COVINGTON, Ky. — Anyone driving down 4th Street in Covington will notice the construction equipment and sounds of demolition as the former IRS site turns into the city's largest-ever public project.
“Being able to see that ... it gives you cold chills really because you know what’s to come,” said Tom West, Covington’s economic development director. “And this is the first step to getting there.”
The Kentucky Economic Development Finance Authority and the city are set to execute a tax incentive agreement for up to $45.5 million. The state TIF would be the city’s first.
“What that says is that within the certain boundaries of the district, you have a benchmark year, and then anything above the taxes generated above the benchmark, an increment/percentage of that goes into the district,” West said.
Some of the costs to build the horizontal infrastructure (roads, sewer, utilities, parking facilities) would be covered by the tax incentive agreement. In return over a 30-year period, 60% of income tax collected in the district, 60% of sales tax generated in the district and 6% of property tax generated in the district would come back to the city to pay off bonds needed to fund the project.
“We have to build the horizontal infrastructure before we get the vertical development going," West said. "We’ll incur debt. Whether that’s through bonds or other means. We’ll pay debt service for quite a while. This will help us retire the debt service on the infrastructure."
At the former IRS site, it’s full steam ahead.
“It says this is real now. The building is going away by the end of September — it should be completely gone,” Covington Mayor Joe Meyer said. “The people are becoming much more alert to the reality of this.”
The master plan shows 200,000 square feet of new office space, 177 new hotel rooms, nearly 90,000 square feet of retail, 348 residential units, and a 110,000 square foot convention center expansion.
Demolition is set to finish by the end of August, and the site should be returned to the city by late September. From there, engineering firms will be hired to begin work on the horizontal infrastructure.
“The remarkable part of this is the way we’re going to approach the city to the river," Meyer said. "Overcome the barrier of the flood wall. Fourth Street and the top of the flood wall are at the same elevation. When we run Russell Street from 4th down to 2nd, we’ll take it to the top of the flood wall so folks can get up and reconnect to the river without having the barrier."
City leaders said the project will have several developers.
“Different ideas, different developers, and creating again the part of Covington we love that was created by individuals,” West said.
The Kentucky Economic Development Finance Authority is expected to vote for final approval on the tax incentive agreement on May 26.
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