Finance Department Continues Evolution at Covington City Hall
The City of Covington's finance department continues to push for more transparency.
Finance Director Muhammad Osuwu said the department has undergone an external turnover audit, worked towards updating its 1995-era procedures manual, and established quarterly meetings of the city's audit committee.
“The reform is where you put policies in place to get yourself out of that rut,” Owusu said.
City Hall is five years removed from an embezzlement scandal that landed former finance director Bob Due in prison after he stole nearly $800,000 from the city over a dozen years. A revolving door in department leadership followed for several years.
Owusu was hired this year.
In his first three months on the job, Owusu has overseen new employees added to the department, including a revenue collection manager, a procurement officer, and additional tax auditors to ensure that the city is receiving all the money it's owed.
Owusu said there will be monthly and quarterly financial reports provided to the city commission, establishing debt, procurement, and rainy-day fund policies. The department will also create a multi-year finance planning model and attempt to increase the city's bond rating.
A majority of the city's nearly thirty bank accounts will also be closed, Owusu said. The finance director said that even when he worked with agencies with billion-dollar budgets, he had never seen one entity with so many accounts.
At the most recent city commission meeting, updates to the waste collection contract with Rumpke were also approved.
Currently, each household receives twelve green stickers annually to use to place bulk items at the curb for pick-up by Rumpke, a system that has not been as effective as most had hoped.
With changes to the contract, the green sticker program will be eliminated and residents of the city will be able to place one bulk item per week at the street for pick-up.
However, with this change, the city will be eliminating the annual two trash amnesty weeks it previously had, as well as limiting yard waste to three bags weekly from six bags.
According to city staff, these changes are a fair balance to the new weekly potential for removal of bulk items.
The changes will go into effect September 10.
Other notes from this week’s legislative meeting:
The commission approved keeping this year’s property tax rate the same as the previous years at 0.349 percent.
A contract will be executed with Sunesis Construction not to exceed $102,690, payable from the infrastructure fund, to complete the Caroline Avenue Underpass Water Remediation project.
Chad Schneider was hired as project engineer in the Public Works Department, effective September 17.
Notes from last week’s caucus meeting:
When the Covington City Commission set their goals for City Hall for the year, one of their top priorities was reevaluating the benefits offered to businesses looking to move to the area.
Quick to jump to the task, Economic Development Director Tom West brought before the commission Tuesday, August 21 a potential plan to revise the city’s Industrial Revenue Bonds (IRB) program that it offers to businesses and developers looking to build to Covington.
Currently, the city offers IRB to developers to help close the funding gap for building projects around town, with six properties currently under this type of contract with the city.
A major part of the program right now is that the developer receives a lower property tax rate over the course of 30 years so that they can put the saved money towards paying off bonds and loans originally received to build and the city also considers the additional revenue each property could bring to the city.
For each of the developments, a value is assessed and the developer is locked into that tax rate, with it raising 5 percent every five years, which according to Ross Patten, economic development specialist, does not keep up with inflation trends over the 30 year period.
The six developers who currently have IRB from the city range from fully revenue based properties, to residential properties and each have similar contracts despite being used in vastly different ways.
Along with lost revenue as inflation continues rising, both West and Patten drew attention to the fact that the residential properties are not allowing the city to benefit payroll taxes, which make a large portion of the yearly budget.
West said that while the city has to be able to offer incentives to get businesses to move to and build in Covington, they also need to develop a better strategy that will allow the city to effectively benefit from aiding in the initial costs of development.
A major concern for many of the commissioners and the economic development department in the coming years is revenue generating projects, as the looming closure of the IRS building will cost the city up to $1.8 million in payroll tax revenue, while also seeing an annual $790,000 increase to the state pension fund for the next three years.
Moving forward with the city’s IRB program, West and his staff recommend that the city be the “last to the table,” saying that all private financing must be locked in before the city will evaluate their contribution to the development projects.
West also made recommendations including evaluating projects individually, whether they be commercial, residential or mixed-use, focusing on the revenue they will benefit the city long term, as well as having regular PVA completed to adjust for inflation, which would adjust the developers payment in lieu of taxes, increasing the cities revenue yearly.
Under the proposed plan, the commission will still be reviewing and approving any future IRB and will be made aware of the potential variances of each deal and have final say over deals being made or not.
West and his staff will work over the coming week’s with the commission to adjust his proposed plan with the members of the commission before presenting a new ordinance for IRB.