Decision on former Hotel Sterling site project funding deferred to 2024

Luzerne County Council won’t be voting this year on a $3 million allocation toward a hotel/convention center project at the former Hotel Sterling site on the corner of River and Market streets in Wilkes-Barre.

“We’ll delay until next year and give the reorganized council an opportunity to proceed with this transformational project,” developer representative Stephen Barrouk said Wednesday. “We’ll start fresh.”

The current 11-member council has only one more scheduled meeting, on Dec. 12.

Five new council members are set to take the oath of office on Jan. 2: Patty Krushnowski, Jimmy Sabatino, Joanna Bryn Smith, Brittany Stephenson and Harry Haas. They will be seated with incumbent LeeAnn McDermott, who was reelected in the Nov. 7 general election, and five council members with two years remaining in their terms: Kevin Lescavage, John Lombardo, Chris Perry, Brian Thornton and Gregory S. Wolovich Jr.

Councilman Stephen J. Urban, who did not win reelection, had proposed the $3 million allocation toward a $36.36 million Gateway Hyatt Place Hotel and Conference Center in October, saying the project would replace an eyesore lot with an attractive structure that helps to boost the city’s downtown.

H&N Investment, which owns the site, made two public presentations to council but requested council halt a scheduled Nov. 28 vote. Barrouk and hotel project head Sam Syla told council they wanted time to work with county legal counsel to establish a council-requested “set of conditions” for receipt of the award.

No vote was scheduled at council’s meeting this week. It’s unclear if a majority of six would have been willing to support the allocation. In addition to Urban, Lescavage and Thornton have been outspoken advocating funding for the project.

Thornton said Wednesday he contacted Barrouk weeks ago, before the Nov. 28 meeting, and recommended H&N hold off until council reorganizes in 2024. He suggested H&N concentrate on formulating special protections that would ensure the county retains its funding if the project does not go forward.

Initially Thornton disagreed a decision should be shelved because council is in a “lame duck” transition period, but he came to believe voting now could give the appearance council was trying to push it through, he said.

“The new council might have an entirely new viewpoint, and we have to work together,” Thornton said. “Let’s not rush it.”

Barrouk said Wednesday H&N has submitted a set of funding award conditions for the county to review that mirror those required for state grants.

“Whatever we do for the state, we’re willing to do for the county, and it’s pretty exhaustive,” Barrouk said. “We’re going to try to make sure those are all acceptable to the county before we try to seek approval from the new council.”

H&N also wants to give the reorganized council time for acclimation before presenting its funding request, Barrouk said. He expects to appear before council in the first quarter of 2024.

“We’ll come in with a complete proposal and conditions and talk about the impacts more,” he said. “This is a big decision, and we think council should be fully educated.”

He reiterated the request for county funding was necessary to cover escalating costs stemming from the COVID-19 pandemic and inflation that remained after the project was scaled back.

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.

In addition to the county funding, H&N is seeking an award through the state’s new Pennsylvania Strategic Investments to Enhance Sites program designed to make more land “shovel ready” to attract and retain businesses, Barrouk said Wednesday.

The proposed Wilkes-Barre hotel/conference center site meets requirements for this funding because much of the debris from the 2013 Hotel Sterling demolition was dumped in the hotel basement, and that material must be extracted and hauled away for the new hotel construction, he said.

At the county level, 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 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.

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.

The new hotel would be five stories high and contain 116 rooms, the developers said. 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. More than 3,000 square feet of retail space also is included in the design.