Luzerne County Council is set to vote Tuesday on whether to sue the county Redevelopment Authority, according to several sources.
Letters obtained by The Times Leader shed light on the reason: The county wants the authority to turn over its railroad so it can be sold to recoup $3.28 million the authority still owes the county for the original acquisition of the line.
While a delinquent loan was stated as a reason, it may be part of a broader push to put the track into private ownership, with the hope that it could retain commercial use but also add passenger rail service.
Tuesday’s council agenda says council will vote on adopting a resolution approving the initiation of litigation against a “delinquent creditor.” The resolution said council is set to discuss the outstanding debt owed to the county during a closed-door executive session before Tuesday’s meeting.
If approved, the resolution said council supports the inquiry into an outstanding debt owed to the county and subsequent initiation of litigation against any and all parties responsible for the debt repayment.
Background
The redevelopment authority is a separate entity governed by a five-citizen, council-appointed board.
However, the county has an interest in the rail line because prior commissioners loaned the authority funds in 2001 so the authority would not default on its mortgage and risk losing infrastructure that serviced 25 businesses.
Since then, the authority must forward money it generates from the rail operation to the county to repay the loan.
The authority still owes $1.475 million to the county community development business loan fund and $1.8 million to the county.
In March, the county sent a cease-and-desist letter to the authority to temporarily halt any further action related to selling, transferring or disposing of railroad property owned by the authority.
While emphasizing there was no implication of wrongdoing, county Manager Romilda Crocamo publicly said the county was seeking a pause so it could conduct a comprehensive review of past agreements involving the rail.
This review was sparked when Redevelopment Authority Board Chairman Scott Linde, while speaking about another matter, gave county council an appraisal of an inactive Kingston area stretch of rail property that county officials viewed as an indication of a possible sale of part of the line.
The authority owns a network of tracks totaling approximately 55 miles, and the appraisal involved one section.
Linde had said the Kingston area portion of the rail line was inoperable because it was cut off on both ends by the Wyoming Valley Levee flood control system and had been discussed as a possible future rails-to-trails project.
Linde also has said approximately 30 miles of the track is “usable” because the remainder contains “dead ends” or is inactive.
In the cease-and-desist letter, County Chief Solicitor Harry W. Skene emphasized that no railroad line can be sold without the county’s permission.
The redevelopment authority owns the rail line, and its affiliated Rail Corp. maintains a lease agreement with the rail operator — a structure set up for liability purposes, officials have said.
Last week
At the redevelopment authority’s May 20 meeting, the agenda noted meetings had been held with county representatives May 9 and 12 to review files and documents related to the railroad operations.
Authority Executive Director Margie Thomas said the meetings were conducted by Skene and county Budget/Finance Deputy Director Caitlyn Holland. The authority supplied all requested records and has not received a report from the county, Thomas said.
Skene and Holland attended the May 20 authority meeting by phone, and Linde asked them if they have a report.
“No you were pretty clear in your letter, so we’ll just proceed on plan B,” Skene replied.
Linde said, “OK. Can you give us a buzz when that’s going to be?”
There was no response.
Letters
They were referencing two letters that have been furnished to both authority and county council members.
Skene wrote the first on May 15, addressed to Thomas and Linde, with the subject line “recovery of RR from RDA.”
Skene said based on their May 12 meeting, it was determined, subject to council authorization, that the county would take possession of the rail with a plan to sell it and use the proceeds to repay the debt to the county and county community development office.
This plan was discussed with council in executive session and will be presented to council for a vote at its next meeting, the letter said.
The county believes the authority and affiliated Rail Corp. are in default on their county loans, it said.
In exchange for the transfer of rail holdings to the county, the county would release the authority and Rail Corp. of all liability on the outstanding debts, it said.
While the county is in the process of having the railroad assets appraised and bid, if appropriate, the county and authority would agree that the authority will continue to operate the railroad as it has with current operator R.J. Corman Railroad Group.
“Finally, given the direction in which we are moving, we expect the status quo will be maintained with respect to the assets and operation” of the railroad, Skene wrote.
Skene requested an authority vote on the matter on May 20, but there was none.
Instead, Linde replied to Skene on May 19 indicating the authority “requests that you take a more measured approach” regarding the rail line before determining a recommendation to county council that the county take possession.
“Before any decision is reached, Luzerne County should take into consideration all the circumstances that led to the purchase of the rail property,” Linde wrote.
He recapped that county commissioners and numerous state legislators sought the authority’s help to “preserve this vital service” at the urging of several businesses in 1996, when the rail operator at that time had announced it “unilaterally would cease rail freight services.”
County funding was needed for the purchase because the state did not provide all promised funding, Linde’s letter said.
Continued rail freight service is “vital” to 12 local businesses that receive and ship an average of 1,324 rail cars of products and materials annually, based on a 2024 car loading report provided to the state, Linde said.
Linde said more revenue may come to the county because the authority and its current rail operator are “on the cusp of increasing rail shippers on the rail line,” which he said has been “greatly improved” and made safer through additional warning systems.
“Our board and staff are committed to work with Luzerne County to find a solution that is in the best interest of all, most importantly the shippers in Luzerne County who depend on rail freight service,” the letter said.
Crocamo said she cannot comment on potential litigation.