City Council approves incentives to keep tech firm Shipt in Birmingham

The Birmingham City Council -- at its regular meeting on Tuesday, July 10 -- approved a large incentives package for Shipt, the tech company that is headquartered in the John Hand Building downtown and is one of the Magic City’s biggest business success stories.

The intent was to induce Shipt -- which was purchased by Target for about $550 million in December 2017 -- to remain in Birmingham, expand its operation and hire as many as 881 new employees over the next three years.

The Council voted 8-0 to approve a project agreement under which the city will give Shipt incentives of up to $1,762,000, payable over a term of up to five years, on the basis of $2,000 per each new employee.

The city’s incentive payments are to be capped at $800,000 for the first year and $1,000,000 for each subsequent year up to the program cap, according to the text of the resolution.

“Today is a exciting opportunity for Birmingham to retain its largest homegrown tech company to date,” said Josh Carpenter, the city’s director of economic development, after the Council vote.

Shipt is “expanding their footprint in our city,” Mayor Randall Woodfin said.

The deal involves “a significant amount of jobs, a significant amount of growth,” Woodfin said.

The city has worked with Jefferson County and the state of Alabama to keep Shipt in Birmingham.

The Jefferson County Commission voted to approve its own incentives package of $720,000 for Shipt on Thursday, July 12, according to various media reports.

Also on Thursday, Alabama Governor Kay Ivey, Birmingham Mayor Randall Woodfin and Shipt CEO Bill Smith gathered at the company's headquarters to formerly announce that the company will remain in the Magic City and expand its workforce.

The administration has worked with Shipt since December to craft this incentives package, according to Carpenter.

As part of the agreement, Shipt has also agreed to implement a new three-part workforce development initiative developed by the city.

The three components, according to Carpenter, are the Talent Investment Program (TIP), the Talent Acceleration Program (TAP) and the Talent Optimization Program (TOP).

Carpenter noted that many cities have offered economic incentives to companies for decades, but that those incentives typically involve land or buildings.

However, the deal with Shipt is the Woodfin administration’s “first workforce development incentive.”

“This goes to Birmingham’s greatest asset -- its people,” Carpenter said.

The deal is a way to grow the city’s workforce and, by working with a homegrown company, to build the city’s “momentum as a tech center.”

A economic development attorney associated with the project told members that the average salary for the new jobs should be about $50,000 per year, or $25 per hour, along with good benefits.

As part of the project, the council also approved an ordinance to sell the John Hand Building Parking Deck on Morris Avenue at 20th Street North to an entity called SPT Parking Deck LLC for $1 million. The deck will be used by Shipt.

The proceeds from the sale of the parking deck will be the second deposit made to the city’s new Neighborhood Revitalization Fund, according to Kelvin Datcher, the city’s director of intergovernmental affairs.

The first deposit will be the $600,000 the city will realize from the sale of its portion of the 27-acre former Trinity Steel property in Titusville to Atlanta tech company DC BLOX. That sale was announced on Monday, July 9.

The incentives package was approved on Monday night by the Council’s Budget and Finance Committee.

Councilor John Hilliard, the chair of the Council’s Economic Development Committee, raised a concern that the project was not also brought before his committee.

Councilors Lashunda Scales and Steven Hoyt said they agreed with Hillard and that the proper council protocols should be followed.

“The process works very well when we adhere to our own rules,” Hoyt said.

Woodfin and Carpenter both said that, in the future, they would be sure to take such projects to both Hilliard’s committee and the Budget and Finance Committee.

Councilor Hunter Williams said the deal with Shipt is “a unique project” because the city is working effectively with its state and county partners -- something which has not always occurred in the past -- and is also “incentivizing job growth.”

New jobs are something the city “desperately needs,” Williams said.

UPDATE: Thursday, July 12, 1:35 p.m.: This story was updated to include information regarding the Jefferson County Commission vote and the governor's announcement.