Luzerne County councilman challenges loan forgiveness request by city chamber of commerce

By Jennifer Learn-Andes - | March 23rd, 2016 6:48 pm

By Jennifer Learn-Andes

Wico van Genderen van Genderen

Luzerne County Councilman Stephen A. Urban said Tuesday he’d have a “hard time” granting a request from the Greater Wilkes-Barre Chamber of Business & Industry to forgive $1.7 million in community development loans.

Wico Van Genderen, the chamber’s president and CEO, told the council the forgiveness is needed to clear liens on its Innovation Center @ Wilkes-Barre on South Main Street so the property can be sold as part of a $6.1 million downtown Wilkes-Barre development project.

Red Talon Group 1 LLC, a private development entity, wants to buy the Innovation Center and First National Bank Building on Public Square to create 120 high-tech jobs and spur other growth.

Urban, one of 11 county council members, said he does not want to sacrifice $1.7 million that could be used for other future development projects.

The money came from the county’s revolving loan fund for community development, which relies on loan repayments and interest earnings to continue providing new loans to area businesses. The money can’t be used for general fund operating expenses.

“That’s money that will never come back into the fund. That’s money that will never be used in the future to generate jobs,” Urban said of the forgiveness.

Urban also questioned why the project was tied to a chamber-owned building when there is vacant space in other downtown structures, including the Wilkes-Barre Center, commonly known as the Frontier Communications property, on Public Square.

“You just simply want to unload a piece of property and you want us to eat $1.7 million,” Urban said.

Van Genderen said the chamber is working on other plans for the Frontier property but can’t publicly discuss them at this time due to non-disclosure agreements.

While the chamber is trying shed its debt and real estate, Van Genderen said his support for the innovation center project is based primarily on its benefits: keeping college graduates here and creating a spinoff demand for housing and other businesses.

Private ownership of the innovation center will “grow the business better,” he said.

If the transaction goes through, the chamber will give the county community development office $1.7 million of its proceeds from the $2.6 million sale as repayment for other loans. That money will go back into the loan fund.

The rest of the chamber’s sales proceeds will be used to repay about $126,600 in back real estate taxes on the innovation center and close out a $704,000 state loan, Van Genderen said.

“Every penny is going back to the county and state,” he said.

Several council members said they will accept Van Genderen’s invitation to tour the center and further discuss the project. The council is expected to vote on the chamber’s request at its April 5 meeting.

The community development loan fund currently contains $16 million, and county Community Development Director Andrew Reilly said requests for loans have dropped off in recent years because businesses can obtain low interest rates borrowing from private institutions.

The chamber currently owes the fund $7.2 million for eight loans, Reilly said. If the loan forgiveness and sale go through, the chamber will owe $3.8 million on five loans, he said.

Van Genderen said the chamber has plans to pay off the remaining debt through land sales.

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