Alabama city to help bankrupt development pay bonds
The city of Birmingham plans to set aside nearly $1 million in the 2021 budget to prop up the underperforming CrossPlex Village development in Five Points West, city officials said.
CrossPlex Village, the business development adjacent to the Birmingham CrossPlex track and aquatic facility, filed for Chapter 11 bankruptcy this week, according to court records.
Ground broke on the mixed-use development in January 2017. Developers hoped to attract multiple businesses and restaurants, drawing hundreds of thousands in tax revenue every year. Currently Dominos, Starbucks Coffee, J-Wings and Comfort Inn are operating in the development.
The city of Birmingham issues bonds on the development. The way the deal was setup, if the development didn't produce enough revenue to make the quarterly payment on the bond, the city of Birmingham would pay the difference. The city also gave the development a 99-year lease on the property for the development.
Birmingham Director of Economic Development Josh Carpenter said the development came short of the mark for that payment at the end of the first quarter of 2020, which ended March 31, and asked the city for help making payments.
In an email, developer Bob Nesbitt said the revenue loss was caused by the COVID-19 pandemic.
"Consequently, the city has budgeted around $900,000 in the upcoming budget in anticipation of future under-performance," Carpenter said. "We are working with the developer to ensure we have a solution going forward."
Birmingham Mayor Randall Woodfin will present the 2021 budget to the City Council on Aug. 18. The council will then work with the mayor to create a final budget before the council approves it.
The bond payments will be made to Regions Bank, the developer's trustee on revenue bonds, which was issued by the Commercial Development Authority of the city of Birmingham, to facilitate the financing of the project.
A Chapter 11 bankruptcy is most often used to restructure a business or corporation so it can be profitable again. The businesses at CrossPlex Village are expected to operate as normal during the bankruptcy process.