Additional funding sought for parking garage at former Hotel Sterling site

Luzerne County Council had awarded $2 million in federal American Rescue Plan funds to help build a public parking garage at the former Hotel Sterling site in downtown Wilkes-Barre earlier this year, which was $1 million less than requested.

Now the Wilkes-Barre Industrial Development Authority and developer of a proposed Gateway Hyatt Place Hotel and Conference Center want to secure that $1 million through casino gambling funding.

The county redevelopment authority is set to vote Tuesday on the request to submit an application seeking $1 million for the design and construction of a two-story, 150-vehicle parking garage at the site on the corner of North River and West Market streets.

Requests for gambling Local Share Account, or LSA, funds must be submitted through certain entities, including redevelopment authorities and municipalities. The Commonwealth Finance Authority decides which applications are approved.

Stephen Barrouk, speaking on behalf of Gateway Associates, reiterated Monday that the garage is a public-private partnership involving the city industrial development authority and H&N Investments LLC. H&N separately plans to construct a 110-room hotel/conference center.

Aside from the planned hotel, more parking is needed in that area for several buildings that have been converted to apartments and for events at the county-owned River Common recreation complex, which runs along the Susquehanna River across from the former Sterling site, Barrouk said.

“It has a public purpose as well as economic development,” Barrouk said of the parking garage. “When there’s a River Common event, the Hotel Sterling site is packed with cars.”

Heavily used free parking on the vacant Sterling lot will end when a hotel is constructed there, he said.

Barrouk estimated the above-ground parking garage will cost $3.8 million and said other funding options also are being pursued.

Due to rising costs, the design has been scaled back from the original 250-vehicle structure, he said, noting it will be constructed to allow upper-level additions in the future. Under the current design, the parkade will hold up to 75 vehicles on each level.

“We’d probably like to see a 300-car parking garage there, but right now, this is all we can afford,” he said.

Barrouk said the group was thankful for the county’s $2 million American Rescue award but must find a way to fill the gap.

He emphasized the county American Rescue funding won’t be retrieved from the county until those involved in the project are certain they have enough money to complete the parking garage. The American Rescue project completion deadline is December 2026, officials have said.

County council had capped outside American Rescue awards at $2 million for municipalities and municipal authorities, which prevented approval of the full $3 million request.

Hotel

Barrouk said the hotel will be constructed, but the developers must first finalize all funding and ensure the design falls within that budget.

He blamed delays on the COVID-19 pandemic, supply chain issues, inflation and interest rates that rose from around 3% to 8%.

“We’re very actively working on the hotel project. We’re working on a daily basis,” he said.

Some architectural adjustments are under consideration to cut costs without compromising the hotel design, he said, noting it will be a structure that “people will be proud of.”

At the same time, developers are still trying to procure additional funding to cover costs beyond what they can finance privately, he said.

He had estimated the total project cost, including the parking garage, at $40 million earlier this year. To date, the state has committed $7 million in grants toward project, with that funding targeted for the hotel and not the parking garage, he said.

“If everything goes well and we get these numbers finalized and get support of the state and county, we can be under construction next spring,” Barrouk said. “We’re pushing very hard.”

This site is more challenging because much of the debris from the Hotel Sterling demolition was dumped in the hotel basement when the structure was demolished, and that material must be extracted and hauled away for the new hotel construction, he said.

It’s also an odd-shaped lot requiring construction of the parking garage, as opposed to hotel projects on large tracts with ample space for parking lots, he said.

There’s also risk because this downtown hotel won’t be relying as heavily on interstate travelers, he said. Barrouk is confident events and activity related to downtown colleges will help attract lodgers.

Because the final design is still subject to change, his only certainties are that the hotel structure will be under 10 stories and aesthetically appealing.

Site history

The landmark Hotel Sterling was condemned and demolished in 2013. The public had learned in 2011 that CityVest, the property’s nonprofit owner at the time, was out of funds and couldn’t fulfill its mission of attracting a developer to renovate the former hotel into a premier residential and retail complex.

CityVest was unable to repay a $6 million county community development loan largely used to make the parcel larger, pay a consultant, tear down an attached hotel structure and remove hazardous material. Critics had questioned that approach, saying the funds should have been invested on roof repairs and mothballing to stop leaks and prevent further deterioration.

The county set aside more than $6 million in community development funds in case the U.S. Department of Housing and Urban Development, or HUD, follows through with a penalty threatened in 2014 to withhold $6 million in funding.

HUD had issued a determination the former Sterling project should not have received $6 million because it did not create jobs or result in a revitalization project.

County officials have contested this determination, arguing planned development at the site eventually should create jobs and that HUD regulations don’t specify a time limit for the job creation.

Efforts have been underway to reach a resolution so the $6 million in funds could possibly be unlocked for programming.

Tuesday’s redevelopment authority meeting starts at noon in the authority office at 16 Luzerne Ave. in West Pittston, although teleconference attendance is urged because the meeting room is tiny. Teleconference instructions are posted on the authority site.