Covington Authorizes Plan to Borrow Funds to Purchase IRS Site
The Covington city commission approved a plan to borrow the money needed to buy the former IRS flattop site near the city's riverfront on Tuesday night.
The plan is to see the 23 acres redeveloped.
"This is clear evidence of the city's commitment to move promptly on the redevelopment of a project that will shape downtown Covington for decades," Mayor Joe Meyer said. "And the timing is good - the city's recent credit upgrade will help make borrowing more affordable."
After four months of negotiation, the federal General Services Administration in March accepted the City's offer of $20.5 million for the site, which one East Coast commercial developer referred to as one of "the most exciting land redevelopment opportunities between Baltimore and New Orleans."
The City paid $2.05 million in earnest money toward that purchase.
The ordinance approved by the Commission on a 4 to 1 vote authorizes the City to issue up to $30 million in debt to raise funds to move forward on the massive project.
Meyer and Commissioners Michelle Williams, Tim Downing, and Shannon Smith voted in support. Commissioner Denny Bowman voted against.
The money would be earmarked like this:
- $18.45 million for acquisition.
- $5 million for demolition.
- $4.05 million for site improvements and contingency costs. Site work would include restoring the street grid, extending utilities and building WiFi infrastructure. Contingency costs would include construction management, an environmental assessment (and addressing any problems discovered), a survey and platting.
- $2.5 million to reimburse the General Fund for money the City paid for public parking as part of the John R. Green project under way in MainStrasse Village. (This will in turn be repaid by future revenue from that public parking.)
The good news, City Manager David Johnston said, is that Moody's Investors Service announced April 17 that it was upgrading the City's credit rating for the second time in two years.
"Our finance department has worked very strategically and aggressively to get our financial house in order, and as a result, they will save taxpayers millions of dollars in financing costs over the life of the debt," Johnston said.
He said the city was simultaneously developing RFQs (requests for qualifications) for demolition and for environmental and geotechnical assessments.
"We want to get this site ready for market ASAP," Johnston said. "It is not our goal as a city to own or hold on to privately developable property. Thus we're not going to be lethargic in our actions."
Speed is doubly important because the proceeds from future sales of various portions of the site - once the building is demolished and public infrastructure is added - will help the city recoup its investment, he said.
The IRS ceased its operations there last September after 52 years.
The vision for the site calls for a restored street grid, eliminated with the development of the IRS facility, as well as a levee park, a community plaza for festivals, and mixed-use buildings for commercial, office, and residential spaces.