Luzerne County Council halts vote on Sterling site funding request

At the developer’s request, Luzerne County Council members halted plans to vote Tuesday on a $3 million allocation for a hotel/convention center project at the former Hotel Sterling site on the corner of River and Market streets in Wilkes-Barre.

Council member Tim McGinley made the announcement before a pre-meeting hearing that had been scheduled to hear public comment on the proposed earmark. McGinley presided over the meeting Tuesday because the chair and vice chair attended virtually. Council did not proceed with the public hearing.

Council members said H&N Investment, which requested the funding, asked for more time to present additional information about the proposed project.

According to an email sent to council, project representatives Stephen Barrouk and Sam Syla said they have been asked to establish a “set of conditions” to receive a county grant and discuss them publicly.

”We have suggestions but need to discuss them further with county counsel and the council before taking action on the grant request,” the communication said.

As a result, Barrouk and Syla requested tabling of the funding request until they have “established mutually acceptable terms.”

”This project is too important to not address all the concerns of county council and the public,” the communication said.

H&N Investment had requested $3 million toward its $36.36 million project to construct a Gateway Hyatt Place Hotel and Conference Center.

H&N paid $700,000 for the land and is working to secure a $21 million loan toward the hotel/conference center, project representatives have said. The state committed $7 million in grants toward the project to date, and there also is a $225,000 contribution from Hyatt. That leaves a gap of about $7 million.

The hotel portion would be five stories and contain 116 rooms. More than 3,000 square feet of retail space is carved out. The section fronting River Street is slated to house a 5,000-square-foot event space that can accommodate 300 to 350 people for conferences, weddings, lectures and other events.

The $3 million earmark would come from $6 million in community development funds the county set aside as a precaution in case the U.S. Department of Housing and Urban Development, or HUD, follows through with a $6 million penalty threatened a decade ago.

This sanction stems from a past county community development allocation of $6 million to redevelop the landmark Hotel Sterling that once stood at the site when it was owned by the nonprofit CityVest. HUD issued a determination that project should not have received $6 million because it did not create jobs or result in a revitalization project. The structure was condemned and torn down in 2013.

Some argue the county should not touch the $6 million kept in reserve unless HUD drops the threatened penalty, but the federal agency has not communicated any willingness to do so to date, officials have said. Others have argued using the set-aside funds on the Sterling site would be the best way to clear up the disagreement with HUD because the proposed project would address HUD’s original complaint that no development has occurred there.

Council has two more meetings scheduled this year.

In the past, council members have deferred such decisions during the “lame duck” period between general elections and the swearing-in of newly elected council members. A recent county law office opinion mirrored a past one that said matters that are not statutorily required, essential government functions should be deferred during a lame duck period. Five newly elected council members are set to take office Jan. 2.

Budget

Council unanimously approved the no-tax-hike $165.5 million general fund operating budget.

Instead of a series of line item cuts proposed by McGinley and Councilman Gregory S. Wolovich Jr. to help build the budget reserve, council unanimously accepted the administration’s proposal to achieve the same result by reducing the health insurance allocation by $175,000.

This cut is attainable, in part, because a portion of the expense was linked to vacant positions, McGinley said. County Budget/Finance Division Head Mary Roselle also said she is confident savings will result from council’s recent vote to retain ETA Insurance Services. The company will manage day-to-day health care programs, compile bi-monthly reports, work with union groups and evaluate consortiums to “drive down costs,” county documents have said.

Under the new budget, the county millage rate will remain at 6.3541. To figure out the tax payment, property owners must divide their assessed value by 1,000 and multiply it by the millage rate. For example, the owner of a $100,000 property pays $635.41 in county taxes.

In other business, council also unanimously voted to approve:

• A merger of county 911 and the Emergency Management Agency to improve safety and security and possibly yield savings, according to county officials.

• A contract retaining WellPath LLC as the county’s prison inmate medical services provider.

WellPath was the only company that submitted a proposal to perform the work after the company’s current contract expires the end of this year.

WellPath’s proposal is $4.4 million for 2024, $4.7 million for 2025 and $4.9 million for 2026, the agenda said.

The provider must supply a range of medical and mental health services and personnel, including prescription and nonprescription drugs and emergency ambulance transport for an average daily 550 to 560 inmates at the Water Street prison and nearby minimum offenders building on Reichard Street in Wilkes-Barre.