Luzerne County Redevelopment Authority discusses county suit in executive session

Luzerne County’s Redevelopment Authority board met in closed-door executive session after its regular meeting Tuesday to discuss litigation the county filed against the authority last month over an outstanding debt related to the authority’s rail line.

Due to the pending litigation, authority Solicitor Peter O’Donnell also advised the board to cancel a vote Tuesday to sell a 0.0825-acre parcel of authority property to Petro Gas Terminals Penn LLC to store its materials.

The county has an interest in the railroad because the authority still owes the county $3.28 million for the original acquisition of the line. Prior commissioners had loaned the authority funds in 2001 so the authority would not default on its mortgage and risk losing infrastructure that services businesses.

Filed in the county Court of Common Pleas last month, the county suit seeks the appointment of a receiver agreeable to the county to preside over the mortgaged property and real estate, an order staying any sale or lease of rail property without the county’s prior written consent and an award of attorney’s fees and court costs, it said.

Another option would be a declaration that the more than $3 million is immediately due and/or that the loan agreement is terminated, it said.

Letters show the county wants the authority to turn over the railroad so it can be sold to recoup the $3.28 million. While the delinquent loan was stated as a reason, it appears to be part of a broader push to put the track into private ownership, with the hope that it would add passenger rail service while retaining and building commercial use.

Authority board members have advocated keeping the railroad under public ownership.

The county suit names the redevelopment authority and county Rail Corp. as defendants. The redevelopment authority owns the rail line, and its affiliated nonprofit Rail Corp. maintains a lease agreement with the rail operator — a structure set up for liability purposes, officials have said.

A recent court response filed by Rail Corp. Attorney Joseph M. Blazosek argues the county has failed to “state a cause of action upon which relief can be granted.”

It said the county’s own court filing exhibit contained a loan repayment extension document requiring the authority to repay the county at a zero interest rate by October 2026, which means there is no default.

The filing also points out the money was loaned to assure the county line would remain in public ownership and available for rail freight service users, which “has been the case since 1996.”

County plans to sell to a private operator would “remove rail freight lines as a public asset,” it said, asking the court for judgment in its favor.

If the county ends up assuming ownership of the line, county council would have to approve any sale following a public bidding process.

Reading & Northern Railroad, which operates passenger rail excursions to Jim Thorpe and other locations in the region, has publicly expressed interest in purchasing the authority-owned rail line, with a commitment to invest at least $2 million of its private funds to upgrade the 8-mile rail line between Pittston and Wilkes-Barre to accommodate 30-mile-per-hour passenger trips.