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Mayor: New Devou Clubhouse Uses No City Dollars, Frees Up $1.25 Million

Covington Mayor Sherry Carran shares history and her thoughts about the new Devou Park Clubhouse & Event Center.

HISTORY

The existing Devou Golf Clubhouse holds memories for many, as it was quite the gathering place. From the early 1970’s to the late 1990’s I lived on Audubon Rd. in Park Hills, located behind the clay tennis courts. My husband and two boys, Todd and Robert, were avid tennis players. Not only golfers and tennis players would use the Clubhouse but people who enjoyed watching the activities, as well as the beautiful setting. The Clubhouse was a popular spot for breakfast, lunch and to hang in the evenings to have a beer with friends and watch the sun set. The upper floor of the Clubhouse was also a busy place as it was rented for parties and weddings. During this time it was becoming apparent that the Clubhouse, built in 1934, needed major restoration work and was in need of more space, especially after the Golf Course was expanded from 9 to 18 holes in the late 1990’s. 

SEE PREVIOUSLY: Sun sets on old Devou clubhouse, ground breaks on new event center

In 2007 work began on developing a Master Plan for Devou Park with Human Nature as the lead consultant and designer. Human Nature is well known for their work such as Washington Park across from Cincinnati’s Music Hall, and the Theodore Berry International Friendship Park on Cincinnati’s riverfront. Human Nature also played a significant role in the design of The Banks/Smale Riverfront Park. As with most design projects, there was significant public input in the Devou Master Plan. Three large public input meetings were held along with a survey and smaller meetings with interested groups.  

During this input process for the Master Plan a question was posed as to whether to keep the golf course, and if so should it remain 18 holes or go back to 9 holes. Keeping the golf course 18 holes was the strong message received and led to the discussion of a new Golf Clubhouse. A new Clubhouse if done correctly would fit the Master Plan goal to build upon successes like the Drees Pavilion, built in 2004, with 41,000+ guests per year and the Behringer-Crawford Museum expansion with 50,000+ visitors per year. With additional input it was recommended that a new Clubhouse would include a modest cafe and rental facilities to be used for golf outings and other events, cart storage and access below main level, and a covered outdoor terrace to take advantage of the view overlooking the golf course.

In 2011 the Devou Park Advisory Committee (DPAC), comprised of residents and established by the City Commission to advise the City on matters related to Devou Park, formed a Clubhouse sub-committee to review the future of the Clubhouse when the upper floor was deemed no longer usable due to a number of issues caused by a deteriorating roof and many years of neglect. Devou Properties Inc. Board chaired by Barbara Drees, is the entity that oversees the Drees Pavilion and decides each year how much of its annual net profits are allocated to capital improvements in Devou Park, commissioned a feasibility study that was recommended by the Clubhouse sub-committee. The feasibility study, completed November 2012, included a market study by Hotel Leisure and Advisors that supported a 200-seat clubhouse facility, and a building and site analysis by CDS Associates, Inc. that recommended against rehabbing the current facility. 

  • February 2013 - DPAC and the Devou Properties Inc. Board jointly approved a $500,000 allocation of its net profits from the Drees Pavilion towards the design of a new Golf Clubhouse and recommended such to the City Commission, which accepted the recommendation. Hub & Weber Architects was commissioned for the design work.  
  • 2013 - the City Commission approved  $1.25 million in its Capital Budget for the new Clubhouse.  
  • Over a 2 year period, from April 2013 to March 2015, the design evolved with 2 design charrettes reviewing 5 alternatives and 9 input meetings that included the City Commission, DPAC, Devou Properties Inc. Board, City staff, Golf Course staff, Drees Pavilion staff, Park Hills’ residents and Park Hills Mayor and City Council.
  • March 31, 2015 – the City Commission approved a request for proposals (RFP) to be issued for the construction of new Golf Clubhouse.  
  • July 15th – the RFP was advertised.  
  • August 11th – 7 RFPs were received but the lowest bid of $6.2 million was 25-40% over the estimated project cost. The Devou Properties Inc. Board then met and approved a resolution to cover any additional funding gap between the estimated project cost and the lowest bid received after competitive negotiations in order to maintain the quality and integrity of the clubhouse design. 
  • August 18th – the City Commissioners approved entering into competitive negotiations with the 3 lowest proposals that would include a list of alternatives to lower the project cost.  
  • October 1st – the new proposals received brought lowest and best bid down to $5.25 million
  • November 10th – City Commission awards the $5.25 million contract to Performance Construction.

SUMMARY of HISTORY

Age of the building and past years of neglect caused the condition of the current Clubhouse to be beyond feasible rehabbing, plus the facility needs expanded capacity to take advantage of the typical size golf outing. Feasibility studies and the Master Plan calls for a modest café and rental facilities that would bring in additional revenue to cover bond debt service, and are considered desired amenities that once were a part of the original Clubhouse. The proposed amenities would also be a more affordable alternative to the Drees Pavilion similar to the Memorial Building that once existed at the Overlook. The new Clubhouse will not only serve golfers, but others who want to take advantage of the café and event space for parties and wedding receptions at a beautiful setting in Devou Park. The Clubhouse will also have bike rentals and will house the Park Ranger’s Station.  

Note:from the golfers reporting their zip code, those with Covington zip codes play 52 % of golf rounds.

