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(A) Application.
(1) An applicant shall submit its signed application for incentives under this chapter to the Department of Economic Development on forms provided by the Department and will provide any additional information reasonably requested to enable the Department to evaluate the application, including a copy of the proposed lease, letter of intent or purchase terms for the proposed business location.
(2) A non-refundable application fee of $1,000 is payable to the city upon submission of a signed application.
(3) Each request for incentives will be evaluated on an individual basis. All requests for local incentives will have an economic impact analysis (EIA) and/or a return on investment (ROI) calculation completed prior to consideration by staff. These will be used initially to determine the viability of the proposed project and must show a positive economic impact upon the city. The analysis will be performed for the number of years that equals the number of years the incentive recipient would be subject to monitoring and compliance provisions in the incentive agreement.
(4) All economic development incentives will be formalized in a written agreement between the city and the recipient business. At minimum, it will outline:
(a) Specific employment and capital investment targets, including:
1. Jobs created and payroll commitments;
2. Capital investment in real property;
3. Compliance with the non- incentivized retention period;
(b) Compliance with all applicable governmental laws, rules, ordinances and regulations; and
(c) Compliance with any conditions imposed by the Economic Development Incentive Agreement.
(5) If the Department of Economic Development recommends approval of an agreement and it is approved by the city’s Board of Commissioners, the applicant will provide the Department with an executed copy of any lease or purchase agreement prior to execution of the incentive agreement.
(B) Disbursement of incentives.
(1) All incentives provided for by this chapter shall be disbursed on an annual basis for the previous calendar year. With the exception of commonwealth incentives under § 123.05, an applicant’s first year in which incentives are provided shall begin on January 1 of the year provided for in the agreement, but no later than 18 months from the effective date of the agreement between the city and the applicant.
(2) An awardee that has executed an agreement pursuant to this chapter shall submit requests for reimbursement of incentives for the previous calendar year to the City Finance Department by April 30 of each year. The awardee shall use the form provided by the City Finance Department, and provide all necessary information for the City Finance Department to calculate the amount of the incentive. If the City Finance Department does not receive an awardee’s request for reimbursement by April 30 of any year, then the awardee shall forgo all reimbursements under this chapter for the previous calendar year.
(3) The City Finance Department, upon proper request by an awardee pursuant to division (B)(2) above, shall disburse incentives for the previous calendar year to the awardee by July 31 of the same year.
(4) An awardee shall not be eligible to receive incentives under this chapter for the previous calendar year unless it has paid in full all taxes owed pursuant to § 110.03 of this code and is in good standing with the city.
(C) Failure to comply. If an awardee fails to comply with the agreement or fails to meet the requirements of this chapter, the awardee shall not be eligible to receive any reimbursement provided for by this chapter that has not been disbursed at the time of noncompliance.
(D) Incentives may not be combined. The incentives provided for by this chapter may not be combined with any other occupational license incentive programs offered by the city without the approval of the Board of Commissioners.
(E) Prior incentives. Changing economic conditions and availability of funds may cause the city to modify, amend or discontinue any economic development incentive program. Incentives provided to a business under an agreement pursuant to prior version of this chapter shall remain in effect as originally agreed, unless this chapter clearly indicates otherwise.
(F) Compliance.
(1) Annual reviews will be conducted by economic development staff to establish compliance with the written agreement between the city and the awardee.
(2) For any out of compliance incentive, the Economic Development Director will schedule a business retention and expansion meeting with the awardee that has missed the contractual performance obligation. The Economic Development Director will then meet with the City Manager, City Solicitor and Finance Director to review and make recommendations on non-performing agreements.
(a) First occurrence. The city will not process a payment for that year, but the agreement will continue without modification for a one-year probationary period. The city will warn the business and notify it that it has one year to achieve its payroll expectations or the agreement will terminated.
(b) Second occurrence. After two consecutive or non-consecutive years of non- compliance, the city will terminate the contract due to non-performance and pursue the claw backs outlined in the agreement.
