A long-planned housing development on Newport’s Ann Street cleared its final financing hurdle Monday, bringing 11 new single-family homes one step closer to construction.
The Newport City Commission approved up to $7 million in industrial revenue bonds, also known as IRBs, to help finance 11 owner-occupied single-family homes on Ann Street. The project was first presented to the commission in February 2024 by 501(c)(3) nonprofit Urban Community Developers.
The project is on the 1000 block of Ann Street between West 10th and West 11th streets.
In the IRB process, the city acts as a conduit, issuing the bonds on the developer’s behalf. Because of that arrangement, the developer can often qualify for lower-interest, long-term financing than it could obtain on its own, making the project more affordable to build. Though the city issues the bonds, the developer, not taxpayers, would be responsible for repaying them.
The bonds would be used to help pay for land acquisition, construction and infrastructure improvements.
In 2024, the commission approved an inducement resolution, the first formal step in the IRB process, by a 3-2 vote, with commissioner Ken Rechtin and commissioner (at the time) Beth Fennell opposed. An inducement resolution signals a city’s intent to move forward with the financing process but does not authorize the issuance of the bonds or guarantee the project will proceed. Monday’s vote represented the final financing authorization needed to implement that inducement resolution.
At Monday’s special meeting, Rechtin once again voted not to approve, but it did pass with yes votes from commissioners Mike Radwanski, Aaron Sutherland, vice mayor Julie Smith-Morrow and mayor Tom Guidugli Jr.
“All of the terms in that original inducement resolution remain the same in this bond order,” said Newport Assistant City Manager Brian Steffen.
Urban Community Developers said in 2024 the IRBs were necessary because construction costs exceeded what lenders would finance. At the time, the nonprofit estimated each home would cost about $543,000 to build but would sell for approximately $495,000, creating a financing gap of roughly $48,000 per home.
Supporters argued the incentive would make redevelopment of long-vacant lots financially feasible. Former Newport City Manager Tom Fromme said the high cost of acquiring and developing urban infill properties meant the project likely would not move forward without assistance.
Urban Community Developers is a nonprofit based in Covington. It describes itself as an “organization dedicated to revitalizing Northern Kentucky’s urban core neighborhoods using new home ownership as the catalyst for positive neighborhood change.”
Plans call for homes with flexible floor plans designed to appeal to a range of buyers, from young families to empty nesters. The base design includes two bedrooms and two bathrooms but can be expanded to four bedrooms and three bathrooms. Each home will also include a tandem parking pad with two off-street parking spaces.
The project will use a 30-year payment-in-lieu-of-taxes, or PILOT, agreement that remains unchanged from the 2024 proposal. Under the agreement, the developer will make annual payments to the city equal to $7 per $1,000 of each completed home’s PVA-assessed value during the bond term. Once the bonds are retired after 30 years, the properties will return to the regular property tax rolls.
“In this case, the $7 per $1000 payment in lieu of tax to the city, and the difference between $7 per $1000-whatever the marginal maximum rate is from year to year is the incentive for the homeowner,” Dick Spoor with Keating Muething & Klekamp said. “Whatever the marginal maximum rate is from year to year is the incentive for the homeowner. It goes to the homeowner to induce the homeowner to purchase these homes.”
That means homeowners will continue paying the fixed $7 per $1,000 rate even if the city’s regular property tax rate increases. The difference between the two rates serves as the tax incentive for purchasing the homes.
Spoor said that after the commission approved the inducement resolution in 2024, the project underwent the required state bond approval process in Frankfort before returning to the city for final financing authorization.
“The requirement is that the state must approve it before the city could issue the bonds,” Spoor said. “Now, the normal hiatus between the beginning and the end of that process is usually six to 12 months. Unfortunately, the highest in this case has been a little over two years.”
Spoor said that the primary reason it took roughly two years was because Urban Community Developers is a nonprofit and doesn’t have a lot of resources, so it required third party assistance from Corporex Companies for the project.
