COVINGTON, Ky. -- For the vast majority of people who don't work in urban planning, acronyms like TIF and IRB might not mean much, but understanding these common development-financing tools gives residents a more meaningful view of the projects taking shape -- as well as the ones that have stalled -- in their communities.
Across Northern Kentucky in recent years, a number of large-scale developments have relied on the most common tax-incentive financing tools, which include:
- tax increment financing (TIF) districts,
- industrial revenue bond (IRB) financing,
- historic tax credits,
- new-market tax credits,
- and tourism/sales tax reimbursement credits.
These tools are often used in combination to incentivize developers and drive new projects in historic urban areas. Newport Pavilion is one highly visible example of a plan that combined IRB financing with new-market tax credits to form one of the region's most popular retail centers.
But development-financing tools are not without controversy. Last year, Bellevue outlined a TIF district that a handful of residents and business owners feared would categorize their properties as "blighted" and expose them to loss via eminent domain laws.
"The idea that TIFs bring about eminent domain is simply not true," said former Newport city manager and local attorney Jim Parsons, who has decades of experience working on tax-incentivized projects in Northern Kentucky. "In fact, Bellevue is the only situation I've encountered where that was a concern."
Bellevue's TIF district was just established last year, so its affiliated account currently has a zero balance, but that's likely to change, Parsons said.
"We've seen in older TIF districts like those in Covington that those balances grow, allowing cities to utilize portions to support different projects within the district," he said.
Understanding how these tools work can also help explain why some projects, like the long-anticipated Ovation at Newport's riverfront, appear stalled.
The Ovation project has seen stops and starts for a lot of reasons, according to Parsons, not the least of which is that it will rely on TIF funding. Northern Kentucky didn't begin implementing that style of funding routinely until 2007 -- just before the economy took a turn for the worse.
With the project now moving forward, organizers are anxious to nail down a tax-incentivized financing package. Meanwhile, organizers must contend with the status of adjacent projects.
"It would have been hard to plan for the redevelopment of the Ovation site without knowing how the KY Route 9 relocation project would go," said Parsons. "Now, the alignment is done, and while some of that work was stalled because of state funding, I think it's about ready to start again, which will mean progress for Ovation."
Ovation offers a unique in-process look at how TIFs and other tax-incentivized developments work.
There are plenty of other noteworthy Northern Kentucky development projects that have relied, or will rely, on one or more such financing tools.
Here's a city-by-city list:
- Newport on the Levee/Newport Aquarium -- Mixed used development constructed in 2000 using a combination of IRB and tourism tax funding. '
- Aqua on the Levee -- Mixed-use development completed last year.'
- Newport Pavilion -- Home to large anchor tenants like Kroger Marketplace and Target.
- SouthShore/VUE 180 -- Luxury, high-rise, riverfront condos overlooking the Purple People Bridge and downtown Cincinnati. '
- The Ascent at Roebling's Bridge -- Iconic architectural space containing luxury residences; completed in 2008 for a cost of about $50 million.'
- Roebling Row -- A $10.5 million investment that brought 86 residential units to downtown Covington in 2000.'
- River Haus (breaking ground soon) -- Two-acre, $40 million mixed-use investment at 501 Main St.; will include 189 residential units.
- Duveneck Square (currently under construction) -- Four-story, mixed-use, mostly residential development (110 housing units).'
- Buttermilk Towne Center -- Opened in 2005; current major tenants include L.A. Fitness, Field & Stream and Remke Market.
- Northern Kentucky Industrial Park -- Largest industrial park in the region; relied on IRB funding, which has been implemented in Northern Kentucky for more than 40 years.'
- The Ark Encounter -- Introduced in 2016 through a combination of tourism sales tax reimbursement credits and a TIF district created through a collaboration between the city and the county.'
- Manhattan Harbour -- Mixed-use development with up to 1,000 new-construction homes planned for an investment totaling more than $400 million.'