Municipal debt measures for the new Covington City Hall building have been approved, and the groundbreaking for the project is set for Oct. 29.
Specifically, the city will issue $29.2 million in general obligation bonds—$26 million of which is dedicated to the building itself with the remainder going toward capitalized interest and fees–to pay for the project. The Covington City Commission approved the financing on Tuesday.
Elizabeth Wetzel, the city’s director of special projects and inter-governmental affairs, updated the commission two weeks ago on the project’s construction timeline. It’s expected to extend through May of 2026, Wetzel said, with a ribbon cutting anticipated in the following June. Contracts for the building’s foundations and other major construction are expected to come before the commission in October and December.
The new city hall building is slated for construction on Scott Street between Lee’s Famous Chicken and the old site of the Emergency Shelter of Northern Kentucky, near the library. Initial renderings of the plans for the building were presented to the commission in October.
A rendering of the Covington City Hall as presented in October 2023. Rendering provided | Elevar Design Group 
A top-down rendering of the Covington City Hall as presented in October 2023. Rendering provided | Elevar Design Group 
A rendering of the interior Covington City Hall as presented in October 2023. Rendering provided | Elevar Design Group 
A preliminary rendering of Covington’s new city hall. Rendering provided | Elevar Design Group 
A rendering of the Covington City Hall as presented in October 2023. Rendering provided | Elevar Design Group 
A rendering of the Covington City Hall as presented in October 2023. Rendering provided | Elevar Design Group 
A rendering of the Covington City Hall as presented in October 2023. Rendering provided | Elevar Design Group 
A rendering of the Covington City Hall as presented in October 2023. Rendering provided | Elevar Design Group
General obligation bonds are common forms of municipal debt. These debt instruments will be secured in conjunction with an even broader restructuring of the city’s overall debt load aimed at controlling short-term cash flow.
Bonds of these kind are one of several debt measures cities use to back capital projects. Newport, for instance, sought general bond funding early this year for a new parking garage. What distinguishes general obligation bonds from other debt instruments, such as industrial revenue bonds, is that they are backed by the city itself.
Here’s how they work:
The city solicits investors to buy bonds, in this case up to $29.2 million worth, which will provide the city with cash to finance the building’s construction. The city is then fully on the hook to pay back the principal of that debt plus any interest. In a scenario where the project fails to generate revenue for the repayments, the city would have to make up the money some other way. In some cases, this could entail raising taxes.
The bonds for the city hall would be on a 30-year term, meaning the city would be scheduled to pay off the bonds’ principal and interest by 2054 if approved. City documents project the total payoff amount for the bonds, including interest, to be about $52.6 million.
The restructuring of the city’s remaining debt, on the other hand, is a way of controlling the amount of cash the city has to pay toward its debt every year. It’s a trade-off–refinancing can increase cash flow, but it extends the life of the debt. The ordinance proposal that came before the commission includes both the new bonds and the debt restructure.
The city’s current debt load puts total debt payments at about $73 million through 2037. This figure does not include so-called self-supporting debt, which is offset by forms of city income and usually not considered in payoff estimates. The proposed restructure, along with the $26 million in bond principal for city hall, would add about $107 million to that payment total and extend the payments through 2056.
It would also reduce the amount in yearly required payments for some of the city’s past debt. Most notably, it would redistribute a lump sum of $29.5 million coming due in 2026. View a chart outlining the complete debt restructure and bond package here.
The Covington City Commission will hold two meetings next week. The first will be its normally scheduled caucus meeting on Tuesday, Sept. 3 at 6 p.m. The other will be a public hearing for proposed property tax rates on Thursday, Sept. 5 at 6 p.m. Both meetings will take place at the current Covington City Hall on Pike Street.
