Home » First new industrial building in decades to pay off big in jobs, tax revenue

First new industrial building in decades to pay off big in jobs, tax revenue

COVINGTON, Ky. — A $17.6 million building with 146,000 square feet of space will be constructed on land zoned for industrial use behind the Latonia Commerce Center, the first new industrial space in Covington in decades.

The project is a spec build, meaning no tenants have been found or announced. Still, developers anticipate it could house four different users with the potential to create more than 100 jobs that City officials say could bring $79,000 to $145,000 a year in payroll tax revenue.

A group of investors led by Covcor real estate investments owns the land and is behind the project, which principal Josh Niederhelman said features flexibility: Inquiries have ranged from a basketball court and running track to a call center to assembly to light manufacturing.

To encourage the creation of as many jobs as possible, the Covington Board of Commissioners on Tuesday approved a staff recommendation for a bond incentive that, over its 15-year term, raises in value to the company as collective payroll generated by the building increases.

West said the payoff in new tax revenue that funds City services could be even more significant. Currently, the site generates about $15,000 a year in property taxes split among an array of local governments and agencies, with the City receiving a fraction of that. But under the 15-year, $18 million industrial revenue bond, or IRB, the City will receive many times that amount.

How the bond works

For a detailed explanation of IRBs and their advantages and disadvantages, see “City seeks more deliberate use of incentives.”

Taxpayers are not on the hook for the borrowing – its payback is the developer’s obligation, who nevertheless enjoys a lower interest rate and a lower property tax payment. The IRB is needed to help keep lease rates competitive, West said.

Generally, the bonds work by allowing the developer to pay only a percentage of the property tax they would otherwise owe for a certain number of years in exchange for creating a project that generates jobs and significant payroll tax. That’s critical in Covington because payroll taxes fund more than 50 percent of the General Fund.

In the case of the Latonia project, the 15-year-old arrangement decreases the percentage of property tax owed – called a PILOT, or “payment instead of taxes” – from 60 percent to 20 percent as payroll in the building increases from $2 million to $5.5 million.

In this case, West said, the new jobs may be well suited to recent high school graduates who immediately choose to enter the workforce.

About the project

The address will be 135 W. 38th St., and the building will sit on 8 acres owned by Covcor just west of what’s now named the Latonia Commerce Center and east of the railroad tracks. The land is zoned for industrial development. CURO BRKG is marketing the building.

West said the developer has financing and a contractor ready to go. Niederhelman said work could begin at month’s end and be completed by late November.

Latonia momentum

West said the project is particularly welcome because it will continue Economic Development’s focus and momentum in the Latonia neighborhood, a spread-out residential area with several commercial areas. Among the City’s efforts in Latonia since 2017:

Click here for more Kentucky business news.
Click here to Advertise.