging taxes provided to it by the BJCC to help fund the proposed $50 million amphitheater to anchor The Star at Uptown.

The approval was confirmed Wednesday by department spokesperson Andi Martin.

The amphitheater would be owned by the Birmingham Jefferson Civic Center (BJCC) and managed by the entertainment giant Live Nation. It would be located at The Star at Uptown, the $300 mixed-use development on the former Carraway Hospital campus in North Birmingham.

Approval of the funds was one of three conditions stipulated by the CVB board of directors on Monday upon approving the BJCC’s request to relinquish taxes from the Sheraton and Westin it receives. That tax money is received under a 2003 earmark agreement conceived after state lawmakers passed legislation allowing the BJCC to capture payment in lieu of tax (PILOT) from the Sheraton to fund capital investments that support entertainment tourism. (The Westin did not exist then.)

The earmark represents one percent of taxes now received from the Sheraton and Westin and would partially fund the projected $2 million annual debt service; the remaining amount would be covered by amphitheater revenues, based on Live Nation’s estimates.

The other two conditions were:

* Forgiveness of $800,000 owed to the BJCC for the remaining eight years of a 10-year agreement to purchase a suite at Projective Stadium.

* Payment of $450,000 annually to the CVB by the BJCC starting in 2031, with a credit applied if lodging taxes received from hotels built within 1.5 miles of the amphitheater exceed that amount.

A CVB resolution on the agreement, with contingencies, was approved with two abstentions: Rep. John Rogers and attorney Greg Gurren.

The state tourism decision sets in motion a series of decisions that would likely result in the City of Birmingham, the Jefferson County Commission, the BJCC, and Live Nation each making a one-time $5 million contribution for a $20 million paydown on construction costs.

The BJCC would borrow $30 million over 30 years to fund the remaining construction costs.

The BJCC could consider its commitment as soon as next week. Birmingham Mayor Randall Woodfin, who favors the project, has not indicated when he would present the funding proposal to the city council.

The funds relinquished by the CVB would partially fund the debt service, with the remaining amount covered by revenue generated by the amphitheater, based on estimates provided by Live Nation.

Live Nation projects 15-17 shows annually, selling a total of 120,000 tickets and generating approximately $7 million in gross sales.

According to a document presented to the BJCC last week, the Carraway amphitheater would replace the Oak Mountain facility. Live Nation will book performances for Pelham next year, it stated last week after details for the Birmingham venue were revealed but wouldn’t commit beyond 2023.

“Live Nation enjoys bringing shows to music fans in the greater Birmingham area. Birmingham is a vibrant live entertainment destination and that is why we are exploring additional opportunities in the region,” the company said in the statement. “We are appreciative of the great partnership we have with the City of Pelham.”

According to projections provided to the commissioners, the hotel at Carraway could produce “an additional $240,000-$270,000 per year in lodging tax revenues to the VB based on an average 70% occupancy and $189.00 [average daily rate].

“Lodging tax dollars paid by visitors that go into infrastructure is a good investment for the community,” CVB President/CEO John Oros said Monday after the board voted to approve the agreement. “This project will attract a lot of out-of-town visitors to our hotel rooms These kinds of dollars are good investments not just for visitors but our residents. [Our contribution] is a great piece but not the final piece to make us the best destination, but it’s a start.”