FUNDING

City bonding authority will be used for the project cost of $5.25 million but no City dollars will be used to pay the debt service. The debt service at 4.5% is an annual payment of $386,000 over 30 years that will be funded by: $200,000 each year for 10 years from Devou Properties, Inc./ DPAC, equaling a $2 million commitment; $25,000 each year for 10 years from both Devou Trusts, equaling a $250,000 commitment; and $200,000 each year from net revenue of ongoing operations of the Golf & Event Center that has been conservatively estimated over the 30 year period. This also means that the $1.25 million set aside funding approved in 2013 for the Clubhouse is no longer necessary and can now be used for other needed projects in the City.

Regarding the City using its bond authority to cover the Devou Golf Clubhouse and the concern that doing so will jeopardize the City’s fiscal stability and rating by Moody’s Investor Services, Inc. (Moody’s is a leading provider of credit ratings, research, and risk analysis that potential buyers of municipal bonds look to for guidance on whether or not to purchase municipal bonds), the City has received guidance from expert municipal finance advisors and CPA’s during the bonding analysis. These qualified individuals have stated they are comfortable with the Clubhouse Proforma, including the chair of the City’s Audit Committee, especially considering conservative figures and assumptions were used. The pro forma also includes a building maintenance reserve fund so that the Clubhouse does not become a maintenance liability for the City’s General Fund in the future.

Debt limits for cities in Kentucky with populations of 15,000 or more is limited to 10% of the cities assessed taxable property value.  This figure is $279,703,571 for the City of Covington but the City has no intention of taking on this kind of debt limit, as it would not be in the best interest of the City. Our current total debt on all bonds, notes and other obligations issued and outstanding is $63,984,136., approximately 23% of our allowable limit.  Over the last 3 years we have been refinancing and restructuring our debt load for lower interest costs and to decline over time so as to allow the City to issue additional debt in the future if needed as existing debt is paid. There are significant annual debt payment decreases in 2019-2020 and again in 2023-2024.

An area that Moody’s does not view in a good light is variable rate bond debt. Sixty percent of the City’s bond debt was variable rate, mostly for the City’s two old pension funds, but through restructuring in 2014 we are now at fifteen percent and we are working to convert that as well. Taking on more debt could also be a concern for Moody’s if it is debt that does not have a repayment source other than the City’s General Fund tax dollars. The debt related to the Golf Clubhouse and to Hotel Covington and the Kentucky Career Center is viewed very differently than a debt issue paid directly out of the City’s General Fund tax dollars. The Clubhouse, Hotel, and Career Center make directed payments back to the City solely to pay the debt service incurred for those projects, separate from any additional property and payroll tax revenue generated from those projects that add to the City’s General Fund to be used for public safety, street repair, etc. 

Moody’s does look at our state pension burden that is significant if you look at the City/County Employees Retirement Fund (CERS), but this is a State issue.  A State issue that our State Legislative Representatives and the Kentucky League of Cities is working to fix. With our own old City Pension System that existed before we went into CERS, the state system, we are doing significantly better than in the past. In the last 3 years we have begun contributing annually to the two old City Pension funds to make sure the monthly pension checks for our past Police, Fire and other City retirees are there in the future.

This past year, the City was able to renew the Tax Anticipation Note (TAN-the equivalent of short term debt to pay for operating costs the City has had since the 1970’s) and have committed to annual payments to reduce the City’s reliance on the TAN and is already making good progress to eliminate that $350,000 annual payment. The City is also increasing its General Fund balance and hopes to meet the recommended reserves so that a TAN is never again needed. The City is also accepting financial responsibility when it comes to making hard decisions such as increasing taxes. It was not an easy decision to vote to approve the allowable increase in property tax and to increase our tax on insurance premiums, but when you consider an increase had not been done since 2008, and when you consider the City has been cutting its budget for the past several years and working hard to reduce the cost of providing services to our public but had reached barebones capacity without jeopardizing quality of service, it was a decision that our financial advisors and Moody’s view as taking financial responsibility. 

The decision to increase the two taxes resulted in the City’s ability to bring on needed additional Police Officers and Firefighters. The increase will also allow us to improve our fleet, including needed police cars, ambulances and fire trucks.  

All the above initiatives go towards strengthening the City’s long-term fiscal liquidity and stability.  

CLOSING COMMENT

Regarding moving forward on a new Devou Park Golf Clubhouse, this was not only important to the City but also important to the Devou Trusts, to the Devou Park Advisory Committee and the Devou Properties Inc. Board (Drees Pavilion) These entities have been watching out for the welfare of the Park and the people who use it for a very long time.  Ralph Drees and his family wanted to give something to the people of Covington and of the Northern Kentucky by building the Pavilion that brought focus to not only what a special spot Devou Park is, but also to the importance of maintaining and improving the Park for future generations.  Since the Drees Pavilion was built, it has brought $3.5 million in capital improvements, including playgrounds, restrooms, band shell repair, shelter repairs, etc., to Devou Park that were badly needed and have been greatly appreciated and enjoyed, but the Devou Properties Inc. Board  (Drees Pavilion) wanted to do more.  

They wanted to leave another legacy, like the Drees Pavilion, that would enhance the sense of place within the Park and would also generate revenue, enough revenue that the Golf Course and Clubhouse could actually cover operating cost with money left over to make further improvements in the Park just like the Drees Pavilion. Thanks to the Devou Trust, to DPAC, to the Devou Properties Inc. Board (Drees Pavilion), and the Ralph Drees Family for your love of Devou Park and for wanting to give back to the people of Covington and Northern Kentucky.

Sherry Carran is the mayor of Covington