Redevelopment of Former School Wins Support from City of Covington
Written by Michael Monks, LINK Media chief content officer
A building constructed as a school in 1939 that has operated under different names and served different educational institutions is embarking upon a new life.
Part of that new life will have it continuing as home to a school.
The property at 525 Scott Blvd. was once First District School and then Two Rivers Middle School, each as part of Covington Independent Public Schools. The building was later integrated into the urban metro campus of Gateway Community & Technical College, a project that has since been significantly scaled back in the city's downtown.
Now, Covington Kentucky Development, LLC, a business operated by Guy van Rooyen, president and CEO of the Salyers Group and developer of landmark projects such as Hotel Covington, is turning the property into a commercial office space.
On Tuesday night, the Covington city commission approved a development agreement and the issuance of industrial revenue bonds (IRB) to support the project. With IRB, the city is merely a conduit through which development financing support is attained and does not impact the city's bond or credit rating.
According to Covington Economic Development Manager Tom West, the building will be home to more than 68,000 square feet of Class-A office space, something that he said the city needs more of.
"Right now, we need more office space," West said. "When we get prospects, we don't have a lot of places we can send them."
While the issuance of IRB reduces the tax burden on the developer, it is still expected to generate revenue for the city, something that the property, which has been a government-owned building since its construction nearly 85 years ago, has never done before.
"Since 1939, it has been off the tax rolls," West said.
With Gateway selling the property last year, new commercial tenants will change the revenue-producing potential for the space. Over the 30-year term of the IRB, West explained that the owner will pay 20% of its anticipated property tax bill for the first ten years, 25 percent for the next ten years, and then 40 percent in the ten years after that.
Over the course of the three decades, it would result in savings of around $3.1 million for the developer, West said, and revenue of $7.7 million for the city. West said that anticipated payroll tax revenue would be about $7.5 million of that, with the balance coming from property taxes.
Already, two tenants are known, van Rooyen said. DeanHouston+, a branding and marketing firm, announced in September that it is moving its global headquarters to the site. In an announcement from the company at the time, the property was described as "(a) truly unique space designed to stimulate creativity, collaboration, teamwork, and healthy lifestyles," and "(offering) the convenience of hospitality and entertainment within easy walking distance."
“DeanHouston+ is a brand on the move – literally and figuratively. Like us, Covington is exploding with positive energy and growth, which perfectly aligns with our creative people, culture, and growth objectives,” said Dale Dean, founder and CEO of DeanHouston+, in the September announcement. “What began as the seed of an idea 33 years ago, today has grown into a global technical products and services marketing powerhouse operating around the world, including more than 90 full-time people operating in five offices in the US. This move marks another chapter in our growth journey. Our entire team is excited about this move.”
Van Rooyen said that the company has 55 employees and a $3 million payroll, and will occupy more than 12,000 square feet in the space. The company is expected to move in in April.
As for continuing the use of the building for educational purposes, Covington Classical Academy is also a tenant, West said. The new private school opened last year.
As for the rest of the space: "Everything else is on spec," van Rooyen said, meaning that it will be available to rent.
Photo: The former Two Rivers Middle School building undergoing a renovation (Michael Monks/LINK Media)