(3) Each fall, Economic Development and Finance will compile all active incentive agreements and provide a summary incentive report on actual performance and compliance. The City Manager will include recommendations to City Commission for any out-of-compliance agreement.
(1984 Code, § 116.03) (Ord. O-13-20, passed 8-11-2020)
(A) New business incentive. New business incentive is targeted for new companies that are considering a site in the city and the incentive will be a deciding factor as to whether the business will locate in the city.
(1) Eligibility. A business shall be eligible for incentives under this division (A) provided the business:
(a) Applies for an incentive under this division (A), is recommended by the Department of Economic Development and approved by the Board of Commission, and executes an incentive agreement;
(b) Has not announced a site location decision and is proposed to be located in the city at the time of its application, and if approved, thereafter remains located in the city;
(c) Will have employees within the city who are primarily engaged in professional, technical and innovation, administrative, manufacturing, communication or general medical and/or general surgical hospital occupations; and
(d) Within the first year of the agreement the awardee must create a minimum new annual payroll of $250,000 to be eligible for this incentive.
(2) Nature of incentive. A business approved for an incentive under this division (A) may receive an annual reimbursement of up to 1% of taxable payroll. The incentive rate shall be based on the most recent payroll incentive evaluation factors.
(3) Duration.
(a) For companies leasing a site, the incentive period may be for up to half of the applicant’s lease term, up to a total of five consecutive calendar years, provided the business continues to meet all requirements of this chapter and the agreement.
(b) For companies purchasing a site, the incentive may be for up to a total of five consecutive years, provided the business continues to meet all requirements of this chapter and the agreement.
(c) A retention period equal to the number of years of the incentive period will immediately follow each incentive period, where the business must remain an active business in the city and meet all requirements of this chapter and the incentive agreement, including, but not limited to, all annual payroll requirements.
(B) Enhanced new business incentive.
(1) Purpose. The enhanced new business incentive is targeted for new companies that are considering a site in the city that will have a significant economic impact and the incentive will be a deciding factor as to whether the business will locate in the city.
(2) Eligibility. A business shall be eligible to apply for an incentive under this division (B), provided the business:
(a) Applies for an incentive under this division (B), is recommended by the Department of Economic Development and approved by the Board of Commissioners;
(b) Has not announced a site location decision and is proposed to be located in the city at the time of its application and thereafter remains located in the city;
(c) Will have employees within the city who are primarily engaged in professional, technical and innovation, administrative, manufacturing, communication or general medical and/or general surgical hospital occupations;
(d) The applicant must create a minimum new annual payroll of $2,000,000 within the first year of business within the city to be eligible for this incentive; and
(e) The business demonstrates to the Economic Development Department that the relocation of the business sufficiently satisfies at least two of the evaluation criteria in Category A or at least four of the evaluation criteria in Category B below.
1. Category A (at least two).
a. The business is a target industry sector as determined by the city’s economic development strategy, as such is adopted by city commission from time to time;
b. The business will be locating a facility headquarters in the city;
c. The business will be making a private investment of at least $3,000,000 in property acquisition, lease, improvements, machinery and equipment, infrastructure or other similar investments; and
d. The business will bring or create over 25 jobs paying above the city’s median wages for that given year of the incentive application, and offer an employee benefit package.
2. Category B (at least four).
a. The project ties into a specific strategy recommendation within the city’s economic development strategy, as such is adopted by City Commission from time to time;
b. The business has demonstrated a strong commitment to the city, such as hiring Covington residents, agreeing to a longer non- incentivized retention period, or other similar efforts as outlined by the business;
c. The project will stimulate investment in redeveloping neighborhoods outside of the TIF District that the city may deem of significant benefit to the community;
d. The investment provides the opportunity for future expansion and increased employment; and
e. The business’ industry sector will help diversify the city’s economy as determined by the applicant’s appropriate North American Industry Classification System (NAICS) codes.
(3) Nature of incentive. A business approved for an incentive under this division (B) may receive an annual reimbursement up to 1.25% of taxable payroll. The incentive rate shall be based on the most recent payroll incentive evaluation factors.
