The Covington Motor Vehicle Parking Authority has cut a deal to reduce its annual payments to the city. The Covington Board of Commissioners approved the deal Tuesday night.
Covington Motor Vehicle Parking Authority Executive Director Jack Monts de Oca explained the reasoning for the request at last week’s caucus meeting. Essentially, the authority wants to take on construction debt and needs room in its budget for debt service.
“We are a few weeks out from issuing a revenue bond of $30 million to $32 million that will support the (Covington Central Riverfront, or CCR, development) public garage and an expansion to the City Center Garage (on 7th Street),” said Monts de Oca last week. City documents corroborate these numbers.
Monts de Oca said the authority is expecting a 30-year repayment term on the debt and that it would require repayments of between $2 million and $2.2 million a year.
“We are asking that the license agreement be amended so that the parking authority is paying only 5% of our adjusted revenue per year, which will equate to about $250,000 to $300,000 per year, while we are on the hook for that revenue bond,” Monts de Oca said. This would decrease the current payments to the city by about $800,000.
The proposal came before the board the same night last week that members discussed the upcoming reduction in real property tax rates. Commissioner Tim Downing asked City Manager Sharmili Reddy if the city could manage the reduction in a revenue source.
“Considering the bigger picture and the fact that this garage needs to be built for continued development of CCR, there’s really only two options,” Reddy said. “It’s either the city taking the bond or the parking authority issuing the bond.”
In other words, if the city had issued the bond itself, then it would be on the hook for paying back the money.
Earlier in the meeting, Commissioner James Toebbe predicted the city would bring in more payroll tax than it expected, based on the city’s current trends (hence the reduction in property tax rates). Mayor Ron Washington said, “I believe we’re going to be okay.”
The vote to approve the deal was unanimous.
