Luzerne County Council to discuss chamber loan forgiveness

$6.1M development plan hinges on decision

By Jennifer Learn-Andes -

$6.1M development plan hinges on decision

By Jennifer Learn-Andes

A proposed $6.1 million downtown Wilkes-Barre development plan hinges on whether the Luzerne County Council will forgive $1.7 million in county community development loans.

The Greater Wilkes-Barre Chamber of Business & Industry is seeking the loan forgiveness on loans it had received for the Innovation Center @ Wilkes-Barre on South Main Street, saying it needs the lien cleared to obtain a clear title to proceed with the property sale.

Red Talon Group 1 LLC, a private development entity, wants to purchase the Innovation Center and the First National Bank Building on Public Square to expand high-tech jobs and spur other growth in the city.

According to agenda paperwork on the loan forgiveness, which is set for discussion at Tuesday’s council work session, the sale will allow the chamber to repay $1.7 million in other past community development loans owed to the county.

The repaid loans would go back into the county’s community development revolving loan fund.

County Community Development Director Andrew Reilly said the loans requested for forgiveness were not part of a still-pending U.S. Department of Housing and Urban Development inquiry.

The federal agency issued a directive in April 2014 requiring the county to put $10 million into the county’s loan fund because seven projects that had received loans had not created jobs.

The county contested the order. HUD continues to monitor the situation but has not issued a final payment order, Reilly said.

Payments by borrowers on some of the loans cited by HUD have since reduced the outstanding balance to $8.7 million, Reilly said.

If the council approves the proposed loan forgiveness, the chamber would use $1.7 million from the Red Talon sale to pay its other loans involved in the HUD inquiry, further reducing the current $8.7 million that the county could be on the hook to repay, Reilly said.

The community development loan fund’s overall balance is $16 million, compared to $13 million two years ago, Reilly said.

The fund has provided more than 669 loans and created thousands of retained jobs since its creation in 1982, Reilly has said.

County officials argued the county should not be forced to replenish the fund because the projects eventually will create jobs, and HUD regulations contain no specific time limit on the job creation. Patience is needed because the recession slowed development, they maintained.

Other loans in the HUD finding involved the former Hotel Sterling project in downtown Wilkes-Barre and projects associated with CAN DO Inc., a nonprofit Hazleton area economic development agency.

Wilkes-Barre now owns the site of the demolished Hotel Sterling at the corner of River and Market streets and is trying to secure a developer. However, officials don’t expect the county to recoup most of the $6 million that had been loaned to the former nonprofit CityVest to develop the site.

CAN DO officials have said they continue to market opportunities to sell sites to developers in an attempt to close out the county loans.

Reach Jennifer Learn-Andes at 570-991-6388 or on Twitter @TLJenLearnAndes.

Reach Jennifer Learn-Andes at 570-991-6388 or on Twitter @TLJenLearnAndes.

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