(4) Duration.
(a) For companies leasing a site, the incentive period may be for up to half of the applicant’s lease term, up to a total of ten consecutive calendar years, provided the business continues to meet all requirements of this chapter and the agreement.
(b) For companies purchasing a site, the incentive may be for up to a total often consecutive years, provided the business continues to meet all requirements of this chapter and the agreement.
(c) A retention period equal to the same number of years as the incentive period will immediately follow each incentive period, and the business must remain in the city and meet all requirements of the agreement.
(C) Business expansion incentive.
(1) Purpose. The business expansion incentive is targeted for existing Covington companies that are planning an expansion that includes new jobs.
(2) Eligibility. A business shall be eligible for an incentive under this division (C) provided the business:
(a) Applies for an incentive under this division (C), is recommended by the Department of Economic Development and approved by the Board of Commission, and executes an incentive agreement;
(b) Has not announced the expansion or started the project:
(c) Is located in the city; and
(d) Applicant must create a minimum new annual payroll of $250,000 in excess of its base taxable payroll to be eligible for this incentive.
(3) Nature of incentive. A business approved for an incentive under this division may receive an annual reimbursement up to 1% of taxable payroll in excess of its base taxable payroll. The incentive rate shall be based on the most recent payroll incentive evaluation factors.
(4) Duration.
(a) For companies leasing a site, the incentive period may be for up to half of the applicant’s remaining lease term, up to a total of five consecutive calendar years, provided the business continues to meet all requirements of this chapter and the agreement.
(b) For companies owning or purchasing a site, the incentive may be for up to a total of five consecutive years, provided the business continues to meet all requirements of this chapter and the agreement.
(c) A retention period equal to the same number of years as the incentive period will immediately follow each incentive period, and the business must remain in the city and meet all requirements of the agreement.
(D) Business retention incentives.
(1) Purpose. The business retention incentive is to be used prudently for existing Covington companies that are at risk of relocating out of the city for an expansion that includes new jobs and capital investment.
(2) Eligibility. A business shall be eligible for incentives under this division (D) provided the business:
(a) Applies for an incentive under this division (D), is recommended by the Department of Economic Development and approved by the Board of Commissioners, and executes an agreement;
(b) Has employees within the city who are primarily engaged in professional, technical and innovation, administrative, manufacturing, communication, or general medical and/or general surgical hospital occupations;
(c) The applicant must have a minimum annual payroll of $2,000,000 to be eligible for this incentive;
(d) Has operated in the city with a valid occupational license at all times;
(e) Can provide documentation to the Economic Development Department that the business is undergoing due diligence on a site in another municipality, as demonstrated by a competing written incentive offer letter, a lease/purchase LOI or other documentation deemed acceptable by the Economic Development Department; and
(f) The Economic Development Department demonstrates that the project sufficiently satisfies at least three of the evaluation criteria in Category A or at least five of the evaluation criteria in Category B below:
1. Category A (at least three).
a. It can be demonstrated that without incentives the jobs may be moved away from the area or eliminated, as evidenced by a written statement and evidence from the business;
b. If retained, the business will be making a new private investment of at least $3,000,000 in property acquisition, lease, improvements, machinery and equipment, infrastructure and the like;
c. The business will retain over 25 jobs and add additional jobs; and
d. The business is a headquarters facility.
2. Category B (at least five).
a. The business has demonstrated a strong commitment to the city, such as hiring Covington residents, utilizing city contractors/suppliers, philanthropic activity or other local community efforts;
b. The business is a target industry sector as determined by the city’s economic development strategy, as such is adopted by City Commission from time to time;
c. The project ties into a strategy recommendation within the most recently adopted economic development strategy, such as “Develop and Invest in Real Estate Product for the City”;
d. The project will stimulate investment in redeveloping neighborhoods outside of the TIF District that the city may deem of significant benefit to the community;
e. The investment provides the opportunity for future expansion and increased employment; and
f. The business’ industry sector will help diversify the city’s economy as determined by the applicant’s appropriate North American Industry Classification System (NAICS) codes.
