Scott Wartman

swartman@nky.com

Corporex has yet to build anything on the 13-acre Ovation site it has owned for 10 years on Newport's riverfront. Yet it vetoed any city tax incentives for the Hampton Inn that opened this month in Newport, according to officials with the city and the hotel.

Corporex has that right under a development agreement signed 10 years ago with the city for Ovation, with no groundbreaking in the foreseeable future for the planned $1 billion residential and commercial project. The agreement gave Corporex the exclusive rights to any city incentive within the tax-increment finance district bounded by Fourth Street and the Ohio River and Columbia Street to York Street.

For Hampton Inn's owners, they see it as a competitive disadvantage with the Aloft hotel opening soon a few hundred feet to the east. The developers of Aloft don't pay city or Campbell County property taxes, thanks to incentives worked out with the city. The Aloft falls outside the exclusive incentive area in the Ovation development agreement.

For Newport residents, the episode reveals a rare glimpse into Corporex's plans for one of the region's most anticipated and delayed development projects.

Hampton Inn's owner, Shaun Pan, said Corporex officials told him they also planned a hotel for Ovation. Yet Corporex has not announced any plans publicly for anything on the site.

"The (Ovation) land is sitting there for 10 years now," said Pan. "Nothing has happened."

Pan cut the ribbon Thursday for his hotel. Yet he believes he's starting his new business at a disadvantage.

"We didn't want to bump heads with Corporex. I'm the little guy going against the big corporate company," Pan said. "We are looking at a huge amount of property tax. That put us at a competitive disadvantage compared to Aloft down the street."

The city and county absolved Aloft for the next 30 years on property taxes. Instead, the developer of that hotel will pay a $138,000 annual payment to the school system. Fromme estimated that's likely half of what they'd pay in property taxes regularly.

The owners of the Hampton Inn initially thought they'd get the same deal. City officials told them so. But then Pan got a call in early 2015 that the city couldn't help him. Corporex objected to the city issuing industrial revenue bonds, said City Manager Tom Fromme.

Corporex CEO Tom Banta wouldn't comment on the tax incentives.

"The agreement publicly is what it is," Banta said. "It speaks for itself."

Fromme said he wanted to help Hampton Inn. But the development agreement tied the city's hands.

"I'm sympathetic to them, but Corporex had a right to do that," Fromme said. "You can't go back in time."

Corporex didn't want to approve the incentives for Hampton Inn because it would have lost out on revenue from the tax-increment finance(TIF) district created around the Ovation site, Fromme said. Corporex will get the money from the increase in tax revenues it creates in the district. The Hampton Inn is in the TIF district. Taking away property taxes for the hotel would take away revenues in the TIF for Corporex, Fromme said.

Fromme said he's not heard whether Corporex will build a hotel at Ovation.

"They've talked about a million things," Fromme said. "Until they come in with a plan, I can't say. That's just pure speculation."

Fromme doesn't see the development agreement with Corporex as a mistake. Even without the incentives, the Hampton Inn hotel was built, he said. Also, an issue like the Hampton Inn won't likely come up again since Corporex owns most of the property in the district covered by the development agreement with the exception of Riverchase Apartments.

Corporex paid the city $2 million in development fees for signing the agreement and pays the city $140,000 a year in property taxes, Fromme said. He blamed the delays on Ovation to the Great Recession.

"There's a lot of things that don't work out according to plan," Fromme said. "I don't hear anyone coming up with a better solution."