Covington to vote on more incentives for Fischer HQ relocation

Covington will vote next week on another set of job incentives and tax breaks for the Fischer Group, which is planning on relocating its headquarters to Covington by the end of 2027, marking the latest in the city’s (and county’s) efforts to facilitate the company’s move.

“The Fischer Group’s decision to invest in our downtown is a clear signal that our urban core is on the rise,” said Mayor Ron Washington at the building’s groundbreaking last week. “Not only does this project strengthen our local economy by bringing hundreds of high-paying jobs into the heart of our city but it also reinforces that Covington is a destination for innovation, talent and opportunity.”

The Fischer Group – which includes Fischer Homes, one of the region’s largest home builders – announced last summer it planned to relocate from its current HQ in Erlanger to 525 Scott Street in Covington, the location of the now-defunct First District Elementary School.

The company, its partners, and subsidiaries hope to expand the building’s footprint from its current 65,000 square feet to about 95,000 square feet. This will include the addition of three new stories to the existing building’s north end and one new story above the building’s gym. The company hopes to complete the work by the end of 2027.

Estimated price tags for the renovations have gradually increased since the initial announcement last year, which put the price at between $10 million and $11 million. A press release from last week, after the building’s groundbreaking, estimated the company’s investment in the work at $15 million.

City documents from Tuesday put the overall value of the renovations even higher, at roughly $20.9 million.

“Without public participation, the project faces a feasibility gap driven by elevated construction costs, interest rates and [office] underwriting constraints in the current capital markets,” according to the text of the redevelopment agreement between and the city and the company.

The agreement also gave a breakdown of how the company plans to pay for it: about $11.3 million in loans, about $7.5 million in cash equity and $2 million in grant funding from the county.

Fischer Group hopes to create about 500 new full-time jobs at the facility over the next 10 years. The redevelopment agreement set the salary range at $90,000 to $119,000 per year. Last year, the city approved a 10-year reduced payroll tax rate of 1.25% as an incentive if it brought jobs into the city. The county also approved an occupational tax break last May.

This newest incentive is more complicated and involves refunding TIF funding to the company after the company submits a request to the city. TIF stands for tax increment financing and is an economic development tool used by government agencies, usually to finance needed infrastructure projects, including sewers, streets, parking lots, and related costs. Taxes generated in a TIF district past a certain threshold are redirected into a separate fund that can be used for specific projects rather than public services generally.

A specific mathematical formula determines the refund threshold in this case. The most the company could request in refunds is $140,000 per year, assuming they meet their job creation requirements.

“Every year, the level of incentive is directly tied to the amount of payroll that is being generated on that site,” said Assistant Economic Development Director John Sadosky.

The table below illustrates the process. Click the table for a larger image.

The mayor and commissioners did not engage in discussion of the incentive on Tuesday, and the incentive was placed on the consent agenda for next week’s meeting. They will cast a final vote on the incentive on April 28.