Alabama Alcoholic Beverage Control Board expects to be operating out of its new, $98 million warehouse in Montgomery in about a year.
Paying for the new 250,000-square-foot building off Congressman Dickinson Drive will slightly decrease the short-term ABC’s contributions to state General Fund revenues, but will mean more money in the long term, lawmakers were told Wednesday.
“In 20 years, it will be a great contributor to the General Fund,” ABC Chief Operating Officer Neil Graff told members of the Legislature’s General Fund committees on Wednesday. They’d asked for an update on the building — and its impact on staff coffers.
The Retirement Systems of Alabama is building the warehouse and it will be paid for from ABC’s operating expenses over 20 years, Graff explained.
Nearly every bottle of liquor sold in the state is distributed through Montgomery.
The board pitched more than two years ago the idea of renting new space, but abandoned that idea after some pushback on cost. Last year, lawmakers and Gov. Kay Ivey approved legislation to allow ABC to own its warehouse space, undoing a previous rental requirement. Retail space must still be leased.
After that bill passed, ABC and RSA began discussing the retirement systems building a new warehouse. It’s a similar arrangement to the new RSA-built State House under construction in Montgomery.
“I think the biggest windfall is us owning that building and not paying any more rent on it,” Graff said.
The board disbursed in fiscal year 2024 about $360 million to state and local governments, most of it generated from taxes on the sale of alcoholic beverages. Tax receipts on alcohol sales have steadily grown and Graff said a decrease isn’t expected. The General Fund received about $110 million last year. Of that, about $1 million was from ABC’s $2 million in profits.
“We do not anticipate disbursing the profit amounts for the next several years as that money is used for this project,” ABC spokesman Daniel Dye explained to Alabama Daily News later Wednesday.
The new ABC site will replace four currently rented warehouse spaces, including the main warehouse ABC has occupied for about four decades. Officials have said the building is too small and inefficient. In 2023, ABC officials said they were paying about $120,000 per month in rent. That goes away with the new building.
The cost of the project includes $65 million for the warehouse and administrative space and about $35 million for new material handling equipment. The more efficient systems will allow ABC to reduce its warehouse staff, through attrition, from more than 80 to about 53, Graff told lawmakers.
Sen. Greg Albritton, R-Range, the Senate’s General Fund budget committee chairman, noted multiple, ongoing state construction projects and the possibility of some “stringent revenue” conditions in the near future.
He said he wanted to see construction completed and so the state could “stop spending so much and start collecting more.”