- Kenton County approved a 20-year PILOT agreement for a plot at the Covington Central Riverfront development.
- The project will be the first built on Covington’s former IRS site.
- Industrial revenue bonds will finance construction, with phased property tax payments.
Kenton County has approved a tax-incentive package to jumpstart a key development within the Covington Central Riverfront site.
On Tuesday, the Kenton County Fiscal Court entered into a Payment in Lieu of Taxes agreement, or PILOT, with the City of Covington, Covington Independent School District and CCR-MN Investment Partners, LLC. — an arm of Cincinnati-based real estate developer Silverman & Co, Messer Construction, and architecture firm KZF Design. With Kenton County approving the measure, all involved parties have signed off on the PILOT agreement.
The PILOT agreement is connected to a recent municipal bond issuance agreement passed by the City of Covington on July 16. Essentially, Covington agreed to authorize up to $75 million worth of Industrial Revenue Bonds to help finance the construction of a multi-use complex at W. Third and Washington streets on the Covington Central Riverfront campus. Covington will issue all of the bonds.
Kenton County’s vote ensured the county’s participation in the revenue-sharing plan, aimed at reducing the project’s initial costs while still providing a steady stream of public revenue.
Jim Parsons, an attorney at Keating, Muething and Klekamp who specializes in Industrial Revenue Bonds, told the fiscal court that the bond issuance will help cover the costs of the development’s parking structure. When the project was first proposed in 2024, the total investment in the project was reported to be $67.2 million.
“This is the first large scale development within the IRS center project that the Silverman Group is undertaking,” he said.
Situated on Covington’s Ohio Riverfront in front of the floodwall, the development is converting a 23-acre site that was previously home to a vacant IRS paper processing center. The development’s campus is divided into several subplots. CCR-MN Investment Partners will develop Blocks M and N of the site. They purchased both blocks, which span about 1.3 acres, for approximately $2.6 million in June 2024.
Silverman & Co. will use the bond funds to finance a project that includes 280 apartments, 7,700 square feet of commercial space, and a 133-space parking garage.
IRBs are tax-exempt bonds issued by a local government on behalf of a private developer. The bonds are generally used to fund construction projects, but the developer, not the government, is legally responsible for repaying the bonds.
This specific bond term is up to 20 years, with payments slated to commence on Nov. 30 of the year following the bond issuance. Payments are required annually. Late payments made after Dec. 31 will incur the same penalties and interest as overdue property taxes.
Congruently, a PILOT agreement is a common financing arrangement that enables a developer to make a fixed, negotiated payment to local governments–like cities, counties, or schools–rather than paying standard property taxes. This, in turn, gives the developer a lower tax burden while still producing revenue for the public sector.
Under this arrangement, the city will retain ownership of the property’s title for the entire bond term and lease it back to the developer, thereby effectively exempting it from local property taxes. Instead of paying those taxes, the developer will make yearly PILOT payments.
These payments will amount to 60% of the usual local taxes to the city, county, and Covington Independent Schools, and will cover 100% of Kentucky’s share. This is determined using the assessed value from the Kenton County PVA and the property rates for the current year.
Kenton County Judge/Executive Kris Knochelmann endorsed Silverman’s plan for the site.
“It’s a good project,” he said.
LINK nky’s Nathan Granger contributed to this article.
