By Patrick Crowley
The Cincinnati Enquirer

An artist's rendering of the proposed Covington West riverfront development shows high-rise office and residential buildings. (Patrick Reddy photo) | ZOOM |

COVINGTON - It is one of the last large pieces of undeveloped Northern Kentucky riverfront land.

And Covington wants to turn it into an $800 million urban neighborhood directly across the Ohio River from Paul Brown Stadium.

Covington's ambitious plans come as Cincinnati struggles with developing Ohio riverfront land known as the Banks. Mayor Charlie Luken worries that the Banks could be harmed by a proposed tax-incentive package for Convergys Corp.

While Cincinnati struggles to advance the Banks, Covington's plan to turn 15 acres of unused and under-used riverfront property into an office, residential, and retail development with a new parking garage is stirring:

• Three developers are formulating proposals for the Riverfront West site, which stretches from the Madison Place office and condominium high-rise west to the Clay Wade Bailey Bridge.

• The city of Covington has received $200,000 in federal money to study how the project will affect the floodwall that must be altered to make the project feasible, considered a key first step in the development process.

• For the first time, federal officials are speaking publicly about possibly vacating the sprawling, 5,000-employee Internal Revenue Service tax processing center, a move that would provide additional land for the project.

• Through the Northern Kentucky Consensus Committee, the region's business, local government and community leadership is lobbying Frankfort for $10 million to pay for infrastructure and land acquisition in what would be the first step toward getting the project started.

Covington officials are convinced the project would provide an economic boost to the city's downtown by bringing in new residents and businesses.

"The impact would be tremendous on the city, particularly on the downtown," Covington Mayor Butch Callery said.

But obstacles are dampening the optimism that development of Covington West is imminent.

Northern Kentucky's office market is already soft with high vacancy rates, experts say. The state of Kentucky's money woes - looming deficits fueled by the sluggish economy - will make it difficult for lawmakers to come up with $10 million to kick-start the project. And the city's suggestion that the three developers interested in the project work in concert would be a "nightmare of coordination," according to one of the developers.

"It's a complex project," said Covington City Manager Greg Jarvis. "But it is also something the city is very committed to, and we're taking the steps that are necessary to make it happen."

A decade-long dream

Covington has been actively pursuing a project to develop the site for nearly a decade, but two major impediments - the floodwall and a slew of underground utilities that would have to be relocated - have stalled any serious plans.

That is why the federal dollars Covington has secured for a U.S. Army Corps of Engineers study of the floodwall and surrounding infrastructure is key to the overall project, said Covington Assistant Manager Andy Riffe.

"That money gives us a leg up with $200,000 to $250,000 worth of work that we can give to a developer when it is done," Riffe said.

Two major Northern Kentucky developers - Bill Butler of Corporex Cos. and Jerry Carroll, whose resume includes development of the $150 million Kentucky speedway - had proposed earlier this year building a casino on the Riverfront West site.

But with state lawmakers failing to act on legislation legalizing casino gambling, those plans are, if not dead, then at least on hold until the General Assembly acts.

Earlier this year, Covington sought development proposals for Riverfront West, indicating the city's desire for a mixed-use development of upper-income condos or apartments, retail and restaurant locations and office buildings.

In April, three companies submitted preliminary concepts for the site:

• Towne Properties of Mount Adams, a longtime Cincinnati-area developer that most recently built the $10 million, 86-unit Roebling Row apartment complex near the riverfront in downtown Covington. Towne Properties offered few specifics, saying the city needs to develop a master development strategy and market study for the site.

• Covington-based Corporex, which developed the RiverCenter office towers, Embassy Suites and Cincinnati Marriott hotels and the Madison Place high-rise on Covington's riverfront. Corporex's plan calls for largely residential, retail and restaurant uses.

• Flaherty & Collins Properties of Indianapolis, a developer and operator of more than 11,000 residential units, envisions a luxury high-rise development with rents of about $1,100 a month.

"It's a very appealing site, particularly with the river and Cincinnati skyline," CEO David Flaherty said. "The views are critical. That's what would allow us to justify the construction costs of a high-rise, because people will pay for a view."

Office market soft

Towne Properties managing partner Arn Bortz said the city must pick a single developer for the project.

"Having three developers at (the) same table ... would be a nightmare of coordination and produce all sorts of confusion and misunderstanding," Bortz said.

Developers also said that the market is soft right now for new office space.

Bill Schneller, a vice president in the Cincinnati office of the CB Richard Ellis commercial real estate firm, said Northern Kentucky's vacancy rate for the newest office space - known in the industry as "Class A" office space - is an "extremely high" 31 percent.

Chuck Eilerman, a commercial real estate broker and a Covington community activist, said Covington's riverfront does not need any more office space.

"There is a real opportunity to make (Riverfront West) a gateway," Eilerman said.

"This is our best opportunity to access the river and bring some sense of community back to that part of the city. It should be done with quality over quantity and with some real style and grace."

The city would prefer an office building with IRS employees.

The General Services Administration (GSA), which oversees property for federal government agencies, is talking about abandoning its one-story processing center that takes up a city block in downtown Covington.

That would not only provide a major office building tenant but also open more land for development.

The center, which is just south of the existing floodwall and proposed Riverfront West project, is fourth on the list of major replacement projects for IRS facilities, said Gary Mote, a spokesman for the GSA's Atlanta office.

If the decision is made to replace the building, federal officials would have to seek funding and approval from Congress, which could take two to six years.

"But if the city came to us with some kind of proposal, we would sit down and talk to them," Mote said. "We would look at their ideas, but I don't know if a high-rise (office) would suit our needs there."

Developers and city leaders agree that without money from the state to open the floodwall, buy land and relocate utilities, the project will remain nothing but a plan.

Email Patrick Crowley at pcrowley@enquirer.com