(3) Nature of incentive.
(a) A business approved for an incentive under this division (D) may receive an annual reimbursement up to 0.75% of its base taxable payroll and up to 1% of its taxable payroll in excess of its base taxable payroll, provided the business’s total taxable payroll is in excess of its base taxable payroll. The incentive rate shall be based on the most recent payroll incentive evaluation factors.
(b) If the taxable payroll of a business approved for an incentive under this division (D) is not in excess of its base taxable payroll in any calendar year, then the business may receive an annual reimbursement for that calendar year up to 0.75% of its taxable payroll.
(4) Duration.
(a) For companies signing a new lease, the incentive period may be for up to half of the applicant’s new lease term, up to a total of five consecutive calendar years, provided the business continues to meet all requirements of this chapter and the agreement.
(b) For companies owning or purchasing a new site, the incentive may be for up to a total of five consecutive years, provided the business continues to meet all requirements of this chapter and the agreement.
(c) A retention period equal to the same number of years as the incentive period will immediately follow each incentive period, and the business must remain in the city and meet all requirements of the agreement.
(1984 Code, § 116.04) (Ord. O-13-20, passed 8-11-2020)
On the Commonwealth of Kentucky’s approval of an application for the benefits and incentives available to an applicant under the commonwealth’s economic development incentive programs that are provided through statutory authorization and otherwise, and that require the city’s participation, the city may offer a rebate to the applicant on all new Kentucky-resident jobs up to 1% of taxable payroll for a term not to exceed ten years from the date of activation of an incentive program. The incentive rate shall be based on the most recent payroll incentive evaluation factors. Alternatively, the city may offer up to 1% rebate to the applicant on all new jobs to the city provided the applicants agrees to a retention period equal to the same number of years as the incentive period. The business must remain in the city and meet all requirements of the agreement.
(1984 Code, § 116.05) (Ord. O-13-20, passed 8-11-2020)
(A) Purpose. The vacant property rehabilitation incentive is to help convert the city’s vacant, historic inventory stock into move-in ready commercial space for prospective businesses.
(B) Eligibility. A building owner shall be eligible for incentives under this section provided the building owner:
(1) Applies for an incentive under this division (B), is recommended by the Department of Economic Development and approved by the Board of Commission, and executes an agreement;
(2) Rehabilitates a building located within the city for use as leasable retail, office or commercial space, provided the building is:
(a) At least 50 years old; and
(b) Has been at least 51% vacant, as measured by gross floor space, for a period of 24 or more continuous months at the time the building owner submits an application for incentives under this section. For purposes of this requirement, area used for storage or residential shall be considered to be vacant.
(C) Nature of incentive.
(1) A building owner approved for an incentive under this section shall receive an annual reimbursement equal to 1.25% of taxable payroll paid by employers with respect to all employees:
(a) With a primary workstation in the building that is the subject of the agreement; and
(b) Provided the business was not located within the city prior to its locating in the building that is the subject of the agreement.
(2) A building owner approved for an incentive under this section shall receive an annual reimbursement equal to 0.625% of taxable payroll paid by employers with respect to all employees:
(a) With a primary workstation is the building that is the subject of the agreement;
(b) But not meeting the requirements of division (C)(1)(b) above.
(D) Duration. The incentive may continue for a total of up to five consecutive calendar years, provided the building owner continues to meet all requirements of this chapter and the agreement.
(E) Ineligibility. Any tenants of a property receiving a vacant property rehabilitation incentive will be ineligible to apply for any other incentives under this chapter until after the vacant property rehabilitation incentive has expired.
(F) If the property falls outside of the TIF District, a vacant property rehabilitation incentive may be used in conjunction with a property tax moratorium outlined in Ch. 45 of this code of ordinances.
(1984 Code, § 116.06) (Ord. O-13-20, passed 8-11-2020)