City of Covington to Buy Former IRS Site for $20.5 Million
The City of Covington is set to buy the 23 acres of land that was previously home to a processing center operated by the Internal Revenue Service.
The city commission met in a special meeting on Thursday and authorized Mayor Joe Meyer to sign papers formalizing the purchase price of $20.5 million from the federal government.
The IRS closed the location, which employed more than 1,000, in 2016 and since then, the city has taken keen interest in gaining control of the site for development purposes. Consulting firms were brought in to envision possibilities for it.
But often, federally-owned property can take a long time to change hands. The city had been negotiating with the federal government since December.
“It would be difficult to exaggerate the magnitude of this opportunity,” Meyer said. “The size and value of this site and its potential for development awards Covington the chance to reshape the very identity and economics of the city long into its future.”
The commission authorized the purchase in a 3-1 vote. Mayor Meyer and Commissioners Timothy Downing and Michelle Williams voted in favor while Commissioner Denny Bowman opposed it.
According to a news release, the city will use its "unobligated fund balance" to pay 10 percent of the purchase price, as required by the agreement. The city will then issue general obligation bonds to recoup that payment and pay the overall purchase price, City Manager David Johnston said.
Mayor Meyer thanks Congressman Thomas Massie for his help in acquiring the property.
“We simply could not have done this without Congressman Massie,” Meyer said. “We had many conversations and meetings with him and his staff, and his constant engagement, leadership, support, and knowledge of the process not only helped us navigate the corridors of federal agencies but also saved Covington taxpayers a significant amount of money at the same time.”
Johnston said Covington residents were fortunate not only that Massie is a member of the House Committee on Transportation and Infrastructure - which oversees the disposition of federally owned properties - but also that the Congressman dedicated himself to helping Covington.
“He really went out of his way,” Johnston said.
The city manager said Covington worked to keep the offices of Kentucky’s two U.S. senators, Mitch McConnell and Rand Paul, informed throughout the process.
The emergency meeting was called in order to meet a deadline from the General Services Administration, the federal agency that manages federally-owned properties.
Covington will spend the next three months securing the title to the property and planning the long and expensive process of physically preparing the site for the market, Johnston said.
Johnston said that the one-story building that spans roughly 17 acres will be demolished, and that the full site preparation could take about three years, which would include demolition, reestablishing a street and sidewalk grid, and running utility infrastructure as needed.
The city worked with Atlanta-based Cooper Carry, an architecture and design firm, to create a conceptual master plan for the site. That plan was presented in December and included such recommendations as a restored street grid, a levee park, a community plaza for festivals, and mixed-use buildings.
Using a model that foresaw development of the site in stages, Cooper Carry’s team projected that - as of 2027 - the site could create 1,159 permanent jobs and 1,651 temporary construction jobs. The former alone would bring an estimated $1.7 million in payroll taxes. Subsequent development of the rest of the site would create even more jobs.
“Jobs are the key,” Johnston said. “What goes on this site can’t just look pretty - it has to pay off for the Covington taxpayer. The bonds add debt to the City, and it creates a moral obligation for us to pay that debt down as quickly and efficiently as possible. I want Covington taxpayers to know two things: One, we are not going to sit on this but work diligently to get it developed as quickly as is feasible. And two, the City is going to solicit the best deals and get the best return on investment it can for the entire Covington community.”