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Covington Gives OK to Incentives for Old Jail Building Renovation

The Covington city commission meeting on Tuesday night was more welcoming to the redevelopment of the former Kenton County Government Building at 303 Court Street than the previous one a week prior. 

Mayor Joe Meyer noted that the tall building at the southern foot of the Roebling Suspension Bridge was originally created to house the governments of the city and Kenton County when it opened more than five decades ago. While the city vacated it decades ago and the county left to occupy the newly renovated Bavarian Brewery building, both governments came together to ensure its next chapter.

"Now, fifty years later, it is because of the city government and the county government that the building is now transitioning into a new use that will serve our community even better," Meyer said.

Al Neyer Inc. and Urban Sites will transform the former county building, which was also home to the county jail before it moved to South Covington, into a 133-unit apartment building with 6,000 square feet of ground-level commercial space.

The $31.4 million project is moving forward thanks to generous incentives from the city and county.

The city agreed to spend up to $500,000 from its tax increment financing (TIF) district funds for public infrastructure, including sidewalks, utilities, and streetscape efforts, and will also issue industrial revenue bonds (IRB) with a payment in lieu of taxes (PILOT) component. That means the city will forgo a chunk of tax revenue for a 20-year period to assist the development.

On Tuesday, the developers and Kenton County Judge/Executive Kris Knochelmann participated to push the commission to support the effort. The county had already agreed to sell the property for just $10. (Under the terms of the IRB, however, the City will gain legal ownership of the building for the life of the bonds.)

"It is a very tough project in the heart of a critical part of Covington," Knochelmann said. The project was challenged by a more than $8 million financing gap and the lingering presence of the former jail infrastructure. "Without (the incentives), it doesn't get accomplished."

Dan Ruh, of Al Neyer, also pleaded for the support of the commission, which ultimately gave its blessing in a 4-1 vote. 

He said that only residential use would work at the site, even though his focus for more than two decades has been on office developments. "One of the reasons why it fascinated me so much is, it's a redevelopment opportunity. It's taking the bones of a building, the concrete frame of a building, and bringing it back to life," Ruh said. The project will strip the brick facade and remove the jail. "The skin of the building is really nothing to be proud of. But the redevelopment of this frame into a beautiful asset for Covington is something I live for. I live for this type of redevelopment."

He said that Urban Sites was brought in to work on the project because of previous work in the Roebling Point area of Covington and its experience in "creating a sense of place".

Ruh also said that the development would support a home for a farmers market. The city's farmers market has been nomadic over the past ten years. That news was a surprise to the commission, and seemed to be a winning addition.

City Commissioner Tim Downing, the lone dissenting vote in opposition to the deal, said that he did not like the financials to justify the city's investment.

"The (return on investment) just simply isn't present," Downing said.

City staff expressed concern in a document prepared for the commission that the Court Street project would not generate the revenue necessary to replenish the TIF funds, an issue that could complicate the need for such funds when the IRS site is redeveloped or when other projects come forward. In fact, the documents suggest that the TIF funds could be at capacity, though there is currently room to assist the Court Street project.

But Downing appreciated the farmers market component, though he questioned why it was not included in previous presentations.

"I really do wish that when we were having these types of discussions we would have the length and time to be able to consider all of the options because that would have certainly given me more things to ask about to see if there were other opportunities on the table," he said.

There was also concern expressed that the expected rents inside the building would be out of the reach of the average Covington resident.

It is expected to have 35 studio apartments, 59 one-bedroom units, and 39 two-bedroom units with rents ranging from $1,111 to $1,714 per month.

Covington Economic Development Director Tom West noted that TIF funds (which come from the “growth” in tax revenue from surrounding development) are by their nature earmarked for such purposes and that much of those improvements would eventually have to be done anyway.

West also noted that even with the forgone property tax revenue, the project will eventually net the city and its taxpayers about $83,000 more a year, since it is part of a broader deal set in motion in 2016 involving the County and Neyer/Urban Sites. That includes the relocation of Planning & Development Services of Kenton County (PDS) to the Bavarian building in Covington, along with its payroll tax, which had previously been paid in Fort Mitchell at its old home.

Renovation of 303 Court St. into what is being called The Hayden is expected to take two years, the developers said.

Ruh told the Covington commission that the developers were confident that the apartments would be in high demand, given the walkability of the neighborhood, which includes – for example – restaurants, bars, coffee shops, a bagel shop, a bookstore, and the public library, as well as numerous large employers.

The first-floor commercial space will likely accommodate two or three tenants, he said.

To complement the new surface parking lot that is to be included, the county will also provide spaces for residents in its nearby parking garage.

-Michael Monks, editor & publisher

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