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How Birmingham Thrived Despite a County Bankruptcy

In Alabama’s largest city, a story of economic confidence in an unlikely place.

Downtown Birmingham, Alabama. (Max Wolfe/Flickr)

There was a time in Jefferson County, Alabama, when layoffs were measured by the gross. It was a time of shuttered hospitals, weeds as big as fourth graders, and potholes up to your elbow. Dead cows dotted the side of county roads, too expensive for anybody to come and clean up.

It was the Age of Municipal Bankruptcy, and it cratered the biggest county in Alabama. Detroit reconfigured our scale for such things, but Jefferson County’s $4.2 billion tab in 2011 was the largest the U.S. had ever known at the time, a budgetary abomination that torpedoed the county’s bank account from $312 million to $152 million in 36 months. There was no money for anything—“a new era” of reduced services, one commissioner put it—and the county’s credit rating, Moody’s said, was among the worst in the United States.

But a funny thing happened on the way to economic infamy. Jefferson County’s largest city, indeed the largest city in Alabama, began to blossom.

Birmingham has wrestled with its own image since its early days as a boom-and-bust iron town. For the last 40 years, that image has consisted mostly of abandoned buildings, as decades of white flight and dwindling industry left the city without an economic or cultural heartbeat.  

Today that image is evolving, thanks to a flood of private investment in the city’s core that has come, remarkably enough, amid the county’s insolvency. (Jefferson County emerged from bankruptcy in 2013.) Leaders are eager to talk about the city’s progress through abstract catchalls like momentum or energy. But for the past five years, investors have been betting on Birmingham with real dollars, a trend that peaked in 2015 with a record $1.2 billion influx in private investment. Dozens of major projects, including at least three hotels and a grocery store, are stirring what for decades has been a forgotten downtown.

Regions Field, home of the Double-A Birmingham Barons, opened in 2013.  (Mike Wood/Flickr)

“There’s been such a dark cloud hovering over Birmingham,” says John Archibald, a longtime columnist with The Birmingham News. “The idea of civic pride had disappeared. It was a town where people got shot and public officials got indicted.”

But now, Archibald says, “we’re doing things we haven’t done before. Whether they’re good things or bad things, I’m not really sure. But they have created a sort of civic pride that hasn’t really existed here since the ‘70s.”

The city’s got a strong pulse, but the county’s on life support

How the Magic City got its economic groove back epitomizes the different planes on which cities and counties often operate in the U.S. This was never Detroit: While Jefferson County’s ledger sent it into the financial abyss, Birmingham’s remained relatively stable, thanks in part to a one-cent sales tax increase passed in 2007, which the city has been using to stay afloat.

That stability—a dependable $33 million allowance every year—helped Birmingham keep an eye toward economic development, even as the county could barely flush the toilets in buildings a block away.

“They realized they were going to have to be the one to carry the load for a while,” says David Fleming, CEO of REV Birmingham, a local economic development organization. “The county couldn’t be as strong a partner until it straightened itself out. They recognized that leadership role was going to be on them.”

That attitude, plus a few key investments, has helped change the conversation. Birmingham knew how to grow new business from within, Fleming says, because a city that size has to: so many of them eventually move away. In 2010, a year before Jefferson County went bust, the Birmingham Business Alliance offered up Blueprint Birmingham, a five-year growth strategy to lure jobs and investors that concluded last year with that billion-dollar exclamation point. The final tally? While Jefferson County sat broke, the metro area added $2.9 billion and 13,000 new jobs.

To get the green, you go green

There are good reasons to wonder where all this economic confidence came from. Birmingham’s crime rate is one of the highest in the country, and its schools remain among the worst in Alabama, thanks in large part to a high poverty rate. It is one of the worst cities for public transit in the nation, and it is still struggling with the legacy of racism. Its people are unhealthy. The air quality sucks. It’s filled with food deserts. As a bonus, because of the deal Jefferson County cut to get out of bankruptcy, all residents will pay higher sewer rates for the next 40 years. Young people love Birmingham, but they’re also most likely to leave it.

A panoramic view of Birmingham’s award-winning Railroad Park. (Wally Argus/Flickr)

Because quality of life wasn’t exactly an obvious story the city could leverage, Birmingham looked instead to two strategies to lure private cash: urban green space and historic renovation, a clever, relatively low-cost approach for a city hoping to improve its aesthetic appeal.

Nothing reflects this recipe better than Railroad Park, a 19-acre former rail yard that’s been transformed into an award-winning downtown green space. The park is such a rousing public-private success that Birmingham has been able to use it to announce to developers that despite Jefferson County’s problems, its biggest city is open for business.  

The city council followed by raising Birmingham’s lodging tax to one of the highest in the nation, clearing the way for a new downtown home for the minor league Birmingham Barons. In two moves, suddenly downtown Birmingham had a logic.  

And there still was another card the city could play: In the 1940s and ‘50s, Birmingham was a vibrant, pulsing city. Luckily, it still had some of the bones. Rather than raze them, investors used state tax credits to renovate historic buildings such as the Lyric Theater, the Pizitz Building, and the Thomas Jefferson Hotel, giving downtown a restorative dash of je ne sais quoi. Today, there are the requisite bars, breweries, and restaurants that were sure soon to follow, to say nothing of the new housing. As many as 4,000 new units will hit the market in the next 24 months, according to Merrill Stewart, President of Stewart/Perry, a construction company involved with four new projects downtown.

Yet, here is where basic census data begins to resemble an elephant that won’t exit the room. Birmingham’s population is stagnant, and has been for five years. Between 2010 and 2014, Charlotte grew more than 10 percent, Atlanta grew about 7 percent, and Jacksonville and Chattanooga each grew about 3 percent. It’s a small sample, but it’s enough to give everything the sniff of a high-stakes wager: During the greatest boom of private investment and job growth the metro area has ever seen, Birmingham’s population netted just 10 new people.  

A government that will fight for you

Birmingham’s comeback also demonstrates how little economic confidence seems to rely on governmental competence. The city’s leadership has been continuously, notoriously inept, and the current line-up has done little to alter the narrative. Just this past December, Archibald went on record to label them quite possibly the worst city council ever; four days later, Mayor William Bell and Councilman Marcus Lundy belabored the point by getting into a fight that sent both men to the hospital.

The next few years will play out the chicken-and-egg question of exactly what it is that turns a place like Birmingham around—whether an improved quality of life attracts investors, or whether the appeal of new construction can lift the quality of life. Birmingham is decidedly counting on the latter.

Yet to be seen is how far investors can carry the load before actual people have to put in their own skin and move downtown. For now, a stagnant population and poor political leadership may be no match for the allure of momentum—especially as the metro area remains in the shadow of Jefferson County’s bankruptcy. If there’s any magic here at all, it’s in the possibility of what could happen if it weren’t.

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