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Hotel Covington also at stake in Covington budget

Scott Wartman
swartman@enquirer.com
The former Covington City Hall that's being converted into the Hotel Covington

It's not just police and fire services at stake with Covington balancing its budget.

The Hotel Covington project hinges on the city passing a timely and balanced budget, city staff told the City Commission at a special meeting Wednesday.

A developer has started rehabbing the former City Hall on Madison Avenue into a luxury hotel and restaurant. This hotel in the center of the city has raised hopes among many leaders about the future of the business corridor.

A $4 million bond issued by the city to help pay for the $21 million Hotel Covington project requires a balanced budget, Finance Director Lisa Goetz told the City Commission. The developer, not the city, is responsible for paying the bonds.

She advised the City Commission to pass the $47 million budget at the next meeting Thursday, or at least before May 31.

"On (May) 28th, we have a good balanced budget hopefully in process so we can continue with this whole arrangement," Goetz said.

Some of the commissioners reacted strongly against this pressure to pass the budget. To pass the budget Thursday, commissioners wouldn't be able to make changes proposed by city staff and read for the first time May 18. Any changes would require an additional two readings, meaning Friday would be the earliest the budget could pass.

The proposed budget would cut daily staffing for the fire department from 27 firefighters to 26. That could possibly reduce response times, particularly to Latonia, where a ladder truck and ambulance would be shut down.

City Commissioner Steve Frank fired back that being told to pass the budget without changes would negate the purpose of debate.

"If you're telling us that this thing has to be the way we did a first reading on without any changes, or else all these other horrible things happen, like no hotel … then we backed ourselves in a corner and what are we doing here?" Frank said.

The City Commission can call a special meeting and doesn't need to pass the budget Thursday, said Commissioner Chuck Eilerman.

"I'm a little concerned we seem to be suggesting that we're under a deadline tomorrow on the hotel for the budget," Eilerman said. "That's not true."

Goetz said the budget doesn't have to pass Thursday, but the banks and bond rating agencies look for a balanced budget when lending money and rating cities. She hoped to have the City Commission on Thursday have a first reading of the issuance of the $4 million in bonds for the hotel and for the $3.5 million in bonds to pay the tax anticipation notes the city issued to pay its bills. But she's waiting on approval from the banks.

The sooner the budget is in place, the better, Goetz said.

Goetz couldn't say what would happen to the Hotel Covington project should the City Commission take much longer in assembling the budget.

"I don't know what the lenders think," Goetz said. "I don't know what they would do. I don't know what they would think if we're starting this process and we don't have a balanced budget.

"They want us to pay down the (tax anticipation notes). They want us to have a reserve. They want us to be fiscally stable. That's ideal. It would be wonderful if we could get that accomplished this month."