Luzerne County officials filed a new legal motion seeking a court-appointed third-party receiver to manage the rail line owned by the county Redevelopment Authority.
The county argues a receiver is needed to protect the line until its pending litigation against the authority is resolved.
This litigation, which is in the discovery stage, seeks a declaration that the $3.28 million the county loaned to the authority is immediately due. Although the litigation centers on the delinquent loan, it appears part of a broader county effort to privatize the track, with the hope of adding passenger rail excursions while expanding commercial use.
In response, the authority has argued that there is no breach of contract to litigate, as it has until October 2026 to repay the county.
Reading & Northern Railroad Chairman and CEO Andy M. Muller Jr. made an unsolicited $10 million offer to purchase the county line in October, stating he would increase freight service and introduce recreational passenger train excursions from Wilkes-Barre to Pittston, with the option to continue to Jim Thorpe.
Authority board members had reluctantly decided that purchase offers should be considered, but only through a public process open to all interested entities.
An authority-hired consultant —Trenton, N.J.-based Strauss & Associates/Planners — is documenting county rail line assets in preparation for an eventual public request for proposals to purchase the line, authority representatives said last month.
Filed in the County Court of Common Pleas, the pending litigation is scheduled for trial in August, with County Judge Lesa S. Gelb presiding.
The county’s litigation was also filed against the authority-related, nonprofit Rail Corp., which maintains a lease agreement with the rail operator, R.J. Corman Railroad Group.
A court hearing is expected to obtain arguments from both sides regarding the requested receiver appointment.
According to the new filing forwarded to County Council members on Friday, the county’s arguments for a receiver include:
• The defendants have admitted they have no ability to pay the millions owed to the county. They are “operating at losses” and cannot sell or lease the mortgaged rail property without the county’s written consent, which they do not have.
• Deposition testimony indicates the defendants “improperly entered into lease extensions” with the rail operator without the county’s required prior consent.
• The rail line is “in large parts” inoperable and “sits in a state of decay and disrepair.” Necessary and public safety repairs have been “continually ignored for years,” which the filing said means the county’s “collateral and security is not being protected or preserved.”
• Required low and/or moderate-income jobs were not created as required for the county loan.
The filing asserts these and other actions constitute a default of the loan mortgage, allowing the county to exercise its right to have a receiver appointed to protect and preserve the property.
It seeks a receiver with authority that includes: taking possession and control of the rail line and its books and records; collecting and controlling “all rents, issues, and profits”; operating, repairing, and maintaining the property; and entering into, modifying, or terminating leases and service contracts.
Scott Linde, Redevelopment Authority Board chairman, said Friday he was not aware of any new court filing in the matter.
The active portion of the county rail line passes through the Pittston, Wilkes-Barre, and Hanover Township areas.
Jimmy Sabatino, County Council chairman, said Friday that he and his council colleagues wholeheartedly support obtaining an appraisal to determine the value of the line and publicly seeking proposals to purchase the line because they want to ensure all interested parties have an opportunity to bid.