The Alabama Alcoholic Beverage Control Board could increase by up to $5 million a year its rent for a new, central warehouse and still see an increase in liquor tax profits paid to state and local governments, ABC Administrator Curtis Stewart said Wednesday.
Talking to a panel of lawmakers at the State House, Stewart said a new warehouse is needed to keep up with liquor demands and ensure those profits keep growing.
In 2013, ABC distributed 2 million cases of liquor around the state, most of it going through the current, singular warehouse in Montgomery. By the end of this fiscal year, Stewart said that number will be nearly 3.9 million.
“We think that in 10 or 12 years, we’ll be handling 6 million cases a year,” Stewart said. “We can’t handle that much — we can’t efficiently handle the 3.8 million we’re handling now out of our existing facility.”
Alabama Daily News last month reported ABC had issued a request for proposal for a new or renovated warehouse to replace the current 140,000-square foot space in Montgomery and three small satellite warehouses in the same city.
The RFP calls for a 250,000-square-foot warehouse with expansion capabilities of up to 325,000 square feet.
While some lawmakers have previously questioned whether the state should get out of the liquor distribution business and let private businesses take over, legislators at the Legislative Sunset Committee seemed supportive of the agency and a new warehouse.
Sen. Sam Givhan, R-Huntsville, asked Stewart if that planned space would be big enough.
“What I get as a complaint is that people can’t get the type of brands that they want because we don’t have enough inventory space,” Givhan said.
Stewart said with the possible expansion space, it should be efficient.
“It will be designed so we could add on to it easily,” he said.
New office space is also included in the RFP. Proposals are due Oct. 20. Bidders are required to have experience with at least five major construction projects of at least $100 million each.
State law says ABC has to lease all its properties, including the warehouses and 168 retail liquor stores around the state.
Givhan said he’s not interested in taking on all of ABC’s current retail landlords, but would consider legislation to allow the agency to own its warehouse.
“I’m not crazy about renting this,” Givhan said.
Stewart said ABC would welcome such a bill.
John Knight, an ABC board member, previously told ADN the new site could cost up to $100 million.
On Wednesday, Rep. Randall Shedd, R-Fairview, asked why a project that large wasn’t discussed a few months ago in meetings with the Sunset Committee, which monitors dozens of state boards.
“That’s a pretty big deal, isn’t it? A $100 million expenditure?” Shedd asked. He asked when discussions about a new warehouse started.
Stewart said no decision has been made and the process is similar to any other lease ABC enters into.
“We haven’t decided we’re going to do this, we wanted to see what kind of proposals we would get,” he said.
ABC’s current warehouse lease expires in late 2025.
Stewart also said he didn’t know where the $100 million number originated.
“I’ve heard it, but we didn’t generate it,” he said.